The San Diego County median home price soared to its highest point ever, $550,000, in March, said real estate tracker CoreLogic. Home prices increased 6.8 percent in a year, which experts attribute to a lack of homes for sale and a strong economy. The previous home price peak was $545,000 in June.
Kelly Cunningham-S.D. Institute for Economic Research
YES Approaching bubble territory, but not yet reaching peak of price. The current median price of homes sold is “only” 6.7 times San Diego’s median household income. This is the same ratio reached in 2004, 1½ years before the ratio peaked at 8 times San Diego’s median household income at end of 2005. The primary reason prices are rising is demand for San Diego housing still far exceeds supply at the same time home construction lags.
Anthony Gin-University of San Diego
NO Housing prices are high and that is causing an affordability problem. But the increase is the result of economic fundamentals, not speculation. The local economy, particularly the labor market, is strong, which is increasing the demand for housing. The supply is much lower than in the last bubble, with residential units authorized by building permits at only about 10,000 a year, compared to 15,000+ in the mid-2000s. The only worry is a rise in interest rates, which would dampen demand.
Gary London-London Group of Realty Advisors
NO The housing market may be peaking again after 10 years of buildup, but it is not bubbling. In fact, lender requirements are very stringent, eliminating the prior crash causation factors. It is housing scarcity that is causing the price increases: We are building at the rate of less than one-half the housing units required in the region, creating a shortage that is expected to reach 170,000 units by 2030. Add to that the reluctance of sellers to sell and the millennial demand for the almost extinct single-family home, and you have a perpetual shortage and bid up of pricing.
Lynn Reaser-Point Loma Nazarene University
NO San Diego home prices are only now finally recovering to the prior highs reached a dozen years ago in early 2006. Demand is strong, powered by expanding jobs, incomes, and wealth. New supply has been inadequate, constrained by regulatory costs and other factors despite some positive steps by policymakers. As a result, San Diego has seen a net out-migration to other parts of the country of about 15,000 residents and home prices continue to climb.
NO As high as our housing prices are now they seem reasonable when compared to the Silicon Valley and Seattle markets. San Diegans are struggling to get into the housing market but those in it are riding the prices up and the for-sale inventory continues to stay very low, meaning houses are selling at these current prices.
Gina Champion-Cain-American National Investments
NO Even as interest rates increase, demand remains high and public policy designed to prevent creation of housing stock will ensure inadequate supply. These conditions will breed appreciation but not a bubble. Bubbles require rampant speculation fueled by irresponsible lending, neither of these conditions are present. The absence of “stated income” loans has shifted the under qualified consumer to rental living which removes those previously vulnerable mortgages from the market further reducing bubble risk.
YES I am no real estate expert, but any market at a peak gives me pause for consideration. I would guess that low-interest rates are a contributing factor, and as the rates increase, prices may see an impact. Also, with recent layoffs (e.g. Qualcomm), San Diego needs to attract/build more companies with high-paid workers, yet we are still at historically low (official) unemployment (which is increasingly misleading as a metric).
John Sarkisian-Motion Ventures
NO There is a shortage of housing that will continue to drive the cost of housing higher in the near future. Unlike the last cycle, housing prices are being driven by fundamental economics and not by creative financing products. It has been 10 years and prices are not significantly higher than before the last correction.
San Diego Union-Tribune