Welcome to San Diego Blog | September 20, 2016
San Diego Median Home Price Peaks to Highest Price Point in a Decade!
The San Diego County real estate market has been on fire, so it is no surprise that the median home price hit $498,000 in August, marking it the highest point in a decade, only $19,500 away from all time high of $517,500 that was set in November 2005.
So what has been causing a steady rise in home values & pricing for about the last four and a half years in San Diego County?
- Lack of Inventory
- Low mortgage rates
- Delay between new home construction & demand
- Decline of distressed sales
- Decline of investor and all-cash buyers
- Low-down payment and high cost of homes
Lack of inventory can easily be felt throughout the industry and the market. There are a few greenfield projects and infill projects, however they are only generating relatively small amounts of units when looked at the demand in total. Condo conversions & the sales of investor-owned single-family homes are unlikely with rental rates steadily increasing & the demand for rentals skyrocketing.
Norm Miller, a real estate economics professor at the University of San Diego, states that in 2017 prices will likely exceed the 2005 records and only decrease if the current low interest rates rise significantly. “With a lack of supply, we will continue to go up higher than inflation, making affordability worse,” he said, advising would-be buyers to act now before prices become out of reach.
Distressed sales have been on a steady decline towards their normal numbers. Real-Estate-Owned (REO) properties set a high in January 2009 at 53.9% of all sales compared to 3.1% in August 2015. Short sales also set a high at 23.1% in January 2012 compared to 1.9% in August.
We have seen a decrease of absentee buyers and all cash buyers as well. Most absentee buyers purchase a property with the intent of vacation uses. They represented only 19.1% of sales, the lowest since October 2008. All-cash buyers only represented 18.3% of sales compared to their 37% peak in February 2013.
FHA approved condos need FHA insured loans. Loans that were 3.5% down payment or less were also down 2.2% since August 2015 of last year.
It is easy to see why we broke the 10 year record for median home price in San Diego County. A combination of lack of inventory, low mortgage rates, delay between home construction & demand, less amount of distress sales, less investor/ all-cash sales and lending on higher-cost homes all contributed to this breakthrough. While it remains to be a hot sellers market, it is also a great time to buy Downtown San Diego Real Estate before prices get too high.
The numbers and information referenced in this article came from The San Diego Union-Tribune written September 20th, 2016 by Philip Molnar & Roger Showley. For further information and details check out the article here: