Over the last few years, San Diego home prices rose steadily and approached the peak levels seen during the last housing boom. But now they appear to be slowing down. This is according to the latest trends and forecasts for San Diego home prices in 2017 through 2018.
San Diego Home Price Forecast, Through April 2018
The real estate data company Zillow recently reported that the median home value in San Diego rose 5.3% from March 2016 to March 2017. That was below the national increase of 6.9% for the same 12-month period. Looking forward, the company’s economists issued a forecast that San Diego home prices could remain mostly flat over the next 12 months (through April 2018).
According to Zillow: “The median home value in San Diego is $555,400 … values have gone up 5.3% over the past year and Zillow predicts they will rise 0.0% within the next year.”
Another recent housing report, this one from CoreLogic, showed that the median home price for San Diego County (not just the city) dropped 1% in February to land at $492,000. That’s not too surprising, when you consider that February is one of the slowest months of the year for real estate sales.
Pricing Trends & History: How We Got Here
Some historical context is in order. Home prices in San Diego peaked at the end of 2005 and early 2006, according to the S&P Case-Shiller Index. They began a steady decline shortly after that, as the nation’s housing market stumbled.
In early 2012, San Diego home values began a steady upward climb that continued until 2017. But prices are now showing signs of leveling off, according to the latest forecasts and trend reports.
The fact that house prices in San Diego are leveling, or even dipping slightly, is no cause for alarm. If you analyze historical trends in home values nationwide, you’ll start to see some patterns. Prices tend to rebound sharply following a steady decline, sometimes after a prolonged “trough” during which they remain low. It’s common for home prices to level off after a strong rebound, as they appear to be doing in 2017.
From an economic standpoint, these latest trends could be viewed as a positive factor, as they could help ease the affordability issues seen in San Diego.
Housing Inventory Is Still Tight
While home prices in San Diego are forecast to cool over the coming months, the real estate market itself is still pretty hot. This is largely the result of limited inventory.
According to a March 2017 report from the California Association of Realtors (CAR), the state is currently experiencing a shortage of homes for sale, relative to demand. In a related news release, CAR’s chief economist Leslie Appleton-Young stated:
“The number of active listings [across the state] has been on a downward trend for the past 20 months and has shown no signs of improvement. As we move into the spring home-buying season, we should see a marginal increase in listings, which will be offset by a pickup in sales. The inventory level is not likely to get better in the upcoming months.”
Home buyers entering the San Diego real estate market in 2017 should be prepared for competition, as inventory levels remain low compared to demand.
Last month, we cited a similar report from Trulia that ranked San Diego among the top three cities in the nation for inventory reduction. According to that analysis, the number of homes for sale in the city dropped by 66.5% between the first quarter of 2012 and the first quarter of 2017.
Disclaimer: This article contains trends and forecasts for San Diego home prices through 2017 and into 2018. Market predictions and commentary were provided by third parties not associated with our company. We have compiled them here as an educational service to our readers.