COVID-19 could not stop the upward pressure on home prices in San Diego County which reached a new high of $600,250 in June.
The median home price in San Diego County crossed the $600,000 line for the first time in June, said CoreLogic data provided by DQNews. It represents a modest 1.7% price gain in a year but is still noteworthy as unemployment is at historic highs.
The biggest factor in rising prices is sellers taking homes off the market during the pandemic and causing price wars among buyers. Other factors include a strong desire for homeownership as many are working from home, low mortgage interest rates and construction of homes in San Diego County at Great Recession levels.
San Diego was not alone in this phenomenon, with three of the six Southern California counties reaching record price peaks in June.
Real estate analyst Gary London said increased prices are a direct result of a low number of homes for sale as buyers continue to be skittish about listing homes. Also, he said homebuilding in the county has been reduced in recent years so it's not like there are more homes to make up the difference. There were 8,053 homes built in the county in 2019 — its lowest since 2014.
"It's all about scarcity," he said. "We have a supply and demand imbalance."
There were 4,786 homes listed for sale in San Diego County from June 8 to July 5, said the Redfin Data Center, a drop of 37% from the same time last year. However, sales increased greatly in June — hammering home that buyers are willing to pay more than asking price.
In the same time period, about 32% of homes had a price drop. That compares to 41.6% around the same time in 2018 and 48.4% in 2019.
Conventional wisdom may say San Diego County's June unemployment of 13.9%, near record highs, would affect the market, but not so say many analysts. London said a lot of low-income workers who lost jobs during stay-at-home orders are renters and not in the market for homes. He said the job losses are much more likely to affect the rental market before it makes an impact on home prices.
"This pandemic is not an equal opportunity pandemic," he said.
There were 2,239 home sales in June, said DQNews, down 1.6% year-over-year but up massively compared to the last few months. From May to June, home sales rose 56%. Some experts say dropping interest rates largely kept the market afloat.
Interest rates remain at historic lows and appear to keep dropping. The rate for a 30-year, fixed-rate mortgage in June was 3.16%, said Freddie Mac, down from 3.8% at the same time last year.
Evan Morris, a real estate agent based in Golden Hill, said competition has gotten fierce in neighborhoods one might not expect. He said in June he was working with a client to buy a three-bedroom, two-bathroom single-family home in Azalea Park, a small area within City Heights.
The property was listed at $675,000, higher than any sales comparisons for that area, and still had five offers. Morris said they put in an offer for $685,000 but were beat out and the property sold for $700,000.
He said sellers are still unlikely to want to put homes on the market with COVID-19 still out there.
"Sellers are at home, in place, and not selling unless they absolutely have to," Morris said.
Resale single-family homes in San Diego County hit a record high of $655,500, surpassing the previous peak in April by more than $5,000. The resale condo median was $449,500, down by $4,750 from its peak in April. Newly built homes remained a fraction of the market with 317 sales (compared to 2,239 resale single family homes and 1,001 for resale condos) for a median of $622,500.
Southern California median home prices were up 2.9% annually. The biggest gain was in Riverside County, increasing 7.8% in a year for a median of $430,000.
It was followed by San Bernardino County, up 7.4% for a median of $365,000, Orange County up 4.1% for a median of $765,000, Los Angeles County up 4% for a median of $643,000, Ventura County up 3.5% for a median of $600,000 and San Diego County had the lowest increase at 1.7%.
