The average price for home rentals in San Diego County surpassed previous records, reaching $ 700,000 in April.
According to CoreLogic data from DQNews, this means a price increase of 17.8 percent per year. The median home price – which includes new and resale homes – has not risen as quickly since October 2013, when the county was still recovering from the great recession. The previous record median price was $ 680,000 in March.
Prices have increased nationwide, particularly in California. In the six-county southern California region, prices rose 20 percent in a year, according to CoreLogic. Most experts struggle to come up with reasons why the price increase might slow down over the course of the year.
“I’ve been selling real estate since ’81 and I’ve never seen it that way,” said Jan Ryan, a RE / MAX agent based in Ramona.
She said the difference between the market now and the days of the housing boom – when prices rose more than 25 percent in one year in the summer of 2004 – is that there are many more homes available for sale. Inventories in San Diego County are now at record lows.
There were 3,537 homes for sale from April 5th to May 2nd after the Redfin Data Center. That is compared to 6,034 around the same time last year, 8,067 in 2019, 7,317 in 2018 and 6,667 in 2017.
Ryan said large cash offerings are crowding out military families using VA loans and first-time buyers using FHA loans frequently. Both loan types allow buyers to make very low down payments but become less practical as successful buyers step in with cash offers above the asking price.
Potential buyers seem to be shaking off rising mortgage rates. The interest rate on a 30-year fixed-rate mortgage was 3.06 percent in April, according to April Freddie MacThis corresponds to a decline of 2.68 percent in December, the lowest level since 1971. The rate fell from 3.31 percent in the previous year.
Experts had predicted that rising interest rates would slow down buyer demand. An increase in inventory levels as more people were vaccinated against COVID-19 and put their homes on the market was also seen as a threatening factor in future price declines. However, as inventory levels have increased (in many parts of the nation but not as much in San Diego), this has had little effect.
Zillow economist Matthew Speakman said rising material costs for things like wood are slowing down new home construction. With resale inventory low almost everywhere – particularly in San Diego – much of the market demand has shifted to newly built homes.
“Homes are selling faster than ever before,” he wrote, “and many builders are expressing the fact that sales could be higher if there were no material restrictions.”
9,486 homes were built in San Diego County, including homes for sale and rentals in 2020, according to the Real Estate Research Council of Southern California. In 2004, more than 17,000 homes were built in the county during the housing boom.
Rich Toscano, a partner in San Diego finance firm Pacific Capital Associates, said the market is still not in a bubble because interest rates are so low. While the prices far exceed wages and rents, the monthly payments are still relatively low in contrast to before the real estate crash in 2006.
The interest rate for a 30-year fixed-rate mortgage was around 6.3 percent in the summer of 2004, which is more than twice as high as it is today.
Toscano believes that price increases will slow as interest rates and the number of properties for sale continue to rise.
The price of a resale single-family home in San Diego County hit a record $ 798,500 in April, compared to a high of $ 760,000 in March. The condominium resale price hit a high of $ 529,000, compared to the previous high of $ 505,000 in February.
Newly built homes had a median of $ 699,182. The median includes new single-family houses and condominiums. The record was $ 812,500 in October 2018 as the number of luxury single family homes for sale increased.
4,347 homes were sold in April, up 74 percent from the same period last year as COVID-19 pushed many potential sellers to take homes off the market. More homes are sold than numbers are listed because sales can start in the previous month and the escrow account is not closed for several weeks. Often times, when homes sell within a few days they don’t count towards final listing.
The average market time for a San Diego County home was 14 days in April (a 44 percent decrease from last year), according to the North San Diego County Realtors market watch report. ◆