Median home prices are basically flat from last year, said CoreLogic. Sales remain low on a year-over-year basis in San Diego County and throughout California.
San Diego County’s home sales were down for the 11th month in a row in March, but home prices were still up slightly.
The median home price was $555,000 in March, said real estate tracker CoreLogic, a gain of 0.9 percent in a year. That’s down from a peak of $584,750 reached in August. In March, there were 3,224 home sales, down 8.6 percent from the same time a year ago.
Much of the slowdown has been attributed to rising mortgage rates, which started to move up in the latter part of 2018. Even with interest rates lowering substantially the first four months of 2019 though, buyers still face high prices in San Diego County, said Mark Goldman, an analyst with C2 Financial Corp.
“We still have affordability issues,” he said. “Wages aren’t going up, so that is going to stifle pricing.”
Goldman said homes increasing in value by 6 percent to 7 percent was not sustainable, as it had been for several years after the Great Recession. He also said some people are concerned that the economy will start to slow and that could put a damper on what they will pay.
March was the first time since April 2012 that the resale median single-family home price saw an annual decrease. The median was $600,000, down from $609,000 a year earlier.
Single-family homes are considered the cornerstone of the local market because it represents the majority of sales. There were 2,088 sales in March, down from 2,126 at the same time last year.
Alan Gin, economist at the University of San Diego, said he thought prices had reached a plateau because they were out of reach for a growing number of people. He suspected fewer buyers has meant more competitive pricing among what is available.
“That affordability wall is just huge now,” he said. “That is going to overhang the market for a considerable time.”
There were 6,253 homes listed for sale in March, said the Greater San Diego Association of Realtors. That’s up from 4,827 homes for sale last year at the same time and 4,369 in March 2017.
The median resale condo price in March was $420,000, down from a $430,000 peak last reached in August. The median newly built home price was $634,000, down from a peak of $812,500 in October. There are have been an average of 278 new homes selling each month for the last year, so the limited number of sales tends to move the median price greatly.
As home prices have largely been flat year-over-year, it is now cheaper to buy a median-priced home than a year ago, thanks to lower rates.
The median price in March 2018 was $550,000 and, assuming 20 percent down, a buyer would have paid a monthly payment of around $2,515. That assumes a 30-year, fixed-rate loan at the 4.51 percent interest rate at the end of March 2018.
This March, the $555,000 median home payment — again assuming 20 percent down — would be around $2,410 a month. Despite an increase in price, the lower interest rate — 4.03 percent — makes it a little less expensive.
The change in rates comes after a sharp rise during much of the last 12 months. In early November, rates hit a high of 5.05 percent.
Jeff Grant, owner and broker of San Diego-based Sand & Sea Investments, said he saw a big jump in interest from potential buyers after the Federal Reserve’s Open Market Committee voted not to raise its benchmark rate in March, and indicated it would likely not raise rates for the rest of 2019.
Mortgage rates typically track the yield on the U.S. 10-year Treasury, so the Fed’s decision can mean lower rates.
“The minute those interest rates went down, we had a huge influx of buyers,” he said. “We had four of our listings under contract that week.”
Grant predicted April’s numbers would be an improvement over March as more and more buyers learn about lower interest rates. Most of the sales in March were the result of transactions started in February, so it is possible the full effect of lower interest rates won’t be felt until April or May.
California home sales down
The entire state had a modest slowdown in prices in March.
In the San Francisco Bay Area, home prices were down 0.1 percent year over year. The last time prices went down annually was April 2012. A similar situation played out across Southern California where home prices also had their first annual decrease since March 2012.
In Southern California, Orange County experienced the only annual drop in price, down 0.7 percent to a median of $720,000.
Riverside County had the biggest annual price increase, 3.9 percent, to a median of $389,500. It was followed by Ventura County, up 3.3 percent for a median of $583,750; San Bernardino and Los Angeles counties up 2.1 percent for medians of $336,000 and $597,500, respectively; and San Diego County with the 0.9 percent increase.
San Diego Union-Tribune