San Diego County's home market started 2020 with prices rising more than any other West Coast market and much of the nation.
Prices in the San Diego metropolitan area had risen 5.1% in a year, as of January, the S&P CoreLogic Case-Shiller Indices reported Tuesday.
The report is another example of looking back at what seems like ancient history before the coronavirus pandemic. The full effect of the crisis on home prices will likely not be known for months, but early analysis and reports from real estate agents suggest many potential buyers have delayed purchases or stopped searching altogether.
All markets in
Phoenix posted the biggest gains at 6.9%. San Diego, Seattle and Tampa all had 5.1% increases. Other California markets lagged behind. Los Angeles was up 3.4% and San Francisco was up 3%.
"Homebuyer demand (in January) was supported by low mortgage rates and rising income, leading to a further rise in home prices," wrote Frank Nothaft, chief economist for CoreLogic. "The novel coronavirus has placed a cloud over the spring buying season, and home sales will likely be much lower than had previously been expected."
Since January, mortgage rates have fluctuated wildly as lenders try to manage explosive demand for home refinances. In January, things were more stable.
The rate for a 30-year, fixed-rate mortgage was 3.62%, said Freddie Mac, up from 4.03% at the same time in 2019.
Zillow economist Matthew Speakman said the U.S. housing market was picking up steam at the start of the year. The rosy outlook had come after a sluggish 2019 that saw price increases slow in the first six months. He said a tight labor market, low mortgage rates and low home inventory were fueling price gains.
"Today's Case Shiller release is sure to offer some fond memories of the not-so-distant past," Speakman wrote, "and some hope that the industry can continue the growing momentum it was riding to begin the year once this crisis passes."
The Case-Shiller indices take into consideration repeat sales of identical single-family houses as they turn over through the years. Prices are adjusted for seasonal swings. The San Diego County median home price for a resale single-family home in January was $630,000, said CoreLogic data provided by DQNews.
An analysis from Redfin, also released Tuesday, predicted many high-cost housing markets like San Diego would be at a greater risk of recession. It came to its conclusion by looking at the rates of leisure and hospitality employment, debt-to-income ratios, the number of COVID-19 cases and the number of air transportation jobs.
In general, it said areas with lower-priced housing — Rochester, N.Y., Hartford, Conn., Raleigh, N.C. — would be better able to weather the storm because of low population density, lower debt-to-income ratios and little dependence on air transportation employment.
"Some cities have factors that make them more susceptible to losing their footing and are likely to be hard hit," wrote Redfin lead economist Taylor Marr. "Amidst rapidly rising layoffs, it will be especially difficult to sell a home in these markets, and yet buyers will likely find limited options as sellers delay listing, leaving the housing market in a standstill."
It said the cities with the highest recession risk were Los Angeles (77.6%), Miami (76.8%) and San Diego (75.2%).
On the plus side, the group of Redfin economists who produced the report said it was unlikely the real estate market would suffer a similar crash to the 2008 Great Recession. They said the driving factor of this potential recession was not real estate — unlike last time — and the factors pushing up prices before coronavirus are expected to ramp up again once the pandemic subsides.
