Best Time to Buy a House in San Diego: Market Analysis & Tips

To say the San Diego housing market is "hot" would be a massive understatement. Rising home prices, competitive bidding, and low inventory are causing many prospective buyers to wonder: Is now the right time to buy a house in San Diego?

While we believe there are still plenty of options out there, we want to give you an honest and fully transparent look at the market so you can decide for yourself. Here, we'll give you an overview of the area’s current real estate trends and provide a few critical questions to ask yourself before diving headfirst into the market.

Current State of the Market

Time on Market: Currently, San Diego homes on the market sell within 15 days and receive an average of six offers.

Competition: The average San Diego home sells about 1% above the listing price. Competitive or "hot homes" (reasonably priced and in desirable locations) are selling for as much as 5% above the listing price.

Cost: The median home sale price is $921,753, up 8.4% from last year. Many of these homes sold above the listing price, with waived contingencies.

Homes Sold: 857 homes were sold in April, up from 787 in 2023.

Inventory: As of May, 2,903 homes were on the market, a 13.3% increase from April.

Current Interest Rates: Currently, a 30-year fixed-rate mortgage is at 7.06%

Considering the market’s current state, here are a few questions to consider before you start shopping for a new San Diego home.

Do You Currently Own a Home?

If you already own a home and have a low-interest rate locked in, you may want to proceed with caution. At a current 7.06% interest rate, you would likely face a significantly higher interest rate than your current mortgage; this could increase your monthly payments and overall cost of borrowing.

However, we also realize that some prospective buyers have outgrown their homes, simply need to relocate, or may have the finances to comfortably purchase a new home at a higher interest rate.

Are You Feeling Competitive?

Homes in San Diego sell for as much as 5% over the asking price and receive as many as six offers. So, if you find a home you love, you may have to offer more than the listing price and compete with other bidders. You may have to waive contingencies or offer a higher price to stand out.

Are you Ready to Stay in One Place?

While San Diego home prices are rising at an unprecedented rate (which means your property value could appreciate significantly), it is still essential to consider your long-term plans. Investigating closing costs and realtor commissions could take time to offset the cost of buying and selling a home.

You should also consider capital gains taxes. If the home appreciates and you sell it before owning it for two years, you may face capital gains taxes on the profit from the sale.

Are You Financially Ready?

A mortgage is a big commitment. Down payment requirements vary by lender, but you should expect to put down 3.5-10% on your new house. With the current median San Diego home selling for $921,753, that down payment could be anywhere from $32,261 to $92,175. In addition to the down payment, you'll also need to budget for closing costs, which typically range from 2-5% of the loan amount.

What Does Your Credit Score Look Like?

In general, lenders prefer credit scores of 740 and above. If your credit score is in the 500s-600s, you could still qualify for a loan but may have fewer lending options and may have to pay a higher interest rate.

Competitive Markets Demand Competitive Realtors

Thinking about buying in San Diego? Then you will need a trusted ally by your side.The Selby Team understands the local market and can give you the insight and guidance you need to stay competitive while making informed decisions that fit your lifestyle and goals. Connect with us today to get started!