The San Diego real estate market is booming and I have a lot of people asking me questions about the market. Everyone wants to know who is buying homes right now, why are they buying, how are they buying, and where these buyers are coming from. Let’s dive in.
Covid has turned San Diego into a hot destination for home buyers. If you were to look at a map, the buyer traffic looks like the jet stream bring rain to Southern California. Buyers are leaving the Bay Area and heading south. At the same time this jet stream is taking home sellers from San Diego to places like Texas (which is having major cold snap as I write this post), Tennessee (ditto), and North Carolina. Let’s face it, I could name half the states in the US, but you get the point!
Buyers are landing in San Diego because their employers are allowing remote working. Who wouldn’t come here if they could afford it, and then their boss let them? These buyers are bringing their real estate experience with them. People from the Bay Area and Los Angeles are used to paying high prices, and they’ve brought that mentality with them here to San Diego!
While we are experiencing a migration of sorts, the San Diego economy was evolving before Covid as well. Institutions or higher learning like USD, UCSD, and SDSU are creating a talented workforce and companies are thriving in the area. We’re seeing bio companies, tech companies, startups, and more. These companies are offering great compensation and the workforce can afford to purchase real estate.
Another reason for the increase in homebuyers in San Diego is historically low interest rates. Just today I heard two different advertisements on the radio for 15 year fixed mortgages for less than 2% interest. That’s nuts! I know people who were paying interest rates in the high teens in the Carter years. Trying explaining this to them! When money is cheap, the dollar goes farther, and people can borrow more. Home buyers really purchase real estate based on an affordable monthly payment. If their $3,500 more payment can afford them a more expensive house, they’re going to take it. Basically, we have a situation where buyers are willing to pay more for a home because their borrowed money stretches further.
Prices will always come back to the supply and demand curve from Econ 101. A lack of supply, coupled with an increased demand for housing has created tremendous gains in property values in San Diego. As more and more people enter the housing market, looking for their oasis to quarantine in, they’re driving prices up and sprinting past previous record prices.