Buying or Selling a House in 2021: San Diego Housing Market Forecast & Trends
In 2020, California, as a whole, has seen a slow down in home sales due to economic uncertainty and skyrocketing unemployment rates, but 2021 might be the start of a more optimistic housing market. In general, home prices in the United States have continued to increase and will continue to in 2021. Though a majority of California has been impacted by the declining turnover rate within the housing market, San Diego county has fared well due to better job opportunities and San Diego’s military population that continue to flow in. The housing market in San Diego is very competitive with hot homes selling 80% to 90% above the listing price and houses selling quicker than you can place an offer. The average price for selling a home in San Diego was $694,000 by the end of 2020, an 11% increase from the price in 2019 (Redfin). Home prices in San Diego are expected to increase by 8.3% in 2021 according to real estate analysts at CoreLogic, which is the highest increase nationwide.
Thankfully, COVID-19 has not slowed down sales volume in San Diego and has brought the best real estate year in over two decades. In fact, the pandemic has also brought about lower interest rates, which affects buyers in two ways: allowing them to maximize their purchasing power and giving them inflated home prices. What does this mean for buyers in 2021? Houses will be slightly more expensive, but they may still be worth it. What about sellers? Inflated prices may be due to a lack of residential properties on sale. Sellers can list their houses for a higher price and buyers will have fewer alternatives, making it more likely for the house to sell. Hence, the housing market will be in favor of sellers throughout 2021.
The demand for houses has started to grow as the economy recovers across U.S. states and San Diego is no exception to this. Though the price for houses in San Diego have increased, it is predicted to grow slowly potentially hitting 1.5 percent in 2021. Surprisingly, even during the pandemic San Diego homes have been selling fast with multiple offers being placed. Furthermore, mortgage rates remain low and those affected financially by the pandemic may be on the hunt for a new house while rates are in their favor. Norada Real Estate predicts that demand for houses in San Diego may continue to grow as there are “few signs that mortgage rates will substantially increase in 2021.”
San Diego’s economy is looking up in 2021 as employment has gone up 0.7% from 2019, recovering significantly from the effects of the pandemic in 2020 according to the Employment Development Department. With more people feeling more secure in San Diego, there will be more people looking to buy a home, further perpetuating San Diego’s not having enough supply to meet their demand. Additionally, the political landscape will have an impact on the housing market in 2021. Biden is looking to boost homebuyers and builders with his proposal to give first-time buyers a tax credit of $15,000 (CNBC). Biden’s proposal also encourages the construction of single and multifamily housing, giving hope for an increase in houses on the market in 2021.
As the world adapts to life at home, potential buyers are looking for homes that will be suitable for their family’s needs. There has been an increase in demand for houses with a home office, spacious backyard, garden, and areas where families can spend time together without feeling crowded. With more families working from home, a home office, as well as space for their kids to learn remotely, has become a high priority for homebuyers. Additionally, today’s homebuyers are looking to move to the suburbs as uncertainty about COVID19 and a potential lockdown lingers on their minds. San Diego offers homes that are spread out and situated in less congested areas, making it a sought after option during these unprecedented times.
The pandemic has also paved the way for digital home-buying experiences. You can now take the home shopping experience virtually through 3D home tours. Virtual reality home viewings have grown in popularity since the beginning of the pandemic when in-person home tours were not possible. The shift to digital home buying and selling will create long-term changes for the real estate industry. In fact, the new tools buyers have access to could change the seasonal patterns of home buying. Buyers may find more comfort in “visiting” houses at their leisure without having to drive anywhere to do so, making the adoption of real estate technology a change that is here to stay.
So, why does the housing market look favorable for San Diego in 2021? Firstly, housing prices are predicted to appreciate between 6% to 8% in 2021, which is great for sellers. There will always be a market for San Diego home sellers in 2021, but it will be competitive for homebuyers. According to the San Diego Union-Tribune, even homes prices between $2 million to $4 million and were estimated to sell in 277 days in late 2019, can sell within 109 days by the end of 2020. Though buying a house is a big decision, it could also be a good investment with a significant return so long as the market is in your favor. Property in San Diego continues to be sought after and if you’re a seller waiting for the right time, now just might be as good as any.