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San Diego County home prices are forecast to rise 8.3% this year, most in the nation

CoreLogic forecasts that single-family home prices in San Diego County will increase more than 8 percent in 2021.
(File)

CoreLogic says a lack of homes for sale will continue to push up prices.

The price of a San Diego County home could increase by more than 8 percent this year, more than anywhere else in the nation, according to a forecast released Jan. 5.

Real estate analyst CoreLogic said the price of a single-family home in the county will increase 8.3 percent from November 2020 to November 2021. That means the median price of house could be around $776,000 by the end of the year.

CoreLogic said the main reason is a lack of homes for sale that will push up prices as buyers fight it out. A secondary factor is income growth for highly skilled positions in San Diego County.

It isn’t out of the ordinary for local homes to increase in price a lot in a year — in fact, single-family homes here were up 9.5 percent last year — but the forecast is noteworthy because CoreLogic says most markets will see price appreciation slow.

The only regions that are expected to climb substantially are Miami, at 3.2 percent; Los Angeles, 3.2 percent; and Washington, D.C., 2.9 percent. CoreLogic said the total national increase should be around 2.5 percent.

“San Diego is just one of those markets that has had a lot of income growth and not enough supply to meet demand,” said Selma Hepp, CoreLogic deputy chief economist.

She said San Diego is an example of what has been seen a lot across the nation: High-wage workers have been able to work from home during the COVID-19 pandemic while low-wage workers lost income because their jobs were among the first cut during shutdowns.

For people with the money to purchase, there aren’t as many options as in previous years. As of mid-December, the Redfin Data Center said there were 3,763 homes listed for sale throughout San Diego County. Though December is typically a slow sales month, that is the lowest in recent memory. There were 5,182 homes for sale at around the same time in 2019 and 7,471 in 2018.

Real estate agents across San Diego County said potential sellers wanted to wait out the pandemic in 2020 before putting their homes on the market. Some of the thinking was not wanting to move during the crisis, as well as avoiding potential buyers walking through the house and carrying COVID-19 with them.

Yet analysts say supply constraints can’t be explained only by a lack of homes for sale but also slowed home construction. As of the third quarter of 2020, 6,691 homes had been built in San Diego County. While that appears to be on track for more than in 2019, it still is down from boom times when 17,306 housing units were built in 2004 and 15,258 in 2005.

Nathan Moeder, principal with San Diego real estate analyst London Moeder Advisors, said data for the state-certified housing plan for the county, which plans how many homes would be needed from 2012 to 2020, shows the region fell short by more than 35,000 units.

“We’re only building half of what we need,” he said.

While it may seem to many San Diegans that home prices here are overvalued, CoreLogic says they aren’t. It ranks markets by undervalued, normal and overvalued. It says a market is overvalued if home price growth is 10 percent or more of household income growth in that region.

CoreLogic says San Diego ranks as normal because of gains in household income growth pushed by higher-paying jobs. It used data from the U.S. Bureau of Economic Analysis that showed personal income in the San Diego metropolitan area up by 4.2 percent, above the national average of 3.5 percent.

The price of a resale single-family house in November was $717,000, according to CoreLogic data provided by DQNews, down slightly from an all-time high of $730,000 in October. ◆