One of the biggest stories circulating the real estate news wires around the country was the seemingly out-of-control price hikes that many home markets were seeing, with one of the most astonishing increases being marked in San Diego. Over the last few months, those alarming trends subsided allowing the San Diego and Los Angeles home markets to regulate themselves and come back down to earth. However, it seems that trend has not taken too strong of a hold. Just as things were returning to normal, home price appreciation rates have accelerated substantially in August.
According to real estate tracker CoreLogic DataQuick, San Diego’s median home price rose to $448,500, which was an 8.1 percent gain from August 2013. The August median value was also an increase from July, which had a median home value of $445,000 and had seen a 6.6 percent year-over-year gain. Although the price hike may seem alarming to local home buyers, market watchers are taking this as a sign of a market that has finally picked up to normal summer values after struggling under stop and start conditions throughout the busy buying and selling season in 2014.
“That’s summer buying season and I’m glad to hear it,” said Mark Goldman, a loan officer and real-estate lecturer at San Diego State University, to U-T San Diego. “I don’t anticipate that this will be an indicator of a new trend, I’m happy for it, but I think I wouldn’t base investment decisions that this rate would continue.”
Home Appreciation Spike is a Normal Trend in Abnormal Market
While Goldman remarks that the 8 percent gain in home prices is not sustainable for current economic conditions in San Diego, he does not see the current spike to be a particular problem for home buyers in the future. Andrew LePage, analyst for DataQuick, seems to agree as well. LePage attributes the spike to an exceptional mix of higher-end homes that have sold in the last few months in addition to less homes in foreclosure being mixed in. August saw 209 newly built homes sell for a median of $627,500, which is substantially higher than the 325 new homes that were sold in August 2013 for a median price of $514,750.
“In San Diego and across Southern California and the state really, most markets are back down to single digit year-over-year price gains,” LePage said to U-T San Diego. “People who are holding to sell at a higher price might not like that, but at least it gets us back to a more sustainable level of price appreciation.”
This has been an exceptional year for the San Diego housing market as home sales have labored under increasingly tightening conditions characterized by higher home prices and lower inventories. Annual appreciation peaked a little more than a year ago in June 2013 when home prices rose by 24.1 percent.
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