Numbers represent an acceleration of prices after months of sluggish growth
Home prices were up 2.9 percent annually in San Diego County as of October 2019, part of a rising tide of nationwide price increases, the S&P CoreLogic Case-Shiller Indices reported the first week of January 2020.
The gain was below the national average of 3.3 percent, but it still represents a reversal of fortunes for San Diego County after months of having some of the lowest price increases in the nation. Home prices were going up at annual rate of around 1 percent for the first six months of the year.
Even with the increase, which experts largely attribute to falling mortgage interest rates, it is still below the 3.8 percent annual increase recorded for San Diego County a year earlier.
Lower cost markets showed the biggest gains, according to the index — with Phoenix, Arizona, up 5.8 percent; Tampa, Florida, up 4.9 percent; and Charlotte, North Carolina, up 4.8 percent. The only market to have a price decrease was San Francisco, down .4 percent.
CoreLogic chief economist Frank Nothaft wrote that the latest numbers show the slowdown in price growth at the start of the year has largely faded.
“The decline in mortgage rates, down about one percentage point for fixed-rate loans from one year ago, has supported a rise in sales activity and home prices,” he wrote.
The interest rate for a 30-year, fixed-rate mortgage was 3.69 percent in October 2019, said Freddie Mac, down from 4.83 percent at the same time last year.
The Case-Shiller indices take into consideration repeat sales of identical single-family houses as they turn over through the years. Prices are adjusted for seasonal swings. The San Diego County median home price for a resale single-family home in October 2019 was $630,000, said CoreLogic.
Lawrence Yun, chief economist for the National Association of Realtors, wrote that it was not surprising price gains were up, considering strong demand and dropping home inventory. He said some lower cost markets could be experiencing growth because people are moving away from more expensive places.
“Faster price appreciation in warmer, southern states reflect the ongoing migratory trend of people moving out of expensive regions of the country to more affordable parts,” he wrote.
Recent population numbers from the California Department of Finance tend to bolster that theory. Between July 1, 2018 and July 1, 2019, California saw a net loss of 39,500 residents who moved to other states, reported the Los Angeles Times. Among the most common destinations for those leaving the state were Arizona, Colorado. Nevada, Oregon, Texas and Washington, according to demographer William Frey of the Brookings Institution.
Despite a slower start to the year, Zillow economist Matthew Speakman wrote that there is a chance home prices will start to accelerate more rapidly in 2020. He said a strong job market and low mortgage interest rates should help keep the market stocked with buyers.
Speakman added that the favorable market could also push more sellers to finally cash in on built-up home equity, even though that hasn’t been a big factor in recent years. However, a growing concern is a shrinking supply of new homes for sale.
“An extreme shortage of for-sale listings, particularly at lower price points, remains a concern,” he wrote, “and may ultimately result in a sharper re-acceleration in home prices than expected.”
There were 6,082 homes listed for sale in San Diego County in October, said the Greater San Diego Association of Realtors, down from 7,918 at the same time in 2018.
S&P CoreLogic Case-Shiller Indices
Yearly increase by metropolitan area:
Phoenix: 5.8 percent
Tampa: 4.9 percent
Charlotte: 4.8 percent
Atlanta: 4.2 percent
Minneapolis: 4.2 percent
Boston: 3.4 percent
Cleveland: 3.3 percent
Denver: 3.3 percent
Miami: 3.3 percent
Detroit: 3.1 percent
Washington, D.C.: 3 percent
Dallas: 2.9 percent
San Diego: 2.9 percent
Portland: 2.7 percent
Seattle: 2.5 percent
Las Vegas: 2.3 percent
Los Angeles: 2 percent
New York: 0.8 percent
Chicago: 0.5 percent
San Francisco: -0.4 percent
NATIONAL: 3.3 percent