Experts: Mortgage rates, wages scarcely rising will continue to slow market
San Diego County home prices were up 1.1 percent in November after two months of declines, real estate tracker CoreLogic reported Thursday.
The median price was $565,000 — still down $18,000 from the all-time peak reached in August — showing the market was somewhat weathering increasing mortgage interest rates and lower sales.
There were 2,936 sales, down from the same time the last two years and representing six months in a row of declining sales. It was not just a local phenomenon, with fewer sales across the nation that many analysts attributed to rising mortgage interest rates.
Mark Goldman, real estate lecturer at San Diego State University, said even with the 1.1 percent price increase from October to November, a lot of factors would probably slow price gains in the coming year.
Goldman said higher interest rates, an overall tempering of enthusiasm for the economy and wages not rising much will all contribute to a slowed real estate market.
“(Mortgage) rates going up are coupled with household income not going up,” he said. “Even with really strong employment, we aren’t seeing the incomes move up yet.”
The mortgage rate for a 30-year, fixed-rate loan was 4.86 percent at the end of November, said Mortgage News Daily , up from 4 percent at the same time last year. That means the monthly cost for a median priced home (assuming 20 percent down) went up around $230 in a year.
National wages were up more than 3 percent in a year as of November, said the Bureau of Labor Statistics. When adjusted for inflation, wages had increased less than 1 percent, CNBC reported.
A factor in the recent bump in sales could be buyers trying to get a place before interest rates go up. Najla Wehbe Dipp, a real estate agent primarily in East County, said she has seen buyers trying to lock in interest rates as recently as last week.
“I know that’s going to be an incentive” in coming months, she said.
Dipp said she has met with several potential buyers who say they are waiting until next year for a big Great Recession-style drop in home prices. However, most economic forecasts still predict home prices going up next year — just at a slower pace than previous years.
All home types were down from peaks reached this summer:
• Resale single-family homes: Median of $605,000, down from $630,000 in June and July. There were 1,760 sales, it’s lowest for November in two years.
• Resale condos: Median of $400,000, down from peak of $432,000 in July. There were 797 sales, it’s lowest in three years.
• Newly built homes: Median of $751,750, down from peak of $812,500 in October. There were 349 sales, its highest since November 2009.
There were 7,445 homes for sale in November, up from 4,858 at the same time in 2017; 5,960 in 2016; and 6,505 in 2015.
Absentee buyers, typically investors who don’t intend on living in the home as a primary residence, made up 18 percent of sales in November. That’s down from 20.7 percent at the same time last year.
In ZIP codes with at least 10 sales, Point Loma (92106) had the biggest annual price increase for resale single-family homes, 34.2 percent, with a median of $1.3 million. It was followed by Bonsall (92003), which was up 30.2 percent for a median of $719,500, and Carlsbad (92009) up 19.7 percent for a median of $1.1 million.
Southern California sales have fallen on annual basis in five of the last six months. Los Angeles County in November had the biggest annual drop in sales — down 15.8 percent — of the six counties.
It was followed by San Bernardino County, which saw a 14.3 percent drop; Orange County down 11.7 percent; San Diego County down 10.8 percent; Ventura County down 9.5 percent; and Riverside County down 6.4 percent.
Riverside County has seen prices go up the most in a year at 8.2 percent with a median home price of $395,000. It was followed by Los Angeles County, up 5.8 percent for a median of $600,000; San Diego County with the 4.6 percent increase; Orange County up 2.7 percent for a median of $719,000; and Ventura County, which decreased 0.9 percent for a median of $575,000.
San Diego Union-Tribune