The average home in San Diego is worth $975 000. This makes purchasing a home in this city a serious investment. And as it is with everything that demands your hard-earned cash, never dive head first without the market analysis.
Below, we have outlined the expected performance of the San Diego rental market in 2023 and what experts are saying about the 2024 forecast.
The San Diego Rental Market: An Overview
The San Diego rental market has been a rollercoaster for the past three years. But it was not until 2022 that the market saw a serious downturn.
Several factors had a hand in the position of rentals in the city. Some of the most common factors with an undeniable impact on the market in 2022 were the drop in the affordability index and the increasing prices of homes.
The affordability index in California dropped by 20%. The index refers to a citizen's ability to afford a home. The affordability index is informed by factors such as income and home prices, among other factors. The drop made homeownership a distant possibility for some citizens.
In 2022, higher prices of homes plagued the housing market. This resulted in houses staying longer on the market. This is uncommon for San Diego, where homes usually spend an average of 12 days on the market.
The Rental Market 2023 Outlook
The good news for investors and landlords is that the San Diego rental market is showing signs of recovery. It is important to note that a serious tug-of-war is happening between the rental and housing markets.
Lower Housing Prices
Though there is a bit of a debate concerning this reality, market estimations expected home prices in San Diego to drop. A study from UC San Diego actually predicts a 12% price decrease.
This argument is based on data analysis focusing on internet searches. But some experts still argue that price drops are unlikely in 2023.
As for the validity of this outlook, only time will tell.
Increasing Interest Rates
It doesn't seem interest rates on mortgages intend to come down anytime soon. This is not unique to San Diego, but the entire country.
These rates may also dampen the housing market, making home purchases difficult. And driving tenants back into the rental market.
Rent Prices Will Drop
The last year saw an increase in the multifamily home market. This new demand pressures realtors to lower prices to attract renters as the residential rental industry becomes more competitive.
2024 Rental Market Forecast
It is unlikely that the 2024 housing predictions will deviate from the current forecast.
Two factors that will probably continue to play a role in the housing market are the increase in San Diego residents and inflation.
We anticipate more people will flock to the city. This may affect prices as demand continues to increase.
And as far as inflation is concerned, San Diego was named the fourth city with the highest inflation in the country. So as far as inflation cooling goes, it is improbable.
Joining the San Diego Market
After the 2022 downturn, the San Diego rental market seems to be attempting recovery. Though it doesn't promise a smooth ride, but there appear to be some blue skies ahead for investors and realtors in the city.
At San Diego Property Management, we help owners maximize their properties. Whether you are a first-time investor or a seasoned pro, we have the industry expertise to assist you.
Contact us for a free rental analysis.