San Diego Housing 2020 – Top 5 Predictions

The San Diego housing market may be more unpredictable in 2020 than in previous years, in part due to slow sales, and in part because of growth in both the number of jobs and in wages. Those considering buying a home will need to know some things in order to navigate the waters of real estate purchasing.

The San Diego Housing Market is Cooling

After several years of running a hot “fever,” it now seems that the San Diego housing market is cooling off. Price growth has slowed in the area, inventory has increased, and the market appears to be shifting in favor of buyers.

Three or four years ago, home prices in the area were climbing at a steady pace. And at the end of 2015, Realtor.com ranked San Diego at #6 on their list of the hottest housing markets in the country. But things have cooled down quite a bit since then.

Over the past year or so, the median house price within the city climbed by a modest 1.9%. That’s based on the latest data from Zillow. Looking forward, the company expects even smaller gains through the summer of 2020.

A More Modest 2020

That brings us up to the present. As of July 2019, the median home value in San Diego was around $635,000. And some forecasters don’t see it rising much further than that anytime soon.

For example, Zillow’s current long-range forecast for the San Diego real estate market predicts that prices will level off over the coming months. It’s a modest outlook, to be sure.

What are the top 5 predictions for 2020 San Diego home buyers and sellers?

Here’s a Quick Run Down

Prediction 1 – 2020 will be a steady, stable market

Prediction 2 – Rent Will Go Up.

Prediction 3 – Millennials Will Represent a Huge Chunk of Home Buyers.

Prediction 4 – There Will be More Environmentally “green” homes at Affordable Prices Available.

Prediction 5 – Affordability is an issue

Prediction 1 – Stable growth.

After several years of running a hot “fever,” it now seems that the San Diego housing market is cooling off. Price growth has slowed in the area, inventory has increased, and the market appears to be shifting in favor of buyers.

Three or four years ago, home prices in the area were climbing at a steady pace. And at the end of 2015, Realtor.com ranked San Diego at #6 on their list of the hottest housing markets in the country. But things have cooled down quite a bit since then.

Over the past year or so, the median house price within the city climbed by a modest 1.9%. That’s based on the latest data from Zillow. Looking forward, the company expects even smaller gains through the summer of 2020.

Prediction 2 – Rent Will Go Up.

Due to lack of affordable homes to purchase, more people are renting in San Diego than ever. Rent in the San Diego area is already some of the highest in the nation. Renters pay more than 40 percent of their income toward housing in four of the largest U.S markets, which includes San Diego.

This could affect single-family home purchasing in a couple of ways. Escalating rent could force people to move elsewhere. That could mean less competition for home purchases. It could also swing the opposite direction if rent becomes so expensive that renters feel it is better in both short-term and long-term finances to buy.

Personally, I’ve seen people are hold off on home purchases to see if prices have peaked, only to be unable to enter the market now. Inventory is incredibly low in the affordably price homes, which builds a demand for them that is not going to stop anytime soon.

Prediction 3 – Millennials Will Represent a Huge Part of Home Buyers

Predictions are millennials with new, higher-paid jobs will seize the opportunity at home purchases as home prices that are increasing in price at a much slower rate.

This will make for a highly competitive market, particularly with starter homes. If you are planning on entering the home market, you may want to start getting yourself and your finances together now rather than wait or you may find yourself paying higher prices to stay competitive for the house you want.

Prediction 4 – Green Housing Leads the Way

More builders are including items like solar panels, net zero design and reduced impact in building. For the first time, having a low impact home is a priority for home buyers.

Prediction 5 – Affordable Homes Continue to Prevent Home Ownership

San Diego is still one of the most desirable places to live. Couple that with a diversified and strong economy and you have competition for affordable housing. While builders are working to build homes, our location next to the ocean prevents too much growth. Affordable homes will continue to be the biggest obstacle home buyers face.

Overall, San Diego will have options in both rental and homes for purchasing in 2020 as outmigration happens and more master communities are built. Options will include more high-end homes and homes on every level that implement green energy concepts. Middle-class and affordable homes will be competitive as more millennials enter the housing market to buy their first home.

Those looking to buy should start preparing themselves now in order to move quickly when the home they want comes on the market. Those wanting more information or who have questions should contact me. I would love to answer your questions and help.

Leave me a comment below. You can also call or text me at (760) 310-0166