While much of the country has seen a meaningful turnaround in home inventory levels and existing home sales, the housing situation in San Diego remains somewhat stagnant. Homes have continued to appreciate in San Diego, however low inventory has persisted in holding home sales back through the first half of 2014.
According to La Jolla-based real estate tracker, DataQuick, the median home sale price in San Diego county rang in at $450,000 in June. This was an 8 percent gain from June 2013 and is approaching a nearly seven-year high for the county.
As of late, home prices have decelerated to much healthier conditions which has come to the relief of many market watchers who were fearing another housing bubble burst due to out-of-buyer-reach, home prices. From June 2012 to June 2013, home prices saw a gain of 24.1 percent, a figure that was largely influenced by heavy investor activity on distressed properties.
“Last year everyone wanted to know why are prices rising so fast, and the three main reasons were extraordinarily low inventory, incredibly low mortgage rates and record or near record levels of investor purchases,” said DataQuick analyst Andrew LePage. “This year each one of those has sort of reversed to some extent.”
San Diego Home Prices Put Pressure on Buyers
Across the six-county Southland territory, a total of 20,654 new and existing homes and condos changed hands, which was a gain from May but still well below June 2013 levels. Although home price gains have slowed tremendously from last year, and even earlier this year, San Diego home buyers on the traditional side of the market are finding that they are already priced out of a market that has seen solid price increases for quite some time.
“Pent-up demand, job growth and still-slow mortgage rates continue to put pressure on home prices,” DataQuick analyst Andrew LePage said. “In many markets price appreciation has slipped into the more sustainable single-digit range, compared with gains exceeding 20 percent this time last year.”
In just the first six months of this year, homes in San Diego have appreciated by 11 percent, or $45,000. This is significantly lower than the $65,000 gain noted last year, but still remains out of touch for most home buyers. In previous situations similar to the one San Diego is now facing, banks were offering riskier loans in order to help bring buyers to the market. Now, having learned a painful lesson from those practices, these types of loans are no longer available in most lending markets.
“Why the drop-off? The supply of homes for sale, while still low in an historical context, is higher this year, and the decline in affordability serves as gravity for home prices. People can’t stretch with exotic risky loans the way they could during the last housing boom,” LePage continued.
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