San Diego Real Estate Market Update – January 2023

Download full reports:

• Monthly Indicators
• Housing Supply
• Foreclosure Report (Lender-Mediated)

Monthly Indicators

2022 was a turbulent year for the US housing market, as inflation, soaring interest rates, and elevated sales prices combined to cause a slowdown nationwide. Affordability challenges continue to limit market activity, with pending home sales and existing-home sales down month-over-month and falling 37.8% and 35.4% year-over-year, respectively, according to the National Association of REALTORS® (NAR). Higher mortgage rates are also impacting prospective sellers, many of whom have locked in historically low rates and have chosen to wait until market conditions improve before selling their home.

Economists predict sales will continue to slow and housing prices will soften in many markets over the next 12 months, with larger price declines projected in more expensive areas. However, national inventory shortages will likely keep prices from dropping too much, as buyer demand continues to outpace supply, which remains limited at 3.3 months, according to NAR. Even if prices fall, many prospective buyers will find it difficult to afford a home in 2023, as higher rates have diminished purchasing power, adding hundreds of dollars to monthly mortgage payments.

Closed Sales decreased 46.2 percent for Detached homes and 53.9 percent for Attached homes. Pending Sales decreased 30.0 percent for Detached homes and 35.9 percent for Attached homes. Inventory increased 48.6 percent for Detached homes and 63.9 percent for Attached homes.

The Median Sales Price was up 2.3 percent to $869,900 for Detached homes but decreased 0.8 percent to $585,000 for Attached homes. Days on Market increased 60.9 percent for Detached homes and 95.2 percent for Attached homes. Supply increased 116.7 percent for Detached homes and 120.0 percent for Attached homes.

Housing Supply

In an effort to attract buyers amid slowing traffic and declining home sales, U.S. homebuilders have been increasingly reducing prices and offering sales incentives this year. According to the National Association of Home Builders, 36% of single-family homebuilders reported cutting prices as of last measure, with an average price reduction of 6%. Meanwhile, 59% of builders reported offering sales incentives, including price discounts, paying closing costs or fees, and offering free upgrades or price discounts, among others. For the 12-month period spanning January 2022 through December 2022, Pending Sales in the San Diego were down 29.0 percent overall. The price range with the smallest decline in sales was the $5,000,001 and Above range.

The overall Median Sales Price was up 10.8 percent to $820,000. The property type with the largest price gain was the Condos – Townhomes segment, where prices increased 14.5 percent to $625,000. The price range that tended to sell the quickest was the $1,000,001 to $1,250,000 range at 22 days; the price range that tended to sell the slowest was the $5,000,001 and Above range at 65 days.

Market-wide, inventory levels were up 53.2 percent. The property type with the largest gain was the Condos – Townhomes segment, where they increased 63.9 percent. That amounts to 1.3 months supply for Single-Family homes and 1.1 months supply for Condos.