In San Diego, we talk about the great weather and the high cost of living, but the big price we pay to live here could be taking a turn.
A new UC San Diego study expects local housing prices to drop by double digits by the end of this year.
Allan Timmerman is a professor of finance at UC San Diego. His department recently rolled out a new model that uses search data as an early indicator to predict the direction of the housing market.
“And so, we find in fact that there is a clear highly-significant predictive power in people's service activity and subsequent future changes in the house crisis. And so that's what we are getting at here. You can think of it in some sense as sort of a pretty clear measure of housing demand, the potential demand,” Timmerman said.
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Miguel Contreras has been a realtor for nearly 20 years. He said between 2020 and early last year, San Diego was a selling market.
However, he said after July, higher interest rates drove many buyers off the market.
“A 10%-plus decrease in home values would be a great benefit to buyers because it would become more advantageous, more cost-effective and affordable for them,” Contreras said.
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He said the limited supply of homes in San Diego is not only impacting sellers and homebuyers, but renters too.
“I do not foresee rents going down at all. At all.” Contreras said.
Contreras said there are many options when it comes to buying a home and recommends talking with a professional for advice.
While San Diego is expecting to see a drop of around 12%, some other communities like Phoenix, Arizona, could see housing prices drop up to 18%, according to the model.
