Dwindling home inventory and low mortgage interest rates have led to large price increases across Southern California
Like much of Southern California, the county has seen sales increase as mortgage interest rates started dropping in the spring and competition heated up. The previous high in the county was $590,000 in June, according to CoreLogic data provided by DQNews.
The median home price has increased 5.2 percent in a year, a turnaround from a few months ago when prices were down year-over-year by 1 percent. With 3,180 closed transactions in November, sales were up 8.6 percent from the same time last year when interest rates were much higher.
Evan Morris, a real estate agent based in Golden Hill, said he has seen an increase in price wars in recent months. He had clients end up in a price battle with seven other offers for a three-bedroom, two-bathroom single-family home in Serra Mesa. They got the home, but the listing price of $599,000 went up to $650,000.
“They’ve seen how rates are getting so low,” he said. “It’s a flurry of activity.”
The interest rate for a 30-year, fixed-rate mortgage was 3.7 percent in November, said Freddie Mac, down from 4.87 percent at the same time last year.
As interest rates dropped, sales significantly increased — which led to a shrinking supply of available homes. In November, there were 5,541 homes for sale, said the Greater San Diego Association of Realtors, down from 7,445 at the same time last year.
The problem is not isolated to Southern California, with inventory numbers down across the United States. The National Association of Realtors said existing-home sales had declined by 1.7 percent in November as buyers have less to chose from.
“The new home construction seems to be coming to the market, but we are still not seeing the amount of construction needed to solve the housing shortage,” NAR chief economist Lawrence Yun said in an analysis. “It is time for builders to be innovative and creative, possibly incorporating more factory-made modules to make houses affordable rather than building homes all on-site.”
Building permits for San Diego County show in the first nine months of 2019 that 6,491 homes had been built or started construction, down 24 percent from the same time last year.
Here’s how the different home types fared in November:
- Resale single-family homes: Median of $633,750, down from a peak of $649,000 in June. There were 1,966 sales, an increase of 10 percent from a year ago.
- Resale condos: Median of $429,000, down from a peak of $440,000 in August. There were 822 sales, up 3 percent annually.
- Newly built: Median of $673,000, down from a peak of $812,500 in October last year. There were 392 home sales, up 13 percent from the same time last year.
Across Southern California, the median home price was up 5.6 percent annually to $549,000. The biggest increase was in San Bernardino County, up 6.1 percent for a median of $350,000.
It was followed by San Diego County with the 5.2 percent increase; Riverside County up 5 percent for a median of $409,500; Los Angeles County up 4.2 percent for a median of $625,000; Orange County up 2.5 percent for a median of $735,500; and Ventura County up 0.9 percent to a median of $580,000.
Some examples of what the median home price gets you in San Diego County:
1. 984 East J St., Chula Vista: $590,000. This 1,594-square-foot home was built in 1998 and has three bedroomss and 2 1/2 bathrooms.
2. 4472 F St., San Diego: $589,000: This 1,615-square-foot home in Chollas View has four bedrooms and three bathrooms. It was built in 1942.
3. 3592 Orange Ave., San Diego: $589,900. This North Park home is on the small side, around 1,000 square feet. It was built in 1923 and has three bedrooms and one bathroom.
4. 4495 Cherokee Ave., San Diego: $599,000. This Normal Heights home is also smaller, 700 square feet, and has two bedrooms and two bathrooms. It was built in 1923.