Dot-Com Déjà Vu? Why the AI Bubble Might Not Burst San Diego's Housing Market
Headlines are buzzing with talk of an "AI bubble." A trillion dollar investment boom in artificial intelligence has the stock market soaring and drawing nervous comparisons to the dot-com bust of the early 2000s. For anyone who remembers that era, the question is unavoidable: if the AI bubble pops, will it take the housing market down with it? A recent Realtor.com article, "If the AI Bubble Pops, Here's What It Means for Your Home Prices," explores this very question, and the answers offer a surprising dose of optimism for San Diego homeowners.
The key takeaway is that an AI bubble is not a housing bubble. The dot-com crash was a tech-specific downturn. While it caused a brief and modest dip in home prices, the broader housing market remained resilient and continued to climb. This is a far cry from the 2008 financial crisis, which was caused by the housing market itself. Today, the fundamentals of our housing market are much stronger. Lending standards are tighter, homeowners have more equity, and we are facing a chronic housing shortage, not a surplus. This means that even if the tech sector takes a hit, our housing market is in a much better position to withstand the shock.
That is not to say there would be no impact. San Diego has a significant and growing tech sector, from biotech and defense to software and telecommunications. A major downturn in the AI industry would undoubtedly lead to layoffs, which would impact the local economy and housing demand. We would likely see a cooling in the market, particularly in the tech-heavy neighborhoods of North County and the UTC area. But San Diego’s economy is also incredibly diverse. Our reliance on the military, tourism, and healthcare provides a level of stability that more tech-focused cities like San Francisco or Seattle do not have. This economic diversity is our greatest strength and our best defense against a tech-led recession.
So, what is the practical advice for San Diegans in this uncertain environment?
For Buyers: Do not try to time the market based on stock market speculation. The housing market is driven by long-term fundamentals, not short-term volatility. If you are financially ready to buy a home and plan to live in it for the long haul, then now is as good a time as any. Interest rates are still historically reasonable, and a slight cooling of the market could give you more negotiating power. Focus on finding a home that you love and can comfortably afford, rather than trying to predict the unpredictable.
For Sellers: If you are thinking of selling, the current market is still very strong. The underlying shortage of homes for sale continues to support prices. While an AI downturn could soften demand, it is unlikely to cause a crash. The most important thing you can do is price your home realistically and make sure it is in top condition. In a more balanced market, buyers can afford to be more selective. A well-presented, competitively priced home will always sell.
It is easy to get caught up in the fear and hype of a potential bubble. But it is important to remember that the San Diego real estate market is not the stock market. It is a market of homes, families, and long-term dreams. While no market is immune to economic shifts, our city’s diverse economy and strong fundamentals make us resilient. The AI revolution will undoubtedly have its ups and downs, but the value of a home in America’s Finest City is a long-term investment that has proven its worth time and time again. If you have questions about how these larger economic trends might impact your specific real estate goals, let’s talk. We can help you navigate the noise and make the best decision for your future. Visit our website to learn more.
This blog post is an analysis of the article "If the AI Bubble Pops, Here's What It Means for Your Home Prices" published by Realtor.com.