Many industry groups released reports early in the year noting how 2024 departed from previous years in areas like construction and real estate. Most of these reports confirm trends people already knew: San Diego is expensive, commercial buildings are empty, and if things improved, it was by a small margin. Here’s a roundup of some of the most important data from last year.

Inflation tapering off

The latest data from the Bureau of Labor Statistics found prices in San Diego declined 0.1% between September and November of last year. Still, the Consumer Price Index for All Urban Consumers (CPI-U) was up 2.6% from November 2023. The cost of food continued to rise through the end of the year, especially food outside the home which increased 11.7% over the year. Inside the home, food prices rose 2.4% in 2024. Gasoline prices going down actually meant energy costs decreased nearly 12% from November 2023. Prices outside of food and energy mostly balanced out near the end of 2024, but still rose a total of 3.2% over the year. When polled by the San Diego Union-Tribune, economists did not believe the inflation rate would drop below 2% in 2025.

Rent market less competitive in 2024

A RentCafe year-end report found San Diego’s residential rental market was slightly less competitive in 2024 compared to 2023. Still, it remained competitive with a 29th ranking nationally and the fourth most competitive market in California, behind Silicon Valley, Orange County and Eastern Los Angeles. Key findings include:

• Rental Competitiveness Score (RCI): 75.9, down from 76.9 in 2023, reflecting marginally less market pressure. 

• Longer vacancies: Apartments remained vacant for 39 days, five days longer than in 2023. 

• Occupied apartments: Occupancy dipped slightly to 94.9% from 95.8%. 

• Competition among renters: 11 renters applied for every vacant apartment, down significantly from 15 in 2023. 

• Tenants loyalty: Rose to 53.4% of renters renewing their leases, up from 50.5%, indicating more tenants are staying put, further limiting the options for new ones.

• New apartments: Increased to 1.64%, nearly doubling from 0.89% in 2023, easing the supply squeeze slightly, but not enough to meet the high demand.  

Homelessness rate slowing

New regional data from the Regional Task Force on Homelessness (RTFH) shows that in November 894 people fell into homelessness and entered the system for the first time compared to 950 people who exited the system and were placed into housing.

The last time this occurred – more people exiting the system and into housing than people falling into homelessness and entering the system for the first time – was in March 2022, or 33 months ago. 

While this may be only one month, this comes as homelessness in California has slowed, especially compared to the national rate where the overall homeless population grew by 18% per the U.S. Department of Housing and Urban Development’s (HUD) annual report. The state’s unhoused population is still increasing, by 3% in 2024, but at a slower rate than before, according to Axios. Still, California has a high portion of the total homeless population, accounting for a quarter of all unhoused people in the nation.

Half of homes worth $1 million

According to Redfin, almost half (42.4%) of homes listed for sale in San Diego last year had asking prices of seven figures. In 2023, that was true for 37.6% of listings and only 19.7% in 2020. Homes are not as expensive here as in San Francisco, where 71.7% of houses are listed above $1 million, but that is still five times the national figure of 9.3%. Axios San Diego also noted Zillow found the number of cities with a typical home value of $1 million or more rose from 491 in 2023 to 550 in 2024. 210 of those cities are in California, with not even New York coming close to that number.

Record industrial/commercial vacancies

Kidder Mathews released its quarterly report on the industrial commercial real estate market in San Diego, highlighting troubling trends in vacancy rates and lease transaction volumes. The 4th Quarter 2024 report was compiled by the research group under Gary Baragona using data from CoStar, EDD, SD Business Journal, and data.bls.gov. Findings include:

– Total vacancy continues to reach new heights, measuring at 7.6%, a year-over-year (YOY) increase of 190 basis points (bps). Likewise, quarter-over-quarter (QOQ) vacancy grew by 50 bps.

– Lease transaction volume halved YOY and QOQ. Sales did go up slightly.

-Over 1.7 million square feet of new construction, concentrated primarily in south county, is slated to be delivered in the first half of 2025, further straining vacancy in that area and limiting rent growth in the near term.

-The industrial market has posted negative net absorption in back-to-back years for the first time since 2008-2009.

Sunny outlook for public sector construction

In its 2025 construction outlook, JLL projected San Diego public sector CRE construction to thrive in the new year. According to senior vice president Kirt Gilliland, the San Diego public sector construction market was extremely active in 2024 in the areas of student housing, higher education, infrastructure, etc. with that trend expected to continue in 2025.

However, JLL echoed Kidder Mathews’s analysis that private-sector industrial vacancies are too high. Gililland noted “The San Diego private sector construction market, on the other hand, has been very slow with office, life sciences and industrial being overbuilt in recent years with a limited number of tenants in the market looking for space. We don’t expect much new construction in the private sector for at least another year until we have significant absorption and rent growth.”

Public sector construction is strong enough the labor market is tight and material costs continue to be a challenge. Some architecture and construction firms are trying to pivot to public sector work. With high labor and material costs, construction lending is still a challenge. According to Gilliland, at least the city’s permitting process has improved although it still takes a long time.

San Diego County GDP rises to $261.7 billion, bigger than half of the U.S. states

San Diego County last year saw its GDP rise 1.4% to $261.7 billion — bigger than half the states in America. In data released by the U.S. Bureau of Economic Analysis, the U.S. gross domestic product grew 2.9% to $22.7 trillion — by far the largest in the world. Slower GDP growth was common across the U.S. in 2023 in the bureau’s delayed data but followed major gains during and after the pandemic. For instance, San Diego’s GDP rose 7.3% in 2021 and 3.1% in 2022. GDP is the value of goods and services produced by the county’s economy less the value of goods and services used up in production. The bureau uses real values, which take into account inflation and is part of the reason it takes longer to calculate data. San Diego County had the 10th-largest GDP in the nation.

Traffic is fine actually

Data from TomTom found the average time it took to drive six miles in San Diego was 11.3 minutes, a nine-second increase from 2023. Compared to the other 94 cities in the analysis, this is great, with other major cities like San Francisco and New York taking double to triple that time. Outside the city’s core, the traffic index places San Diego in 49th nationally, with six miles taking an average of 10 minutes and 27 seconds. In the city’s score, San Diego was ranked 56th, still beaten out by fast times in Thousand Oaks and Mesa, Ariz. Axios San Diego noted this may be bad for SANDAG and the city, which is trying to pivot to transit to meet emissions goals.