Is San Diego Real Estate Too Expensive in 2024
As we draw closer to the end of 2023 with only 2 months left in the year lots of San Diegan’s are concerned about how expensive it is to live in San Diego. In 2024 they will be making decisions to buy a home, rent a home or relocate out
of San Diego. Whether you’re renting or buying a home, San Diego is an expensive place to live. I’ve lived in San Diego for over 3 decades and the very first thing I heard about San Diego was that it was very expensive. Things like, you get paid in sunshine dollars here. Real estate prices compared to average incomes were still very expensive back then. And it hasn’t changed.
What has changed is interest rates. Interest rates were very low over the past several years which drove home prices up. Not just in San Diego but throughout the country. Recently rates have risen sharply to over 7% and close to 8% and may even go higher in 2024. Even with higher interest rates the home and condo prices have continued to rise. Coupled with low inventory and buyers wanting to own real estate even at a higher payment, the prices have continued to climb in San Diego. There may be a cooling off on buying and a leveling off or lowering of real estate prices in 2024 but we’ll have to wait and see. Many buyers are moving to San Diego after selling a property in another part of California or another state. They have large down payments which will lower the monthly mortgage payment because they will need to borrow less to purchase the property.
I think the new norm for some occupations, being able to work from home, has allowed people to move where they want to live, instead of living where they must. I would say that San Diego is on the top 10 list of places that someone who can work from home would choose to live if they could afford it. This means more demand for real estate for people who can work from home and make enough income to live in San Diego.
If you look at San Diego on a map it’s very limited as far as how much it can grow. Over the past 70 years or so there has been plenty of farmland to expand into and build master planned communities. Communities like Clairemont in the 1950’s, Carmel Valley in the 1980’s and 1990’s, Carlsbad in the 1990’s and 2000’s, Chula Vista in the 1990’s up to today and many other master planned San Diego communities. There are no large tracts of land any more that are a reasonable commute in San Diego County. There are small infill projects and the tapering off of large projects like Otay Ranch in Chula Vista, but no more large areas to turn into new homes.
On the map, San Diego has the Pacific Ocean to the west, Camp Pendleton Marine Corps Base to the north, Mexico to the south, which are all unbuildable for San Diego expansion. The only direction to build is East County San Diego where there are still large tracts of land and open space. Much of this open space is zoned for large parcels with one home on it and not zoned for large scale master planned communities and condominiums and townhomes. Even if there were new master planned communities in far East County San Diego, people may not want to drive an hour or two get back and forth to work. They may not want to live that far from Downtown San Diego, the beaches, the parks, the museums, the restaurants, the Zoo, Sea World, Balboa Park, etc. all the things you live in San Diego to enjoy. What does this mean, it means that San Diego real estate gets more and more valuable.
New zoning laws in California have allowed for ADU’s, Accessory Dwelling Units, to be built on most Single-Family Properties throughout the state. This means that you could potentially turn one single family home into 3 units. The main house, an ADU, and a junior ADU. There is also the ability to lot-split some properties and build another home on it with an ADU and junior ADU. Density is on the rise and some neighborhoods are feeling this in a big way. More people living in the same space that less people lived in historically. Noisier and parking is getting very hard to find in some areas. More congestion on the roads and less of a small neighborhood feel and more of a metro feel. This is basically just progress, but if you grew up in some of these communities or have lived there for a long time you feel like it’s changing too quickly and in a way that makes it not feel like the home you knew.
It's particularly hard if you’re a first-time home buyer in San Diego. You need to save money for a down payment and then with high mortgage rates you may find that what you can afford is not what you want. This happens a lot in San Diego. Like I said, it’s very expensive and high interest rates make it even less affordable. I think realistic expectations are important. For a first-time homebuyer you probably need to think small and affordable. You most likely will be in the price range of a condo and probably not in the most expensive neighborhoods of San Diego. You need to buy a property within your means and over time upgrade to a larger property until you can afford the home you really want in the neighborhood you really want to be in. It takes time and patience. Very few people can buy their dream home when they buy their first house. It’s a process that takes time, you need to build equity in your home or condo, sell it, buy a larger home or condo, gain equity, sell it, and then purchase the home you really desire. You can also decide San Diego is too expensive and move somewhere else, many people do that too.
If you’re active-duty military or a qualified veteran, you can use your VA Loan to buy a property in San Diego with no money down and ask the seller to pay closing costs. I’ve used the VA loan many times and it’s a great loan and an incredible benefit to having served in the US Armed Forces. San Diego has many Navy and Marine Corps bases, and The Lewis Team has helped hundreds of Active Duty and Veterans buy homes in San Diego. There are tens of thousands VA Homes in San Diego to choose from.
If you have just decided that you are ready to move out of San Diego and sell your house, you wouldn’t be alone. There are many people every year who sell their San Diego home, take their equity, and buy a home in another location or another state where the real estate prices and cost of living are far less than it is in San Diego. We’ve helped many people and families with this transition. Some home sellers walk away with enough cash from the sale of their home to purchase a home for cash in another state. This means no monthly mortgage payment on the property.
There is no crystal ball showing us what the future has in store for the San Diego Real Estate Market. We won’t know exactly what 2024 will bring until it gets here. One thing you can count on is The Lewis Team to be available to help with any real estate needs that you have. If you just want to get your home’s value, look at some property in San Diego, or just run a question by us, please give us a call.
The Lewis Team San Diego Real Estate Experts!