San Diego home prices continued to rise in October, up 11.6% – the biggest increase in more than six years.
Prices in America’s thinnest city have increased the third fastest year in the country, the S&P CoreLogic Case-Shiller Indices reported Tuesday. Only Phoenix, with an increase of 12.7%, and Seattle, with an increase of 11.7%, had greater gains.
The last time that prices in the San Diego metropolitan area rose so quickly was 12.4 percent in May 2014. Still, it is nothing compared to the times of real estate boom when, in July 2004, prices rose 33 , 37 percent in one year (only to drop more than 26 percent four years later).
San Diego was not an isolated case in October. Substantial gains in home prices have been reported across the country. Prices rose 8.4 percent nationwide and all 19 metropolitan areas on the index experienced faster increases than in the same period last year.
“The trajectory of house prices in recent months has been remarkable,” wrote Zillow economist Matthew Speakman. “In many parts of the country, and in the country at large, house prices are rising, in some measures at the fastest pace in decades.”
He said the price gains were the result of low mortgage rates, millennials aging as owners and limited stock of homes, all working together to raise prices. Speakman said the same factors were likely to maintain upward pressure on prices until 2021.
The cities with the worst performance in the index still had almost three times the pace of inflation. New York had the smallest increase, 6%, followed by Chicago with 6.3%. Detroit has been off the list since March because of pandemic-related delays at its recording office.
Other cities in California have made substantial gains, but have fallen far short of San Diego. Los Angeles was up 8.4% in one year and San Francisco, 7.7%.
The Case-Shiller indices take into account the repeated sales of identical single-family homes as they occur over the years. Prices are seasonally adjusted. The average price of a home for resale in San Diego County in October was $ 730,000, according to CoreLogic data provided by DQNews.
CoreLogic’s deputy chief economist, Selma Hepp, wrote that possible bumps in the housing market in 2021 can be mitigated with lawmakers’ COVID-19 relief programs. She cited the extent of eviction moratoriums to help tenants and foreclosure prevention efforts that will help existing homeowners stay in their homes.
“Together, the recent stimulus actions are likely to help demand from the housing market and ensure continued growth in house prices,” she wrote.
The stock of homes in San Diego remains low because of potential sellers who wait for the pandemic to end before they are listed. Looking back over the long term, a history of slow home construction has meant fewer new homes available for purchase.
There were 5,089 homes listed for sale from October 5 to November 1 in San Diego County in October, the Data Center Redfin said. This compares to 7,604 at the same time in 2019, 9,427 in 2018 and 7,028 in 2017.
There were 8,053 homes built in San Diego County in 2019, said the Southern California Real Estate Research Council. Early signs show the county is on track to build a few more homes this year, but that doesn’t compare to the housing boom days. There were 17,306 houses built in 2004, more than double what was produced last year.
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S&P CoreLogic Case-Shiller Indices
Annual increase by metropolitan area
Phoenix: 12.7 percent
Seattle: 11.7 percent
San Diego: 11.6 percent
Cleveland: 9.5 percent
Boston: 9.4 percent
Portland: 8.9 percent
Charlotte: 8.6 percent
Tampa: 8.6 percent
Los Angeles: 8.4 percent
Washington, DC: 8.2 percent
Minneapolis: 7.8 percent
San Francisco: 7.7 percent
Denver: 7 percent
Atlanta: 6.8 percent
Miami: 6.8 percent
Dallas: 6.5 percent
Las Vegas: 6.4 percent
Chicago: 6.3 percent
New York: 6 percent
Detroit: N / A
Nationwide: 8.4 percent