San Diego home prices going up 3rd fastest in nation at rates not seen since 2014
San Diego continues to outperform most of the nation in price acceleration
San Diego home prices went up the third fastest in the nation in September and appreciated at a pace not seen in more than six years.
Prices in the San Diego metropolitan area were up 9.5 percent annually, the S&P CoreLogic Case-Shiller Indices reported Tuesday, Nov. 24. The acceleration is still not near housing boom levels when, in July 2004, prices were up 33.37 percent in a year.
Only Phoenix, up 11.4 percent, and Seattle, up 10.1 percent, saw prices go up faster in September. But all markets covered in the 19-city index were up, even places like New York and San Francisco, that saw price gains slow considerably since the start of the COVID-19 pandemic.
Zillow economist Matthew Speakman said price gains are the result of mortgage rates at record lows and a lack of homes for sale nationwide. He said competition for homes has put upward pressure on prices for months, but it seemed to have greatly accelerated in September.
“Some measures show home prices now growing at a faster pace than they ever have,” he wrote. “While the worsening spread of COVID-19, and the economic uncertainty that accompanies it, do pose some potential risks to the booming housing market, it appears unlikely that this remarkable growth in home prices will abate in the coming months.”
In September, the interest rate for a 30-year, fixed-rate mortgage was 2.89 percent, said Freddie Mac, down from 3.61 percent the year before. Rates are seen as one of the factors motivating potential buyers to compete for a limited number of houses.
The national average increase for home prices was up 7 percent, a six-year high. Even the worst-performing cities saw notable gains. Chicago was up 4.7 percent in a year and New York was up 4.3 percent.
Other California cities were also up, but not as much as San Diego. Los Angeles prices increased 7.7 percent and San Francisco increased 6 percent.
“The strength of the housing market was consistent nationally,” wrote Craig J. Lazzara, managing director and global head of index investment strategy at S&P Dow Jones Indices. “All 19 cities for which we have September data rose, and all 19 gained more in the 12 months in September than they had done in the 12 months ended in August.”
The only area not included in the index was Detroit as it has been off the list since March because of pandemic-related delays at its recording office.
The Case-Shiller indices take into consideration repeat sales of identical single-family houses as they turn over through the years. Prices are seasonally adjusted. The San Diego County median home price for a resale single-family home in September was $715,000, according to CoreLogic data provided by DQNews.
It is known from October data from CoreLogic that home price gains did start to slow, but it is unknown if it will be a long-term trend and reflected in future Case-Shiller reports. Many experts say the factors that have pushed up prices will likely continue for the rest of the year, especially low inventory.
From Sept. 7 to Oct. 4 there were 5,305 homes listed for sale in the San Diego metropolitan area, said the Redfin Data Center. That’s down from 7,858 around the same time in 2019 and 9,236 in 2018.
“Prices have reached the highest level in years,” wrote Bill Banfield, Rocket Mortgage executive vice president of capital markets, “but in order to keep them within reach for buyers, listing volume needs to increase — whether that is through building new homes or by more existing homes hitting the market.”
Upward pressure is expected to continue into the next year even if there is a marginal increase in homes for sale. CoreLogic deputy chief economist Selma Hepp wrote that about 15 million millennials, ages 28 to 30 years old, are reaching their typical first-time homebuying age. Also, she said mortgage rates are likely to stay at or below 3 percent into 2021.
“These two factors will bolster the home buying market and continue propping up home price growth,” she wrote.
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S&P CoreLogic Case-Shiller Indices
Yearly increase by metropolitan area
Phoenix: 11.4 percent
Seattle: 10.1 percent
San Diego: 9.5 percent
Boston: 7.7 percent
Cleveland: 7.7 percent
Los Angeles: 7.7 percent
Charlotte: 7.6 percent
Portland: 7.6 percent
Tampa: 7.5 percent
Washington, D.C.: 7 percent
Minneapolis: 6.6 percent
Atlanta: 6 percent
Denver: 6 percent
San Francisco: 6 percent
Miami: 5.6 percent
Las Vegas: 5.4 percent
Dallas: 4.9 percent
Chicago: 4.7 percent
New York: 4.3 percent
NATIONWIDE: 7 percent
— Phillip Molnar is a reporter for The San Diego Union-Tribune
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