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San Diego County’s median home price hits record $700,000

Home and keys

CoreLogic data says prices have increased 17.8 percent in a year.

San Diego County’s median home price smashed through previous records to hit $700,000 in April.

It represents a 17.8 percent price increase in a year, according to CoreLogic data provided by DQNews. The median home price — which includes new and resale homes — has not increased at such a pace since October 2013, when the county was still recovering from the Great Recession. The previous record median price was $680,000 in March.

Prices are up nationwide, especially in California. The six-county Southern California region has seen prices rise 20 percent in a year, according to CoreLogic. Most experts are struggling to find reasons why price appreciation could slow down as the year goes on.

“I have been selling real estate since ’81 and I’ve never seen it like this,” said Jan Ryan, a RE/MAX agent based in Ramona.

She said the difference between the market now and the housing boom days — when prices were increasing more than 25 percent in a year in the summer of 2004 — is that there were a lot more homes available for sale. Now, inventory levels in San Diego County are at record lows.

There were 3,537 homes for sale from April 5 to May 2, according to the Redfin Data Center. That’s compared with 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 offers are pushing out military families, who use VA loans, and first-time buyers, who often use FHA loans. Both loan types allow buyers to give very low down payments but are becoming less practical as successful buyers are swooping in with cash offers above the asking price.

Potential buyers seem to be shrugging off rising mortgage rates. The interest rate for a 30-year fixed-rate mortgage was 3.06 percent in April, according to Freddie Mac, up from December’s average of 2.68 percent, which was the lowest on record going back to 1971. The rate is down from 3.31 percent a year before.

Experts had projected that rising interest rates would slow buyer demand. Also, an increase in inventory, as more people got vaccinated for COVID-19 and put their homes on the market, was seen as a looming factor in future price slowdowns. However, as inventory has started to increase (in many parts of the nation but not as much in San Diego), it has had little effect.

Zillow economist Matthew Speakman said rising material costs for things such as lumber are slowing down new home construction. With resale inventory low just about everywhere — especially in San Diego — a lot of the market demand has shifted to newly built homes.

“Homes are selling about as quickly as ever,” he wrote, “and many builders are expressing the fact that sales could be higher if materials-related constraints weren’t there.”

There were 9,486 homes, including for-sale and rental apartments, constructed in San Diego County in 2020, according to the Real Estate Research Council of Southern California. In 2004 during the housing boom, more than 17,000 homes were built in the county.

Rich Toscano, a partner at San Diego financial firm Pacific Capital Associates, said the market is still not in bubble territory because interest rates are so low. While prices are far exceeding wages and rents, he said monthly payments are still relatively low, unlike before the housing crash in 2006.

The interest rate for a 30-year fixed-rate mortgage was around 6.3 percent in summer 2004, more than double today’s rates.

Toscano said he believes price appreciation will slow if interest rates and the number of homes for sale continue to increase.

The price for a resale San Diego County single-family home in April hit a record of $798,500, up from the peak of $760,000 in March. The resale condominium price hit a peak of $529,000, up from the previous high of $505,000 in February.

Newly built homes were at a median of $699,182. The median includes new single-family homes and condos. Its record was $812,500 in October 2018, when there was an increase in luxury single-family homes for sale.

There were 4,347 homes sold in April, up 74 percent from the same time last year, when COVID-19 pushed many potential sellers to take homes off the market. There are more homes sold than listing figures because sales can start the previous month and not close escrow for several weeks. Also, if homes sell within a few days, they often don’t make final counts for listings.

The average time on market for a San Diego County home was 14 days in April (a 44 percent decrease from a year earlier), according to the North San Diego County Realtors’ market watch report. ◆