San Diego home price hits a record $725K, increasing at the fastest pace in nearly 8 years
San Diego County hasn’t seen prices rise so fast since the summer of 2013
San Diego County’s median home price rose to a record $725,000 in May, representing a 23 percent increase in one year.
The median price — the point where half of all homes sold for more and half for less — has not risen so fast in the region since summer 2013, when the market rapidly recovered from the Great Recession, according to numbers released Tuesday by data firm DQNews.
Home prices continue to rise nationwide, and especially in Southern California. Experts point to low mortgage rates, intense competition for the limited supply of homes for sale and the increasing fortunes of stay-at-home workers.
It has become the norm to bid over asking price and most buyers have come to expect it, said Samantha O'Brien, a real estate agent with PorchLight in University Heights. She said she had been working with a couple to buy a condo since October. Only this week — after 11 rejected offers — were they successful in grabbing a $425,000 condo in Chula Vista, by offering $35,000 over asking.
“It felt like such a triumph to get my clients into escrow,” O'Brien said.
She said it seems like the number of homes for sale has been increasing in recent weeks, but the demand is as extreme as ever. O'Brien said she was at an open house for a $1.2 million single-family home in Carmel Valley this weekend and it was so packed that it was difficult to move.
Home inventory remained at record lows in May, with 3,790 homes for sale in San Diego County from May 3 to May 30, said the Redfin Data Center. That is down from 6,239 around the same time last year; 8,465 in 2019; 7,768 in 2018; and 6,998 in 2017.
Real estate agents said low mortgage rates continued to motivate some buyers, despite increasing slightly. The interest rate for a 30-year, fixed-rate mortgage was 2.96 percent in May, said Freddie Mac, down from 3.23 percent the year before. The rate is up from December’s average of 2.68 percent, which was the lowest in records going back to 1971.
Sales were up drastically year-over-year in May, mostly reflecting a historic drop in sales of homes that opened escrow in March and April last year. There were 4,222 home sales over that period, up 82 percent from the same time last year.
Lynn Reaser, chief economist with Point Loma Nazarene University, said increasing interest in homeownership by millennials — who make up the majority of the nation’s workforce — and low mortgage rates are pushing prices up.
She also cited several factors that are limiting construction of new homes: Community opposition to new projects, housing regulations in California, and increasing labor and materials costs.
While it may be tempting to say the market is entering bubble territory, many economists are cautious about comparing the current market to the one that preceded the housing crash. San Diego County home prices were up 27 percent in summer 2004, only to drop by more than 30 percent over the next four years.
One big difference: lending standards have changed since then to make it much harder to buy a home with little money down.
“The tightening of underwriting requirements makes the current picture very different to one that triggered the 2008 financial crisis,” Reaser said.
The median home price is made up of newly built and resale homes. The resale single-family home hit a record high of $825,000 in May, up from the previous record of $798,500 in April. The resale condo median also reached a new record, $540,000, up from a record $529,000 in April.
Newly built homes hit a median of $681,500. The median includes new single-family and condos. That is short of the new-home record of $812,500 in October 2018, which reflected an increase in luxury single-family homes for sale.
Some housing analysts predict housing price increases will slow later in the year as interest rates rise and more people put their homes on the market. But that is hard to imagine for potential buyers and real estate agents in the thick of it right now.
“It’s like there is no limit” to price increases, said Jan Ryan, a RE/MAX agent based in Ramona.
She said she has seen homes in Ramona, far from the coast in eastern San Diego County, regularly go for $50,000 or more over asking price. She said the buyers are not tech millionaires but usually first-time buyers with big loans from parents.
Prices rose throughout Southern California, and were up 24.7 percent in the six-county region. Los Angeles County had the biggest annual increase, 25 percent, for a median of $775,000.
That was followed by San Diego County, up 22.9 percent; Riverside County, up 22.5 percent for a median of $502,250; Ventura County, up 20.9 percent for a median of $701,500; Orange County, up 19.3 percent for a median of $895,000; and San Bernardino County, up 16.8 percent for a median of $432,000.
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