Due to San Diego’s many employment opportunities, welcoming community, and exceptional quality of life, our population is growing.
It’s no wonder San Diego has been attracting an influx of new residents—many of those coming from Los Angeles (top in-state origin) and Seattle (top out-of-state origin). In fact, 6,804 new residents moved to San Diego in Q2 of 2022 and that rise in demand meant San Diego homes now spend 10 days fewer on the market than homes for sale in the rest of the country. What does this recent inflow of new residents mean for San Diego homeowners? Let’s break it down:
Home values will rise as demand increases
Some had assumed the San Diego housing market would crash due to high interest rates making monthly mortgage payments unaffordable. And while these factors have—unfortunately—priced out many, demand remains high from those who can afford these rates. Specifically, populations from places that have a higher cost of living (Los Angeles and Seattle) see San Diego as an attractive place to settle given that San Diego housing costs are 9.7% less than Seattle and 6.8% less than Los Angeles.
As San Diego grows in popularity, home values will rise until the supply of new homes can keep up with demand. According to Freddie Mac, “In markets where demand is growing but housing is in short supply, the result is a speculative boom in home prices.” This boom is leading to a rise in value for those who already own property in San Diego.
This is great news for homeowners who are eager to see their investment appreciate, but it does lead to some complications for those who decide to sell but who also want to remain living in San Diego. A recent article on Curbed.com discusses some frustrations experienced in Boise when an influx of Los Angelenos moved to their state: “Local homeowners can get a great price when they sell their homes, due to recent appreciation, but trading up to accommodate a larger family becomes more challenging.”
San Diego homeowners might face a similar challenge to those in Boise. Though their home values have increased (on average) $300,500 (or 52.3%) in the last five years, that net gain doesn’t necessarily mean they will get a 52% larger house if they decide to use their accrued equity to purchase another home. Rather, those who stand to get the most out of the booming home prices will be those who are looking to downsize, move to a less expensive region, or turn their equity gains into rentals or investment opportunities.
Those who do plan to sell and then relocate to a new home within San Diego County will want to understand the options available when selling a home and buying a new one at the same time. Inventory is still low and demand is high, but a good agent can be an asset when navigating the challenges of this dynamic, and can provide you with leverage in the negotiation process that will help your offer be successful.
New residents coming from Los Angeles and Seattle
Many of those moving to San Diego are coming from Los Angeles and Seattle, bringing with them the skills and life experiences unique to those regions. The largest employment sectors in Los Angeles’ economy are international trade, entertainment, aerospace, technology and fashion/apparel, whereas Seattle’s population is comprised of jobs in service, design, and clean technology companies.
With San Diego’s economy driven by defense/military, tourism, international trade, and research/manufacturing, it is likely that those coming from Los Angeles and Seattle will have skills that complement San Diego’s tight, skills-heavy job market. In fact, San Diego’s unemployment dropped to 3.1% in June 2022, and, overall, California’s unemployment hit record lows in July—down to 3.9% and 84,800 new jobs added overall—so individuals moving here from elsewhere (even out of state!) will likely have no trouble finding work.
Recent data from the U.S. Bureau of Labor Statistics found that San Diego was #2 in the nation for job growth with 8.3% growth in the last 12 months and #23 in the nation for a combination of factors including job growth, job competition, and housing affordability.
Since unemployment in San Diego is .8% lower than the rest of the state and .4% lower than in Seattle, the region is an attractive place for those wanting a strong economy and opportunities for employment might be one of the reasons why 10% of millennials moving to San Diego are coming from LA where unemployment is 1% higher—4.9%.
Increased demand for services
According to this report from the Global Future Council on Migration, anytime more people move to a region, it places “demands on urban infrastructure and services in both the place of origin and the place of destination. Shifts in demand occur in housing, childcare, power generation, shops, roads, hospitals, doctors, amusement parks, schools, public transport, police, telephones and employment, among others.” This might be detrimental if a city’s infrastructure has demonstrated any inadequacies, but the San Diego City Council recently passed measures to strengthen San Diego’s infrastructure, making funding available for necessary improvements. According to Mayor Todd Gloria, “With Build Better SD, we’ll be able to prioritize projects—libraries, streets and other public spaces—where the need is greatest and get projects across the city completed faster.” The mayor’s plan involves major investments in water, sewer and stormwater infrastructure as well as “smooth streets and great parks and libraries in every neighborhood."
Funding for these projects will also contribute to more job opportunities, revenue for local businesses, and a higher quality of life for all residents. Additionally, future funding will be available as more folks arrive in San Diego, pay property taxes, and contribute to the community. According to Chris Van Gorder at Scripps Health, “San Diego will continue to attract new residents as long as we retain businesses and remote workers.”
The need for more housing opportunities for moderate income households
Because so many of those who are moving to San Diego are highly-skilled, high-income workers, Alan Gin, associate professor of Economics at USD warns, “We are fast becoming a ‘boutique’ economy accommodating the creative and professional classes, the wealthy, and the tourists... our region is increasingly inhospitable to families of moderate income. Not much can change that, although we must address the needs of those front-line workers who service others.” A thriving local economy requires accessibility and opportunities for those of diverse backgrounds and income levels and so availability of affordable housing will be needed in the near future to accommodate those working in the retail, service, and hospitality industries.
Business writer Patrick Sisson surveyed residents of Boise when that city saw an influx of new residents. He found, “The most important issues for residents included housing affordability, transportation and the lack of public transit options, [and] environmental preservation…” Though San Diego is hardly experiencing growth at the level of the Boise boom, these factors should be considered in order to maintain San Diego’s quality of life. The city’s $808.9 million Capital Improvements Program seems to be doing just that. It’s the largest infrastructure investment in the city’s history.
“I am proud that this mayor and council are getting to work to fix our roads, parks, libraries, and more so that we remain America's Finest City for generations to come," says Councilwoman Marni von Wilpert.
Wanting to take advantage of San Diego’s real estate opportunities?
Whether you’re buying or selling, The Cassity Team is eager to help you navigate the changing market. Schedule a call with us today and let us answer your questions.
Want more local insights and tips on moving to San Diego? We can help. Schedule a call with us to start your home ownership journey today.