In a normal market, there would be 6,000 to 8,000 homes for sale. But currently in San Diego, there are about 2,000 homes on the market, according to San Diego Multiple Listing Service.
That's driving up prices, realtor Voltaire Lepe said.
"What I've seen is just affordability going way down," he said. "A lot of my buyers cannot afford the home prices, and they're either getting downsized or they're just getting completely taken out of the market."
High housing costs, including rents, are partly to blame for San Diego's high inflation, University of San Diego economics professor Alan Gin said.
“That's helped drive up the cost of living," he said. "On top of that, we also have among the highest electricity rates in the country, and they're rising rapidly.”
That's something Alexis, who did not want her last name used, and her boyfriend, Nathanial Adkins, know full well. They are renting right now, but want to eventually buy a place of their own.
“We're looking at the renters' market right now, and one-bedrooms are almost $2,000," she said. "So thinking about buying a house is kind of hard when you can't even afford, barely, to float by and pay your rent.”
According to personal finance company WalletHub, San Diego has the fourth-worst inflation rate in the nation. The company used changes in the Consumer Price Index for its evaluation. CPI is a widely used measure of inflation.
Even for people who could afford to buy, it might still be cheaper to rent. According to the latest study by Construction Coverage, an industry trade news site, it costs 113.6 % more to buy than to rent in San Diego.
Lepe said the median price of a home in San Diego was $840,000, making the monthly mortgage payment, with 7% interest, about $6,200.
“You have that option to buy, $6,200 payment, or you could rent that same home for about $4,500," he said. "So the difference is $1,700 that a renter would be saving on a monthly basis.”
The Federal Reserve has taken steps in recent months to cool inflation, including raising the interest rates, but that hasn't stopped inflation from rising.
"The latest report that came out this week ... showed that inflation ticked up a little bit compared then to the previous month," Gin said. "So a little bit of a concern there. But I anticipate that inflation will going to be lower in 2024 compared to 2023."
While adding more housing stock to the market might dampen inflation in San Diego, Gin said that, in the long term, it might not make a difference.
"Unfortunately, that might just make it more attractive for people to live here and that might cause more people to want to live here, which would just get us back in the same situation," Gin said.
