San Diego Market Update
February 2023
San Diego Sees 7 Straight Month's of Price Declines
San Diego’s median home price finished the year with its 7th straight month of price declines, ending the year almost $100,000 below its peak earlier in May of 2022. This includes all single family homes, townhouses, condos including new construction and resales. Clearly the sales market has cooled off since May. Not only have prices fallen, but there are the lowest number of properties on the market since January of 2019.
We have also seen the days on market average rise dramatically from a low of 8 days, to a current high of roughly 30 days. This recent article from the UT has some great opposing opinions, one from a recent Goldman Sachs article that is referenced, the other being from local real estate analysts. It will be interesting to watch how the sales market plays out over the next year. Interest rates are also expected to continue rising as well
Housing as a ‘Human Right’ Declared in San Diego
If you recall, I had previously mentioned that the city was bringing a resolution to vote regarding a new stance on housing back in our October 2022 issue. In late January, the city voted unanimously to declare that housing is a “fundamental right and reaffirms its commitment to providing more housing and services geared toward putting a roof over the head of every San Diegan.” While legally the declaration does not mean much, the fear is that this is going to have a major impact on how San Diego creates and addresses legislation surrounding housing.
The collective fear of rental property owners is that the need to house people becomes a problem for them to bear instead of the City or State. In my opinion, this is likely to set the stage for future tenant protections including the city’s latest and new Tenant Protection Framework
San Diego’s New Proposed Tenant Protection Framework
With the City’s recent declaration that housing is a human right, we are already starting to see effects in proposed legislation
In early 2023, the City will vote on a new set of Tenant Protections. Here are some of the most controversial aspects of the ordinance:
- A minimum of three months rent must be paid to the tenant if you move back into your own home
- Bans owners from evicting a tenant for using the rental unit illegally
- Just cause required on the first day of tenancy
- Delays “at-fault” eviction notices by an additional 7 days
- Will induce property owners to violate with federal and state fair housing laws by requiring owners/managers to ask about protected class status
- Additional red tape when an owner decides to exit the rental market
There is also a link to the full addendum from the Mayor’s office in the link above. This would be incredibly detrimental to rental property owners, especially the ‘mom and pop’ landlords. The tenant protection groups are really lobbying hard for this and landlords are definitely fighting an uphill battle. I’d strongly recommend reaching out to your local council member to voice your concerns. Here is a link to your local elected officials: San Diego City Council Members
If you are unsure of your district, here is a district map from the City: District Map
January 2023
Potential Renter Protections Proposed by Mayor Todd Gloria and City Council President Sean Elo-Rivera
In early December, Mayor Todd Gloria and City Council President Sean Elo-Rivera proposed new renter protections that would increase San Diego’s tenancy protections and potentially provide stricter rules surrounding no-fault evictions. The goal of the protections are to increase tenant rights while still appeasing property owners. Data shows that more and more people are falling into homelessness. This ordinance aims to prevent that.
Some of the proposed changes include:
- bringing San Diego’s tenancy laws into sync with California’s Tenant Protection Act of 2019 (AB 1482)
- an increase in relocation assistance for tenant’s who are evicted in good standing (e.g. a no-fault eviction)
- tenant protections outlined in San Diego’s Just Cause ordinance would apply day 1 of the tenancy (currently applies 2 years into tenancy)
- Seniors and disabled residents who receive no-fault move-out notices would have additional time to find new housing
- Tenants who receive an at-fault eviction notice would be given more time to remedy violations
The city is expected to vote on the ordinance in early 2023.
San Diego Housing Market Expected to Cool Throughout 2023
According to Redfin, the San Diego housing market will continuing slowing in the new year. Markets that experienced all-time highs through the pandemic will now see the biggest slowdowns. In May 2022, San Diego reported a 30% annual price increase; that number is now closer to 8%.
In the rental market, prices are expected to gradually decline. While we aren’t seeing steep drops like we are with the sales market, seasonality combined with inventory is resulting in lower prices than we saw a year ago. 20 and 30-somethings are choosing to rent longer than they used to, so demand is still strong.
Have questions? I’d love to hear from you! Call me anytime to discuss.
Adam Manly
Business Development Manager at Good Life Property Management
858-519-5199
DRE #01953442
December 2022
San Diego Sees Decreased Demand for Short-term Rentals Outside Mission Beach
You may recall that earlier this year, short-term rental laws for San Diego changed. The new ordinance stated that the new total of allowed short-term rentals would be roughly 5,400 units, down from almost 13,000. It would also cap the number of short-term rentals available for more than 20 days per year to 1% of the city’s housing units.
The allowance is different for Mission Beach. Their cap 30% of available units for that area only (around 1,080 of its total inventory). This is due to high demand and popularity with vacationers.
However, the applications received totaled less than half of the allowed number, meaning that a lottery for San Diego rentals is not needed at this time. In light of the lack of demand, the city will be extending the application deadline. It is expected to conclude once the maximum units allowed has been reached.Mission Beach, however, will still require a lottery. Lottery results are expected no later than December 16th, 2022.
One theory as to why the application threshold wasn’t reached is the complexity of the ordinance. Between the different tiers, the potential for a lottery, and lengthy application process, property owners may have decided to sell or rent the property long-term instead.
Another theory is that the general appeal of owning and operating a short-term rental in San Diego has lost some of its appeal. Outside of hotspot Mission Beach, demand for whole home rentals in the city is lower. Owners may have decided that they upkeep of a short-term rental is no longer worth it.
San Diego Sees Home Price Drop for the 5th Month - The Biggest Drop in Southern California
Despite hitting an all-time high earlier this year, home prices have steadily declined in the last few months. The median home price dropped 2.2% from September to October, making it one of the biggest decreases in Southern California. Average prices are dropping the most in expensive markets like San Diego.
Despite this fact, inventory has wavered only slightly. Sellers would rather pull the home from the market and try again in the spring than decrease the price now. Sellers are likely used to the pandemic market where home prices skyrocketed. Prices are still up 5% year over year, but it doesn’t seem like much when it was up 17% in May 2022.
Have questions? I’d love to hear from you! Call me anytime to discuss.
Adam Manly
Business Development Manager at Good Life Property Management
858-519-5199
DRE #01953442
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