With pleasant year-round weather and over 50 miles of pristine coastline, San Diego County real estate is highly sought after. Find out what makes the county a real estate destination for buyers and investors alike.
AN ECONOMIC OVERVIEW OF SAN DIEGO
California has a large and diverse economy driven by innovation-based and world-renowned industries. These include entertainment, aerospace, biosciences, and information technology.
The state’s economy accounts for more than 14% of the national GDP — the most out of any state as of 2020, according to the Gross Domestic Product by State: Fourth Quarter and Annual 2019 report by BEA.
Located in Southern California, San Diego County has a population of 3.286 million as of 2021. With prosperous cities and businesses, the county presents many opportunities to investors and entrepreneurs. The local economy is buoyed by cutting-edge industries and businesses as well as a skilled workforce.
Economic stability and growth trends in San Diego
San Diego’s diverse economic base offers some protection from the potential impact of a deep recession. While housing and food prices have gone up from three years ago, unemployment has remained low so far, according to the San Diego Union Tribune.
As the southernmost major metro area in California, San Diego County is home to a growing population, which increased by 0.1% between the 2019 and 2020 census estimates. It is the second largest county by population in the state and the fifth largest in the country based on 2019 estimates. The steadily growing population helps create demand for housing, goods, and services in the county.
Key industries driving the local economy
The economy is primarily driven by four base sectors:
- International Trade
San Diego County is also supported by software, electronics, telecommunications, Smart City technology, biotechnology, life sciences, and genomics. In addition to these major industries, the education sector also provides many career and research opportunities.
There are several school districts that serve the area, particularly the San Diego Unified School District, which is the second largest in California and supports the livelihood of over 15,800 employees. There are about 335 private schools within the City of San Diego alone.
The San Diego Association of Governments (SANDAG) predicts the economic sectors that did well during the COVID-19 pandemic – including innovation, finance, insurance, construction, manufacturing, and the military – will continue to do so in the foreseeable future. These sectors are also expected to grow at a steady pace, according to SANDAG’s The San Diego Economy: COVID-19 Impacts A Year in Review released March 2021.
Employment opportunities and wage growth in the region
According to University of California, Los Angeles (UCLA) forecasts during the COVID-19 pandemic, the California employment sector is expected to rebound faster than the national average with the loosening of restrictions. As California’s economy expands and more jobs become available in the following years, the labor force is also expected to grow. Now that more people have returned to work, consumer spending is expected to normalize and increase taxable sales revenue.
As for wages, low earning and middle wage workers in San Diego County make more than the state average as of 2021, according to Occupational Employment Statistics from the California Employment Development Department. However, the county’s high earners made less than the state average. Moreover, diminishing factors such as inflation and the San Diego real estate market can potentially reduce their overall buying power.
Impact of the military presence and tourism on the real estate market
The San Diego region features the largest concentration of US military in the whole world. This makes local military presence an important driver of the region’s economic health. In addition, San Diego County is a global travel destination with world-famous attractions. Millions of visitors support a robust tourism industry, with heavy spending on accommodations, services, retail, food and beverage, and other areas.
SAN DIEGO’S REAL ESTATE MARKET
Historical trends and recent performance of the housing market
Historically, the San Diego real estate market is highly desirable for its coastal setting, pleasant climate, world-class healthcare services, and stellar career and business opportunities in various industries.
San Diego County offers a wide range of housing options. These options range from luxury beachfront properties to modern condos and single-family homes. The market attracts buyers and investors of all backgrounds, including young professionals, families, and retirees.
Home prices and current supply and demand dynamics
Like many coastal areas in Southern California, San Diego County’s home prices have been on an upward trend over the last several years, although there have been fluctuations in home
prices. Home prices vary based on the neighborhood, property type, and current market conditions.
The demand for housing typically outpaces supply. Strong demand can sometimes lead to competitive bidding for the most desirable or best-priced properties, potentially driving up the final sale prices. Existing zoning regulations and limited buildable land for new construction may contribute to supply challenges.
Moreover, the growing tech industry has created increased demand for housing, particularly in cities and neighborhoods closer to tech hubs and research institutions. This demand can also contribute to rising home prices.
Rental market trends and potential for passive income
San Diego County’s attractiveness as a tourist destination has created demand for hotels, upscale rentals, and other forms of short-term accommodations. Some tourists may show interest in buying real estate as a vacation home or investment properties to be used as short-term rentals.
The region also attracts a vibrant student population with many new students coming to San Diego County each academic year. While many students decide to live on campus, others prefer to find housing away from university. This also helps sustain demand for rentals in the area.
THE ADVANTAGES OF INVESTING IN SAN DIEGO REAL ESTATE
There are many advantages to investing in San Diego real estate, including:
- Appreciation potential in the long term
- Attractive rental yields and cash flow opportunities
- Diversification and hedging against inflation
If you’re looking for an investment property in San Diego, work with a local expert who can help you choose a home with strong potential for passive income. They will help you evaluate the profitability of a property and provide guidance on acquisition.