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Median home price in San Diego sky rockets for first time in 10 years
The San Diego County median home price hit $498,000 in August, its highest point in a decade, real estate tracker CoreLogic reported Monday. Home prices have climbed steadily most of the year, but are still below the all-time peak of $517,500 set nearly 11 years ago.
In August, the median price of a resale home was $550,000, a 6.8 percent increase in the last 12 months. Resale condos reached $377,750, up 7 percent in a year, and newly built homes were $684,5000, up 5.6 percent in a year.
The home market was pushed up by what is traditionally its second biggest sales month of the year. CoreLogic said 4,124 homes sold in August — 359 less than the same time last year.
The median price paid for all Southern California homes sold in August was $465,000, 6.2 percent higher than a year ago and unchanged from July.
CoreLogic analyst Andrew LePage said prices have been rising for nearly 4 ½ years but affordable constraints and other factors might come to bear.
“It’s possible that the Southern California median sale price has already peaked for the year at $465,000, where it has held steady for the last three months,” he said. “Historically, the median sale price has most often peaked in one of the summer months or in December.”
Experts suggest a lack of inventory, low mortgage rates and a lag between home construction and demand have kept housing prices rising.
The Greater San Diego Association of Realtors said the number of single-family resale listings dropped 2 percent from August 2015 to 2,124 and increased 1 percent over the same period on resale condos and townhouses to 1,127 units.
The latest median prices still leave overall San Diego housing 3.8 percent below the November 2005 peak but far above the $280,000 low set in January 2009.
Norm Miller, a real estate economics professor at the University of San Diego, said the numbers reflect rising prices for houses with less than 1,500 square feet and an overall inventory of only about two months for homes selling for less than $800,000. A six-month inventory is considered normal.
“With a lack of supply, we will continue to go up higher than inflation, making affordability worse,” he said.
He said the only brake on appreciation might come if interest rates rise by one or two percentage points from their current level of about 3.5 percent on 30-year, fixed rate loans. But buying typically accelerates when rates rise and that leads to further price jumps. And if prices and rates rise, many buyers switch to adjustable loans with lower rates.
Looking to 2017, Miller said prices will likely exceed the 2005 peaks and only subside if interest rates rise substantially. Consequently he advises would-be buyers to act now.
“Interest rates matter as much and more than prices,” he said.
As for increasing supply, he said few new greenfield projects in the distant suburbs are under way and infill projects in existing neighborhoods are generating relatively few units. And condo conversions and sales of investor-owned single-family homes are unlikely anytime soon.
In the six-county Southern California market, San Diego’s year-over-year price increase tied with Riverside County at 7.1 percent. Ventura County was highest at 7.9 percent and Los Angeles, the lowest at 6 percent. Orange County had the highest August median price, $649,000, and San Bernardino County, the lowest, $275,000.
CoreLogic also issued updates on various elements of the housing market that explain some of the continuing price rise in the county.
Distressed sales: Foreclosures and short sales — homes sold for less than their outstanding mortgage balance — continue to decline toward their historic norms. Foreclosures that ended up as real-estate-owned properties by lenders represented 2.6 percent of all sales. That compares with 2.4 percent in July and 3.1 percent in August 2015. They peaked at 53.9 percent in January 2009. Short sales totaled 1.9 percent in August, the lowest since April 2007. They peaked at 23.1 percent in January 2012.
Investors and all-cash buyers: Absentee buyers, many of whom purchase a property for vacation uses, represented 19.1 percent of sales, the lowest since Oct. 2008’s 18.5 percent and below the peak 31.1 percent in February 2013. All-cash buyers bought 18.3 percent of the properties, compared with the peak 37 percent in February 2013 and cyclical low of 6.1 percent in April 2005.
Low-down payment and high-cost homes: FHA-insured loans accounted for 13.7 percent of mortgages with 3.5 percent or less down payments. That compares with 15.9 percent in August 2015. The share of conventional, low-down payment loans has risen over the last year. Jumbo mortgages — up to $562,350 in San Diego County — took up 17.4 percent of home purchase loans in the county, compared with 16.2 percent percent a year earlier.
