America’s Finest City is just a hair away from having the hottest real estate market in the nation.
Home prices in the San Diego metropolitan area were up 24.7 percent in a year as of May, the S&P CoreLogic Case-Shiller Indices reported Tuesday. Phoenix was the only metro to have a faster gain at 25.9 percent.
May was the highest annual increase in the index’s national average, 16.6 percent, in its more than 30-year history. While the month marked San Diego’s biggest increase of the pandemic — it is still not a record. In July 2004, prices increased 33.4 percent in a 12-month period.
“A month ago, I described April’s performance as ‘truly extraordinary,’ and this month I find myself running out of superlatives,” wrote Craig Lazzara, managing director and global head of index investment strategy at S&P Dow Jones Indices.
Experts continue to point to a perfect storm of reasons for the increases: National housing inventories not keeping up with demand, increasing fortunes of stay-at-home workers, millennials aging into homeownership and record low mortgage rates.
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.
All 20 cities in the index had faster increases in May than they did the previous month, which was already one of the biggest record-breaking months in the index’s history. Chicago, with an 11.1 percent gain, and Minneapolis, up 12.8 percent, had the slowest increases.
San Diego’s 24.7 percent increase marks the 22nd month as California’s top market for the fastest home appreciation. In May, prices increased 18.2 percent annually in San Francisco and 17 percent in Los Angeles.
Matthew Speakman, a Zillow economist, wrote in his analysis of the report that the number of homes increased slightly in May but it did little to slow demand. He said the upward pressure on prices continues and is likely to stay that way for the coming months.
“Sharply rising prices do appear to have priced out some home shoppers, particularly those looking to enter the market for the first time, and causing fatigue among would-be buyers,” Speakman wrote.
He said if home inventory continues to increase it will eventually slow price appreciation, but it probably will be a whilebefore that shows up in the market.
The Case-Shiller indices take into consideration repeat sales of identical single-family houses — and are seasonally adjusted — as they turn over through the years. The San Diego County median home price for a resale single-family home in May was $825,000, according to CoreLogic data provided by DQNews.
Selma Hepp, CoreLogic deputy chief economist, said stricter lending standards and significant accumulated savings make the market much different than the factors that led to the housing crash. She said the market is buttressed by an underlying consumer strength.
Competition for homes appears to be mainly local, according to another housing report released this week. The National Association of Realtors said the number of purchases by foreign buyers decreased 27 percent from April 2021 through March 2022, expected because of the COVID-19 pandemic. The top places for foreign buyers were Florida (21 percent) California (16 percent) and Texas (9 percent).
Our experienced professionals have access to top listings, a worldwide network, exceptional marketing strategies and
cutting-edge technology to help make your real estate experience memorable and enjoyable.
RE/MAX COAST AND COUNTRY Broker Owner Donna Sormanti-Saglio 860-536-7600
Each office independently owned and operated.
RE/MAX, LLC is an Equal Opportunity Employer and supports the Fair Housing Act and equal opportunity housing.