The San Diego Housing Market During a Recession and What to Do

Much of California had never fully recovered from the financial crisis and recession in 2008 before the COVID-19 pandemic and financial crash slammed the region. Home prices in San Diego are still steadily dropping. They recently saw their most significant drop since the Great Recession.

Real Estate Agents Say There Is No Housing Recession in San Diego

Everyone in real estate remembers the property crash of 2008. People are still recounting tales of the disaster, and professionals continually look for signs of a repeat. Nobody wants another disaster to catch them unaware.

There is talk of a housing recession in the county. However, real estate agents insist that it is not a housing recession. Instead, the housing market is stabilizing. That means homes with incredible views stay on the market for 30 to 45 days, the same as before the pandemic.

How the Housing Bubble Happened

A housing bubble happens when real estate prices go up too fast. The housing bubble in San Diego started in early 2020 with a strong job market, low-interest rates, and a limited housing supply. However, economic theory posits that a housing bubble is unsustainable. Eventually, it will end in a significant decline in prices.

A sharp price decline can cause hardships for people with recently purchased homes and those looking to buy a home. Yet, it would help to remember that prices eventually rebound since housing markets are cynical. So, some factors will always keep housing prices high in San Diego.

Reasons Why It Will Not Crash in 2023/2024

• A growing population
   

• Inflation and mortgage interest rates
   

• Real estate prices are still going up
   

• The job market is still strong

What a Recession Means for the Housing Market

An economy swerving toward a potential recession and soaring inflation have many people wondering whether purchasing a home is a good idea. Experts suggest that it could be, but it can be risky.

A recession does not necessarily mean an excellent opportunity to buy a house. It will depend on your financial situation. You may be in a perfect position to buy if you have an adequate emergency fund, flexibility in your budget, and sustained income security. Purchasing a house in a recession may be a good idea if you can find one you love for a price you can afford.

A recession usually means a sustained lull in economic growth and rising unemployment. Many homebuyers expect prices to drop, but that is not always the case. Numerous factors influence the speed and degree of a drop in prices. These include current versus historical median prices, potential buyers' debt levels, the home-buying population's age, and demographics.

How to Make the Right Home-Buying Decision in San Diego

Housing experts recommend a conservative approach. It is essential to be cautious about how you spend your money during a recession. Consider the following before you decide.

 

• Focus on your budget
   

• Establish your emergency fund
   

• Work with a lender
   

• Determine what is right for you
   

• Consider the own versus rent equation
   

• Be patient

Conclusion

Between July and August 2022, home prices in San Diego dropped 2.5 percent, the most significant decrease since July 2008. Many people know San Diego for its sky-high housing costs. However, real estate prices in the region are one of many on the drop. The entire housing market across the country is experiencing a slowdown.

For more about real estate tips, visit Blue Horizon Realty and Lending, INC, at our Escondido, California office. Call (760) 237-4092 to schedule an appointment today.