The San Diego housing market is strong, but how long will it stay that way?
The median single-family home in San Diego County reached $1 million in April, according to resale housing statistics compiled through the San Diego Multiple Listing Service by the Greater San Diego Association of Realtors
“We’ve seen prices appreciate like crazy and we have seen so much buyer demand because rates were so low so the last two years,” San Diego Realtor Destiny Roxas said.
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There are many factors fueling the hot housing market, according to economists.
Low interest rates, low housing supply, and high demand are among the top reasons fueling the current housing prices.
Home values appreciating quickly in other areas are causing some buyers to head to San Diego.
“What I have been seeing is a lot of people from L.A., San Francisco, San Jose areas starting to get priced out of their markets and turning their attention to San Diego because of location, and a lot of those other markets appreciate a lot faster, we are seeing a lot of those people come down here,” Roxas said.
The housing market is not expected to keep its current pace, though. Some housing experts predict a future slowdown in the housing market due to rising interest rates.
“I think we are already seeing signs of the market cooling off right now to be completely honest. A lot has to do with the Fed raising the rates to try to counteract what’s happening with inflation,” Roxas said.
Home prices are not expected to fall, but the rate of appreciation is expected to ease and rising interest rates will impact some neighborhoods more than others, according to many economists.
“Communities where you know the interest payment is a big part of their budget will be particularly hard hit. So, this is likely to have a different impact on a household depending on their savings, depending on their wealth, depending on the income,” UCSD Professor Allan Timmerman said.
Despite an expected cooldown in the market, experts believe the foundation of the San Diego housing market will remain strong.
“I only see it expanding. I mean, there’s so many plans for development. There’s SB 10, SB 9 that was just released. Regionally we are trying to see more investors come in and create more housing developments,” Roxas said.
The Federal Reserve will meet in the upcoming weeks and it is possible they will raise interest rates again.