2013 Housing Market Forecast

The San Diego real estate market is poised to see steadily increasing home prices and sales volume throughout 2013 due to:

- Positive job growth in technology and communications sectors: 20,300 new jobs in 20121 will bring more buyers into the area.

- New confidence in the economy will encourage builders to increase housing starts.

- Current low inventory and high buyer demand will push prices upward throughout the year.

- Mortgage rates are low now and will increase only slightly in 2013.

- Foreclosure filings are decreasing rapidly.


Sales Prices and Sales Volume

Prices and number of sales are recovering from the lows experience since 2007. City-wide, San Diego saw an overall increase in home prices in 2012 of 0.2%2. January prices were up for the tenth straight month and sales volume was up for the 18th time in a row, creating the best sales month in six years3.

Drilling down, Central San Diego’s median sales price moved up 20% year over year (from January 2012 to 2013), East County median sales rose 15.1%, North County Inland was up 14.7%, North County Coast increased 12.9% and South County came in at 9.1% over 2012. Investors and those buying vacation homes represented 30.7% of the market3,6

As can be seen in the Union Tribune table below, the Southern California housing market is experiencing strong growth both in numbers of sales and in price increases over 2012. San Diego County was second only to Orange County in numbers of sales and to Riverside County in median sales increases.

January 2013 - Southern California housing market3

All homes







Los Angeles





















San Bernardino







San Diego





















It is likely that these trends will continue, thus, each quarter of 2013 should beat its comparable quarter in 2012.


Luxury Real Estate Prices and Sales Volume

“A rush to complete sales of higher-priced homes by the end of (2012) to avoid an expected increase in capital gains due to the “fiscal cliff” pushed up sales of homes (in California) priced $500,000 and above by nearly 42 percent from December 2011,” said California Association of Realtors (C.A.R.) President Don Faught4. This sales increase is not expected to continue in 2013; Forbes indicates the new 20% capital gains tax rate for high income individuals5 will discourage further gains seekers.


Inventory Levels

Housing starts remained flat in 2012. As confidence in the economy builds, 2013 should once again see growth in construction starts.

Redfin’s Real-Time Home Price Tracker (December 2012) states that California’s inventory is the worst in the U.S. and San Diego’s inventory is down 56.7% over December 20116.This situation has had a dampening effect on strong increases in sales volume; however, it is still expected that lower inventories will drive increased competition for properties and move prices upward7.

According to the C.A.R., San Diego’s Unsold Inventory Index for existing, single-family detached homes fell to 3 months, down from 5 months in December 2011. The median time on the market was 43.1 days, down from 61.8 days in December 2011; a bit higher than California as a whole with an unsold inventory index of 2.6 months and a median time on the market of 38.1 days in December 20125. Again, increased demand is driving a more rapid turnover of properties than in 2011 -- good news for sellers8.



As reported in the Union Tribune, Data Quick indicates that 40.9% of the current market is distressed properties -- foreclosures or short-sales3. Foreclosure activity is now decreasing due to the new California Homeowner’s Bill of Rights which took effect in January. Foreclosures fell sharply from December to January 2013, a 39.5% decrease in filings9, which is expected to continue throughout 2013.


Mortgage Rates

The California Association of Realtors recently commented on rates in the state:“the 30-year fixed-mortgage interest rate averaged 3.35 percent during December 2012...down from 3.96 percent in December 2011, according to Freddie Mac. However, adjustable-mortgage interest rates edged down in December, averaging 2.54 percent...down from 2.79 percent in December 20115.” It is anticipated that 30 year fixed-rate mortgages will inch back up to 4% during 2013, remaining relatively low10.



1Metro Study Report, February 5, 2013 (http://www.metrostudyreport.com/category/san-diego-market)

2Forecast-Chart.com site (http://www.forecast-chart.com/estate-real-san-diego.html)

3Union Tribune San Dieg site (http://www.utsandiego.com/news/2013/feb/13/january-housing-price-sales/)

4California Association of Realtors site (http://www.car.org/newsstand/newsreleases/2013releases/decembersales)

5Forbes site (http://www.forbes.com/sites/greatspeculations/2013/01/09/post-fiscal-cliff-tax-tips-for-traders/0

6RedFin’s Real-Time Home Price Tracker report February 15, 2013 (http://blog.redfin.com/blog/tag/real-time-price-tracker)

7The Daily Transcript Roundtable discussion (12/26/12)

8San Diego Source, The Daily Transcript http://www.sddt.com/Reports/reports.cfm?RID=899#.URw8lI41fzI

9Mortgage News Daily article, February 14, 2013 (http://www.mortgagenewsdaily.com/02142013_realty_trac_foreclosures.asp)

10California Association of Realtors Market Forecast site (http://www.car.org/marketdata/marketforecast/)