For the third year in a row, San Diego is seeing a late summer dip in home prices. If you’re wondering whether this trend will continue into the fall, you’re not alone. In this post, we’ll break down what’s happening with San Diego’s housing market, why home prices are softening, and what it could mean for buyers and sellers.
Let’s start by zooming out a bit and looking at the U.S. housing market as a whole. Over the past few years, the market has seen some big shifts, driven by high housing costs, rising mortgage rates, and a limited supply of homes. Nationwide, home prices were up 4.1% year-over-year in July, but there was also a significant increase in the number of homes for sale. This may signal that the market is stabilizing.
Now, let’s bring it back to San Diego. In recent years, the local market has been incredibly competitive, with homes selling quickly and often above the asking price. However, things are starting to shift. About one in three homes in San Diego County have recently seen price cuts, which is a noticeable change from earlier this year when almost every home was selling for more than the asking price.
So, what’s causing this shift? It seems like the market is beginning to resemble the pre-pandemic era, where buyers had more negotiating power. This is welcome news for potential homebuyers who have been priced out of the market in recent years. In fact, we’ve seen home prices surge in the first half of each of the past three years, only to pull back in the second half, especially in North County San Diego neighborhoods.
To give you some perspective, in June 2022, the median home price for a single-family home in San Diego was $980,000. By December, it had dropped to $865,000. In 2023, home prices peaked at $1 million in August before dipping to $960,000 by the end of the year. Now, in 2024, we saw the median home price hit $1.19 million in June, but as of August, it has dropped to $1.07 million. And, just like in previous years, we expect to see prices continue to soften into the fall.
As a real estate agent in San Diego, I often get asked, “When is the best time to buy or sell?” For sellers, January through June tends to be the sweet spot, especially for suburban neighborhoods. This is largely due to families wanting to move before the school year starts. On the flip side, for buyers, the best deals often come between July 15 and November 15, when prices typically dip. However, keep in mind that there are usually fewer homes on the market during this time.
Even though home prices are dropping, it’s important to remember that San Diego’s market is still competitive. Homes that are priced right and presented well can still receive multiple offers and sell quickly. But if a home is overpriced, it could sit on the market for weeks or even months.
Another factor impacting the market is the involvement of outside investors. In the second quarter of this year, nearly 24% of homes sold in San Diego were purchased by investors. Many of these investors are buying apartment complexes and duplexes, taking advantage of strong rental demand. While this might drive up prices in some areas, it also means there could be more rental options available, which might be good news for those not ready to buy yet.
So, what does the future hold for San Diego’s housing market? While prices may continue to soften for a bit, many real estate agents expect competition to pick up again as kids go back to school and families settle in for the fall. And while we may be in the midst of a market correction, there are no signs of a major crash on the horizon. San Diego remains one of the most desirable and expensive places to live, with strong demand keeping things competitive.
Whether you’re looking to buy, sell, or just stay informed, it’s important to keep an eye on both local and national market trends. San Diego’s market may be cooling slightly, but it’s still a hot spot for real estate.
