San Diego home prices increase fastest in nearly 16 years and are second fastest in the nation
A home sold by Judy Goldberg, San Diego Realtor
Home prices are up 17 percent in a year for the San Diego metropolitan area.
San Diego home prices increased at their fastest pace in nearly 16 years as of February and the metro area was among the strongest markets in the nation.
Home prices in the San Diego metropolitan area are up 17 percent in a year, the S&P CoreLogic Case-Shiller Indices reported Tuesday. The last time they went up that fast was April 2005.
Phoenix narrowly beat out San Diego as the top housing market in the nation, with prices up 17.4 percent in a year. Other top markets were Seattle, up 15.4 percent, and Boston, up 13.7 percent.
All 20 metro areas experienced gains at least four times the rate of inflation. Overall national home prices were up 12 percent, the highest in 15 years. Analysts point to a nationwide shortage of homes for sale as the main reason for rising prices, with record-low mortgage rates and millennials aging into homeownership as secondary factors.
Zillow economist Matthew Speakman wrote in an analysis of the numbers that there is an even larger wave of eager buyers now than during the past year as the economy improves.
“But with relatively few for-sale homes on the market,” he wrote, “bidding wars have become increasingly common, pushing sale prices higher and leading homes to sell at a record pace.”
Speakman said that there are signs that home inventory may be increasing. It is possible that could slow bidding wars, but as of right now, there appears to be no near-term slow down in price appreciation.
Price acceleration in San Diego has been higher in the region before — up 33.4 percent in July 2004 and 27.2 percent in June 1989. The February numbers broke the mold because it is typically one of the weakest months of the year. However, prices have accelerated in February at higher levels in the last 20 years: In 2005 at 24.1 percent, in 2004 at 21.6 percent, in 2003 at 20.3 percent and 2001 at 17.3 percent.
The Case-Shiller indices take into consideration repeat sales of identical single-family houses — and are seasonally adjusted — as they turn over through the years. The San Diego County median home price for a resale single-family home in February was $740,000, according to CoreLogic data provided by DQNews.
CoreLogic deputy chief economist Selma Hepp wrote that there is an open question of how much longer the housing market can remain at this pace — particularly if home inventory increases. There is a hope for potential homebuyers that more people will be comfortable putting homes on the market as vaccinations increase and the fear of COVID-19 is diminished.
“Housing market strength is reflecting many of the positive and continually improving signs of the economic recovery,” she wrote,” including employment gains, consumer savings and more purchase power among home buyers, all while mortgage rates remain historically low.”
The interest rate for a 30-year, fixed-rate mortgage hit a record low of 2.68 percent in December, said Freddie Mac. It rose slightly to 2.74 percent in January and 2.81 percent in February.
San Diego prices have accelerated more than any other California market since June 2019. In February, prices were up 11.9 percent in Los Angeles and 11 percent in San Francisco.
Even the slowest price appreciation markets experienced substantial gains. The slowest market, Chicago, still was up 8.6 percent.
Craig Lazzara, managing director and global head of index investment strategy at S&P Dow Jones Indices, wrote in its latest report that data supports its hypothesis that COVID-19 has motivated buyers who want suburban homes instead of urban apartments.
“This demand may represent buyers who accelerated purchases that would have happened anyway over the next several years,” he wrote. “Alternatively, there may have been a secular change in preferences, leading to a permanent shift in the demand curve for housing.”
Yearly increase by metropolitan area
Phoenix: 17.4 percent
San Diego: 17 percent
Seattle: 15.4 percent
Boston: 13.7 percent
Tampa: 12.7 percent
Cleveland: 12.5 percent
Los Angeles: 11.9 percent
Charlotte: 11.7 percent
Detroit: 11.7 percent
New York: 11.6 percent
Portland: 11.4 percent
Denver: 11.2 percent
Washington, D.C.: 11.1 percent
Miami: 11 percent
San Francisco: 11 percent
Dallas: 10.9 percent
Minneapolis: 10.4 percent
Atlanta: 10 percent
Las Vegas: 9.1 percent
Chicago: 8.6 percent
Nationwide: 12 percent
Source: The San Diego Union Tribune