The price of a home in San Diego could rise more than 8 percent this year, more than anywhere else in the country, according to a forecast released on Tuesday.
CoreLogic real estate analysts said the price of a single-family home in San Diego County will increase 8.3 percent from November 2020 to November 2021. This means that the average price for a home in San Diego can be around $ 776,000 by the end of the year.
CoreLogic said the main reason is the lack of homes for sale, which will increase prices as buyers compete. A secondary factor is the growth in income for highly qualified positions in San Diego County.
It is not uncommon for San Diego homes to increase dramatically in one year – in fact, single-family homes here increased by 9.5 percent last year – but the forecast is noteworthy because CoreLogic predicts that most markets will have a slowdown in price appreciation in most markets.
The only regions that real estate analysts say will come close to rising as much as San Diego will be: Miami, with a 3.2% rise forecast; Los Angeles, 3.2 percent; and Washington, DC, an increase of 2.9 percent. CoreLogic said the total national increase is expected to be around 2.5 percent.
“San Diego is just one of those markets that have seen a huge revenue growth and insufficient supply to meet demand,” said Selma Hepp, deputy chief economist at CoreLogic.
She said San Diego is an example of what has been seen a lot across the country: high-paid workers who were able to work from home saw their fortunes rise during the pandemic, while low-paid workers lost income because their jobs were among the first closed during shutdowns.
“Income inequality is being exacerbated by all of this,” said Hepp.
For those who have money to buy, there are not as many options as in previous years. In mid-December, the Data Center Redfin reported that there were 3,763 homes listed for sale across San Diego County. Although December is usually a very slow month for sales activity, it is still the lowest in recent memory. At the same time, in 2019, there were 5,182 homes for sale and 7,471 in 2018.
Real estate agents in San Diego County in 2020 said potential sellers wanted to wait for the pandemic to end before putting their homes on the market. Part of the thought was not to want to change during the crisis, as well as to prevent potential buyers from passing through the house carrying the COVID-19 with them.
However, analysts say supply restrictions in California cannot be explained only by the lack of homes for sale – but they have also delayed home construction. In the third quarter of 2020, San Diego County had built some 6,691 homes. Although it appears to be on the right track for more than 2019, it is still down since boom times, when 17,306 housing units were built in 2004 and 15,258 in 2005.
Nathan Moeder, director of London Moeder Advisors, real estate analysts in San Diego, said that local construction is below what is necessary for a growing population. He said data from the state-certified housing plan for the county, which plans how many homes will be needed from 2012 to 2020, show that the region has fallen short of more than 35,000 housing units.
“We are only building half of what we need,” he said.
While it may seem to many San Diegans that home prices are overvalued, CoreLogic said it was not. It classifies the markets as undervalued, normal and overvalued. It only says that a market is overvalued if the increase in house prices is 10% or more of the increase in family income in that region.
The company said that overvalued markets include Denver, Las Vegas, Miami, Phoenix and Washington, DC However, it said that San Diego ranks as “normal” due to gains in family income growth driven by higher-paying jobs. CoreLogic used data from the US Bureau of Economic Analysis, which showed that personal income in the San Diego metropolitan region increased 4.2%, above the national average of 3.5%.
The resale price for a single-family home in November was $ 717,000, according to CoreLogic data provided by DQNews, slightly below the historic $ 730,000 peak reached in October.
While rising prices can be difficult to swallow for potential buyers, it has meant good luck for San Diego County homeowners.
Hepp said the increase in equity for homeowners means that they can use it to make improvements to their homes, use it to finance the purchase of a second property or sell and buy a new home in a lower cost market .
CoreLogic does not anticipate that all markets will increase in 2021. For example, it said that Houston – hit hard by the oil industry slump and the recent hurricane season – will see prices drop 1.4 percent through November 2021.
Trends in San Diego County may mean that the largest generation of workers, Generation Y, will be composed mainly of tenants. A LendingTree study, also released on Tuesday, said the San Diego metro is not as popular with millennials, who tend to be poorer than Generation X and baby boomers.
LendingTree said that of the 50 largest metropolitan areas, from January 1 to December 15, 2020, San Jose had the largest share of mortgage purchase orders by the millennium generation, with 62%. I was followed by Boston, Denver and Minneapolis with 59 percent and Buffalo and San Francisco with 58 percent.
San Diego ranked 35 on the list, with 51 percent of the millennial generation placing purchase orders. Las Vegas was the smallest, at 50, with 43%.