Like much of the state, San Diego County never fully recovered from the 2008 recession and financial crisis before the recession, financial crash and pandemic slammed the region in 2020.

The economic response to COVID-19 and the underlying recession caused record job losses in 2020, which are very gradually being recovered. Still, record-low interest rates maximized buyer purchasing power and prices in 2020-2021, with homebuyer fear-of-missing-out (FOMO) on a dwindling MLS inventory also fueling home prices.

Today’s bubble market has reached a peak, to feel downward pressure in 2022 from the coming wave of forced sales following the recent expiration of the foreclosure moratorium and buildup of forbearance exits. Without a full jobs recovery, the short-term government efforts to prop up the economy have merely put off the inevitable decline. San Diego’s housing market will likely begin a consistent recovery around 2024 with the return of jobs. 

View the charts below for current activity and forecasts for the San Diego housing market.

Updated January 18, 2022. Original copy posted March 2013.

Home sales volume slows

Chart update 01/18/22

2021* 2020 2019 2003: Peak Year
San Diego County home sales volume 49,000 42,300 40,100 60,800

42,300 home sales closed in San Diego during 2020, amounting to 2,100 more homes sold than in 2019, an increase of 5%. For perspective, this small increase still leaves San Diego 50% below peak 2003 sales numbers, but it exceeds the statewide average annual increase of less than half a percent. As of November 2021, home sales volume is on track to end the year 15% above 2020.

Home sales volume in San Diego County saw its last significant increase in 2015, which was 12% higher than 2014. This boost was partly due to lower mortgage rates in 2015 and to the area’s relatively swift jobs recovery. Since then, sales volume as continued at a relatively flat-to-down rate.

The stagnant sales volume of the past decade can be attributed to a lack of end users who have yet to return to the market in significant numbers. Total sales volume in 2016 was just 1% above 2015. Sales volume slowed in 2017, following the increase in mortgage rates at the end of 2016. This slowing continued into 2018, with 2018 sales volume 7% below a year earlier. Sales volume remained flat in 2019.

Don’t expect San Diego’s home sales volume bounce to continue in 2022. The job losses stemming from the recession and pandemic have pulled many would-be homebuyers and sellers from the market. Those jobless homeowners with mortgages have found themselves delinquent, though thus far have remained in their homes due to first the now-expired foreclosure moratorium, then forbearance plans. But as these forbearance programs gradually expire, these homeowners will find themselves heading toward a forced sale, saved from foreclosure due to the high levels of home equity achieved in 2021.

Expect sales volume and prices to bottom around 2023-2024, when homebuyers will return in greater numbers to push the housing market to its next stable recovery, expected to begin around 2024-2025.

Turnover rates are up: good for sales

Chart update 09/08/20

2018 2017 2016
San Diego County homeowner turnover rate 7.6% 9.4% 9.0%

San Diego County renter turnover rate

22.5% 23.6%

The percentage of San Diego County homeowners and renters who moved in 2018 fell back from the previous year. This trend echoes other regions of the state, which saw turnover decline in 2018 following a brief burst in 2017. Turnover rates for both owners and renters still remain well below pre-recession levels.

Lower turnover rates are indicative of cash-strapped households that simply cannot afford to move, whether they are homeowners or renters. When turnover is low, home sales volume is hindered.

While the trends are similar to the rest of the state, the magnitude of decline in turnover rate in San Diego County has not suffered as much compared to the rest of Southern California. This is partly due to a better jobs outlook and San Diego’s large military population, which traditionally experiences high turnover. Agents can gain an “in” with this population by familiarizing themselves with the various benefits available to military renters and homeowners such as Veteran’s Administration (VA)-guaranteed and CalVet mortgages, then advertising themselves as experts.

Related articles:

Servicers must assist underwater military members to relocate

Foreclosure of service members’ property prohibited during nine months after service

Homeownership rebounds from bottom

Chart update 01/18//23

Q3 2021
Q2 2021 Q3 2020
San Diego County homeownership 55.0% 51.6% 61.5%

San Diego County’s homeownership rate followed the general statewide and national trend of decline in the years following the Millennium Boom, bottoming in 2016 at 50.7%. In contrast, homeownership peaked at 63% in 2006 in San Diego County.

The homeownership rate in San Diego County has historically been comparable to the rest of the state, at 55.0% in Q3 2021. The California average homeownership rate was slightly lower, at 54.4% in Q3 2021. When home prices adjust downward later in 2022 due to the expected uptick in inventory, the homeownership rate won’t rise significantly until homebuyers regain confidence in the housing market, returning in larger numbers in the years following 2023.

