Forecasts and predictions for the San Diego real estate market in 2021 predict that home prices will continue rising due to stiff competition among buyers. And that makes sense, when you look at the current supply and demand situation across the San Diego housing market in 2021.
In short: There are plenty of buyers seeking homes to purchase in the area, but not enough properties to meet the demand. This is boosting prices and increasing competition among buyers in the San Diego metro area. Forecasts suggest that this could lead to ongoing home-price appreciation throughout 2021 and into 2022.
San Diego Housing Market Forecast for 2021
Housing market demand remains strong across the San Diego-Chula Vista-Carlsbad metropolitan area. All across the county, home buyers are competing for a limited number of properties for sale. In addition to boosting home values, this imbalance is making things challenging for some buyers.
Demand is particularly strong at the lower end of the price spectrum. In some parts of the San Diego-area housing market, the more affordable “starter homes” can be difficult to find in 2021.
Predictions for the San Diego housing market in 2021 suggest that house values could continue to climb over the coming months. In fact, we might even see double-digit price growth during 2021, as we did during 2020.
According to the real estate data company Zillow, the median home value for San Diego County rose by +13.5% over the past year or so. This was reported in March 2021, which means it dates back to March of 2020. As of mid-March 2021, the median home value in the county was around $690,000. San Diego housing market forecasts predict that the median price point for the county could climb above $700,000 later this year.
- In neighboring Carlsbad, the median home value was up to around $997,000 as of March 2021.
- Further south, in Chula Vista, the median price point was around $629,000 during that same month.
- Like San Diego, both Carlsbad and Chula Vista experienced double-digit price growth during 2020.
As mentioned earlier, most forecasts and predictions for the San Diego real estate market in 2021 suggest that prices could continue climbing for the foreseeable future. And that’s not surprising, when you take a look at supply and demand conditions within this highly competitive housing market.
So let’s talk about those factors next…
Tight Inventory Conditions Persist in 2021
The positive forecasts for San Diego’s housing market are largely driven by a lopsided supply-and-demand situation, which has existed for some time.
The San Diego area has always had strong demand from home buyers, because it’s such a popular place to live. With great weather and beaches and plenty of outdoor activities, it’s a popular destination city. What’s unique about the San Diego housing market right now, in 2021, is the inventory situation.
As of spring 2021, housing market supply levels in the area were hovering near historically low levels. This trend could persist throughout the year and into 2022.
According to a March 2021 report from Realtor.com, the total number of active property listings within the San Diego-Chula Vista-Carlsbad metropolitan area declined by -22.8%. That was nearly a one-fourth reduction in the total number of homes for sale, over the course of just one year. And supply levels were already depleted last year, before declining even further.
A separate report published in March by the California Association of Realtors showed that San Diego County had a very low “unsold inventory Index.” This refers to properties that are listed for sale but haven’t yet been sold. The unsold inventory Index for San Diego County dropped to a very low 1.8 in February 2021. That was down from 3.0 in February 2020.
These low inventory numbers mean that local home buyers will have to work a little harder to find a home that checks all (or even most) of their boxes. This is also a big part of the reason why San Diego housing market forecasts predict continued price growth through 2021 and into 2022. Tight supply conditions, combined with strong demand from buyers, is putting upward pressure on house values.
Buyer Beware: It’s a Fast-Moving Market
Anyone planning to buy a home in San Diego in 2021 should be prepared to hit the ground running. This is a fast-moving real estate market where properties tend to sell quickly, often with multiple competing offers.
According to the California Association of Realtors report mentioned earlier, homes listed for sale within San Diego County spent a median of just seven days on the market during February 2021. That was down from a median of 12 days a year earlier, in February 2020. Going into the spring of 2021, the housing market in San Diego County has one of the lowest median “days on market” among California’s 50+ counties.
Of course, all of these things are connected. Real estate market forecasts for the San Diego metro area in 2021 predict that home prices will continue climbing. This is largely due to the constrained inventory situation mentioned above. There are plenty of buyers in the market looking for homes, but not enough properties to go around. This leads to bigger and bigger offers, which pushes house values north over time.
Frequently Asked Questions
We tend to receive a lot of emails from potential home buyers who are researching their local real estate scene. Here are some frequently asked questions about the San Diego area housing market in particular.
Is 2021 a good time to buy a home in San Diego?
There are a lot of personal considerations a person has to make before buying a home. But from a market standpoint, 2021 could be a good time to buy a house in the San Diego metro area.
In fact, buyers who postpone their purchases until later in 2021 or 2022 could pay a price for their hesitancy. House values are expected to continue climbing (as mentioned below). So a strong case could be made for making a purchase sooner rather than later.
Additionally, mortgage rates were still hovering in the 3% range, as of March 2021. But some forecasters expect them to creep upward over the coming months. This too could add a sense of urgency for home buyers in the San Diego area.
Will home prices keep rising this year?
The answer is, probably.
No one can predict future real estate market trends with complete accuracy. But current forecasts and predictions for the San Diego housing market in 2021 suggest that house values will continue to appreciate through this year and into 2022. And that’s a pretty safe bet, when you consider they rose by double digits during 2020.
More to the point, the supply-and-demand imbalance that led to big price gains over the past year are still in place. In fact, inventory levels have declined since 2020. So we will continue to see strong upward pressure on home prices across the San Diego metro area. Prices within this housing market will likely continue rising for the foreseeable future.
Is San Diego more of a buyer’s or seller’s market in 2021?
Due to the lack of inventory and strong demand mentioned throughout this article, San Diego is clearly more of a seller’s market in 2021.
Buyers who are serious about purchasing a home in this highly competitive market will want to make a strong offer right off the bat. It’s not the kind of real estate scene where you would want to “lowball” the seller by coming in below their asking price. If the listing price is reasonable based on recent sales activity, that’s probably where you want to start when making an offer. That’s the standard “protocol” in a seller’s market, and San Diego currently falls into that category.
Disclaimer: This article includes forecasts and predictions relating to the real estate market in the San Diego-Chula Vista-Carlsbad metropolitan area. Such predictions are the equivalent of an educated guess and should be treated as such. No one can predict future economic or housing trends with complete accuracy, nor do we claim to have such an ability.