Home prices in San Diego County blew past previous records to hit an all-time high of $634,000 in July.
That represented a 9.3% price increase over a year earlier, according to CoreLogic data provided by DQNews, its highest annual jump in nearly two years. The previous record median price — the point where half of all homes sold for more and half for less — was $600,250 in June.
Prices were up sharply across Southern California as experts pointed to historically low interest rates and a lack of homes on the market as driving forces — despite a global pandemic and high unemployment.
Rich Toscano, a partner at San Diego financial firm Pacific Capital Associates, said it is hard to imagine a better scenario for rising home prices: People don't want to put properties on the market because it could risk bringing COVID-19 into their houses, which has made listings even more scarce. Borrowing costs are low. And buyers are seeing increased value in homeownership as they are stuck working from home.
"For now, everything is going in the housing market's favor," he said.
Toscano began warning of a bubble on on his housing blog Professor Piggington's Econo-Almanac in 2004, before the housing crash in 2006. He said the market right now is not a bubble and, for the most part, buyers and sellers are acting rationally. However, he did say the factors pushing up prices are temporary and could change as the year goes on.
The rate for a 30-year, fixed-rate mortgage in July was 3.02%, said Freddie Mac, down from 3.77% at the same time last year.
There were 5,505 homes listed for sale in San Diego County from July 6 to Aug. 2, said the Redfin Data Center, a drop of 35% from the same time last year. Meanwhile, sales of 4,253 properties were up 6.7% in July from a year ago
Samantha O'Brien, a real estate agent with PorchLight in University Heights, said the home search has been heartbreaking for many clients who are searching for places under $600,000 or so.
Two weeks ago, she and her clients offered $20,000 over asking price on a Chula Vista single-family home on the market for $550,000. They were beat out as the property drew 15 other offers. The sale has yet to close escrow, so the final price is unclear, but O'Brien said it is likely there was a substantial increase — something she has been seeing all over town.
"They are just getting priced out. Everything is just very, very competitive," she said of her potential buyers. "I'm advising everyone to come in at least $10,000, to upwards of $30,000, over asking."
O'Brien said potential buyers have other challenges besides higher offers, including buyers paying all cash or removing all contingencies up front. Redfin data showed that in July only about 4% of homes had a price drop. That's down from 4.8% in 2019 and 4.6% in 2018.
Resale single-family homes were July's market leader in San Diego County, hitting a record of $700,000, up $44,500 from the old record in June. Resale condos also hit a record at $471,500, up about $17,000 from the previous high in March. The median price for newly built homes, which includes condos and single-family houses, was $678,000, down from the record $812,500 in October 2018, when there was an increase in luxury, single-family homes for sale.
Norm Miller, the Ernest W. Hahn chair of real estate finance at the University of San Diego, said the high end of the market is largely responsible for pushing up average prices. He said people that have kept high-paying jobs during the pandemic, and those that have benefited from the stock market, are the ones buying up San Diego's most expensive homes.
Miller has published research that ties success of the home market to stock prices, which have seen major gains in the last few months, especially with tech stocks.
While San Diego County's unemployment rate is still near Great Recession-highs — 13.9% in June — Miller said many of those workers that lost jobs would not have been able to afford homes to begin with, or represent the very low end of the housing market.
