As the housing market continues to move into peak home buying season, reports indicate that the San Diego County housing market is stabilizing. While there are some areas that remain a matter of concern, most indicators show that the market remains strong and is starting to normalize.
San Diego County Real Estate Appreciation Reaches Sustainable Levels
According to San Diego County real estate data from the month of May, the median price for a home in the county was $459,000. This represents a 3.1 percent increase when compared to May of last year. While prices did go up, these figures represent the slowest prices have gone up on a year-to-year basis since June 2012, at which time prices increased by 1.7 percent when comparing year-to-year data. Interestingly, following the drop off in June 2012, the figures for June 2013 showed an appreciation of 24.1 percent after a surge of fix-and-flip foreclosures. Foreclosure sales have since slowed down as the market returned to being paced by more traditional factors such as employment, wages and supply.
While the 3.1 percent increase represents a slow pace of price increase, most experts agree that the rate of appreciation is sustainable. While there are still speculative deals and fix and flip investments taking place in the county, there is not as much speculative value in the area any more. As such, these types of investments are no longer being made at the same rate as they once were.
Housing Sales Increase in San Diego County
Just as appreciation has slowed down, the number of sales being made appears to have increased when comparing year-to-year data. In fact, the number of sale increased by 3.5 percent to 3,825 sales in May. On the other hand, this does represent a decline in sales when compared to April, at which time there were 4,049 sales in the county. Since sales made in May represent deals that originated in March or April, it should be noted that these figure have not been padded by the busy summer homebuying season.
While much of the data regarding the San Diego housing market appears to be positive, there are some areas that are still troubling. Perhaps the largest area of concern is the lack of supply to meet the demand for housing in the area. With just 6,658 active listings in May, the county had less than two months of inventory available. This represents a third of the amount of inventory that analysts consider to be a normal amount. On the other hand, Freddie Mac reports that credit remains cheap with a 30-year fixed loan carrying a rate of just 3.84 percent.
By comparison, Los Angeles home prices rose by 5.4 percent when comparing year-to-year data to a median price of $485,000. Orange County also saw an increase, with median prices reaching $610,000. This represents a 2.5 percent increase when compared to May of last year.
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