The San Diego County real estate market saw a major shift in 2022, as the red-hot housing market finally cooled. A rise in mortgage rates and declining affordability caused a slowdown in home sales and prices. Pending sales decreased 29.3% and closed sales were down 28.9% compared to the previous year. Despite a 7.5% increase in the number of homes available for sale, new listings decreased by 12.5%. Despite forbearance efforts, the percentage of distressed sales increased by 25.0% to finish the year at 2.0% of the market.
Home prices in San Diego County still saw an overall increase of 11.0% with median sales price reaching $900K. Single-family detached homes saw a 9.2% increase while single-family attached homes were up 14.9%. However, sellers received, on average, 101.2% of their original list price, a 1.7% decrease from the previous year.
As the affordability challenges continued, many prospective buyers and sellers had to step back from the market. Some buyers opted to move to smaller, more affordable areas or turned to the rental market, where competition and rental prices surged. Homebuilders also reduced production, further constraining the already limited supply of housing.
Looking ahead to 2023, economists predict many of 2022’s housing trends will continue, with home sales expected to soften and price growth to moderate. Inventory is expected to remain tight and greater variability between markets is expected, with some regions potentially experiencing price declines and other areas experiencing price growth. The outlook for the San Diego County real estate market depends on inflation, mortgage interest rates, and the broader state of the economy.
Sources: Realtors Property Resource and North San Diego County Association of Realtors HomeDex
Data as of January 2023 from Realtors Property Resource®