Home prices at their peak

Chart update 01/18/22

Oct 2021 low-tier annual change Oct 2021 mid-tier annual change Oct 2021 high-tier annual change
San Diego County home pricing index +20% +22% +28%

The price of housing in San Diego County has skyrocketed in the past year, particularly in the high tier. Lower mortgage rates free up more of a buyer’s monthly mortgage payment to put towards a bigger principal. Thus, San Diego’s high home prices continue to find fuel from the historically low interest rates of 2020-2021, translating to increased buyer purchasing power. However, this boost won’t last for long, as interest rates have begun to inch higher heading into 2022, turning purchasing power negative and decreasing homebuyer urgency.

In 2022, home prices will begin to feel the impact of record job losses and months of built-up delinquent inventory, headed for forced sales following the buildup of forbearance exits. The overall home price trend for the next couple of years will be flat-to-down, the result of job losses and lower sales volume. As during the 2008 recession, the drop in sales volume and prices will first be most volatile on the coast, before rippling outward to inland areas.

Multi-family construction leads the way

Chart update 01/18/22

2020 2019 2018
San Diego County single family residential (SFR) starts 3,700 3,000 3,200

San Diego County multi-family starts

7,000 5,000

Residential construction starts rebounded in 2020, rising 23% for single family residential (SFR) starts and 40% for multi-family starts. Until 2018, the recovery had been concentrated in multi-family starts, due to the increased demand for rental housing experienced during this recovery. Fueling this increased rental demand are:

  • a demand shift from suburban living to city dwelling by the youngest generation of homebuyers, Generation Y (Gen Y);
  • an increased resistance to homeownership following the housing crash; and
  • the higher barriers to homeownership due to the return of mortgage lending fundamentals which tightened mortgage lending.

Today, the general trend for SFR construction starts in San Diego County is still far below 2002-2004 numbers. The next peak in SFR construction starts will likely begin around 2023.  Even then, SFR construction starts are highly unlikely to return to the frenzied mortgage-driven numbers seen during the Millennium Boom.

Historic job losses erase years of gains

Chart update 01/18/22

Nov 2021 Nov 2020 annual change
San Diego County employment 1,460,600 1,395,700 +4.7%

Before end users can provide sufficient support for the housing recovery, they will need to acquire income in the form of jobs and wage increases. San Diego continues to outpace the state’s jobs recovery, which is good news for San Diego’s housing industry.

Unlike other parts of the state with less stable employment markets, San Diego surpassed the level of jobs held prior to the 2008 recession well before the 2020 recession set in. However, due to 2020’s significant job losses and their slow recovery, jobs are now 64,600 or 4.2% below the pre-2020 recession peak as of November 2021. This recovery is roughly in line with the statewide jobs recovery, which is 4.0% below the pre-recession peak. Expect a W-shaped recession in the coming months, with jobs rising and falling, not to enter a true recovery until around 2024.

Industry employment rises slowly

Chart update 01/18/22

Nov 2021 Nov 2020 annual change
Real estate


89,400 84,800

In the housing industry, construction jobs have gradually regained numbers over the past decade of recovery from the 2008 recession, nearing a full recovery. Likewise, the number of employed real estate professionals has remained low throughout the past recovery, rising slowly.

In 2020, both industries experienced a hit to job numbers, though both have bounced back fairly quickly compared to other industries. The real estate profession will not likely experience a sustained increase until the next confluence of buyers and renters (members of the Generation Y and Baby Boomer generations) converge on the market in the years following 2024.

Per capita income has recovered

Chart update 03/03/20

2018 2017 Annual change
San Diego County per capita income $61,400 $58,100 +5.7%
California per capita income $67,000 $63,900 +4.9%

The average per capita income in San Diego County is $61,400 as of 2018, the most recently reported Census year. This shows a fairly large average increase in income of 5.7% over the previous year. Income took a hit in San Diego during the 2008 recession, and it took three years for income to finally catch up to 2008 levels.

After factoring in an additional 10%-11% increase in income needed just to cover eight years of interim inflation, homebuyers in 2018 had only slightly higher purchasing power to buy a home or rent as they did in 2008 – all else remaining unchanged. Per capita income in San Diego County is slightly lower than the state average, and exceeds levels in the inland valleys by roughly 50%.

As long as income remains diminished across most job sectors, home prices and the price of rents are limited. This is due to the reality that buyer occupants ultimately determine selling prices in this economic environment  — buyers can only pay as much for a home as their savings and income qualify them to pay — nothing more, unless lenders and landlords want to take on more risky, less qualified individuals. The same fundamental truth is also applicable to tenants’ capacity to pay, which ultimately works to set the ceiling on rental amounts.

Expect per capita income to rise with increases in job numbers. When considering the jobs needed to cover population growth of one percent per annum in the years since 2007, employment numbers and income won’t drive demand for significant additional new housing until after the recovery from the 2020 recession.