November gain of 3.3% third slowest of 20 cities in Case-Shiller indices
San Diego home price gains continued to slow in November compared to most of the nation and California, said the S&P CoreLogic Case-Shiller Indices released Tuesday.
Resale home prices in the San Diego metropolitan area increased 3.3 percent in the year, the third slowest of the 20 cities covered by the index. National home prices were up 5.2 percent in a year, with Las Vegas leading the pack with a 12 percent gain.
Home price increases in November were slower year-over-year nationwide, with many analysts attributing higher mortgage interest rates leading to decreasing affordability — especially in costly areas.
Los Angeles metro area prices increased 4.4 percent in a year, also below the national average. San Francisco was only slightly above with a 5.6 percent yearly gain.
Alan Gin, economist at the University of San Diego, said it is important to note that prices are still rising. However, he said home costs already being near record highs means there’s not much wiggle room for potential buyers.
“A lot of people right now are just priced out of the market,” he said. “That’s why you’re seeing sales slow, as well.”
Gin said other parts of the San Diego economy are still strong, especially with a low unemployment rate, so the region’s slowed home price increases might be an aberration.
Still, declining affordability of potential homebuyers in San Diego County is of concern to some business leaders who see themselves competing with lower cost states. Gilman Bishop, principal of local development firm Bishop & Company, said workers who continue to stay in the region will face commutes farther and farther away.
“This hurts recruitment and retention, and makes our region less competitive overall,” he said.
The indices evaluate home prices by more than just price — they also track repeat sales of identical single-family houses as they turn over through the years. It is a favorite of economists, who use it to get a more complete view of the market instead of just the median home price.
A slowdown in sales, down for six months in a row year-over-year for San Diego County, will continue to slow price appreciation as the inventory of homes for sale continues to build, wrote Lawrence Yun, chief economist at the National Association of Realtors, in an analysis of November’s index.
Yet he said it is unlikely the national home price would actually decline because of a shortage of moderately priced homes, as well as a strong job market.
“In 2019, home prices in many markets look to trail income growth for the first time since 2012,” he wrote. “That is a healthy development of keeping housing affordability in check.”
The median price for a resale home in San Diego County was $605,000 in November. The interest rate for a fixed rate, 30-year loan was 4.81 percent at the end of November, said Mortgage News Daily, up from 3.98 percent a year earlier. That means the monthly cost for a median priced home (assuming 20 percent down) went up around $237 in a year.
Since November, mortgage rates have gone down. On Nov. 2, rates were around 5 percent but were down Tuesday to 4.61 percent, meaning home sales could pick up with the lower rates.
“Throughout the recovery, home shoppers have proven to be both remarkably sensitive to short-term volatility in rates and markets more broadly,” said Zillow senior economist Aaron Terrazas, “and also to have short memories once things stabilize, however temporarily.”
The highest annual price gains in November were in Las Vegas (12 percent), Phoenix (8.1 percent) and Seattle (6.3 percent). The lowest gains were Chicago, at 3.1 percent, and Washington, D.C., at 2.7 percent.
S&P CoreLogic Case-Shiller for November 2018
Yearly increases by city
Las Vegas: 12 percent
Phoenix: 8.1 percent
Seattle: 6.3 percent
Atlanta: 6.2 percent
Denver: 6.2 percent
Minneapolis: 5.8 percent
Detroit: 5.7 percent
Tampa: 5.7 percent
Boston: 5.6 percent
San Francisco: 5.6 percent
Charlotte: 5.5 percent
Miami: 5 percent
Cleveland: 4.6 percent
Los Angeles: 4.4 percent
Portland: 4.4 percent
Dallas: 4 percent
New York: 3.5 percent
San Diego: 3.3 percent
Chicago: 3.1 percent
Washington, D.C.: 2.7 percent
Nationwide: 5.2 percent
San Diego Union-Tribune