Home prices rise again after two month decline
Speaker 1: (00:00)
The experts say it's a basic question of supply and demand. The low inventory of homes for sale in San Diego is driving prices up again. After heading down for a couple of months, the median home price in the county is going up again. It's now at $750,000. And while that would seem to make it a sellers market, even sellers are facing problems, trying to find another home to buy after their home is sold. Joining me is San Diego union Tribune reporter Phillip Molnar. Philip.
Speaker 2: (00:31)
Welcome. Thank you so much for having me
Speaker 1: (00:33)
For a while. There. It looked like home prices were cooling off. So what caused prices to dip for the last couple of months?
Speaker 2: (00:42)
So what was going on was we were starting to get more homes for sale on the market. It's been stubbornly low home inventory throughout the pandemic, but finally people started putting their homes for sale. Part of it probably is the price going up so much. They felt they could cash out. So what we saw was for two months, inventory was increasing not by a lot, maybe about like 700 more homes than usual for sale. And during that time we saw the price actually declined for two months in a row. But as fewer homes went on the market in the most recent month, we have data for in September. We saw that price climb up again,
Speaker 1: (01:16)
New construction, have anything to do with it. I see a lot of stuff going up around town,
Speaker 2: (01:20)
You know, not really. When we look at new home sales every month, it's usually around 300 homes have sold. So it's such a low number of new homes are being built that it's like basically statistically insignificant. So yeah, unfortunately our home building is not keeping up with the needs of the community or the demand. So yeah, that's really not having a factor what's really driving the market is resale single family homes. That's our biggest portion of the market. So whatever is happening with those homes, that tends to be how the market's going to go.
Speaker 1: (01:53)
What about the increase in mortgage rates? Is that a factor?
Speaker 2: (01:56)
You know, what's so fascinating is what we're seeing now, especially in San Diego and I'm sure it's Aberdeen and other markets is the mortgage rate is not affecting home prices. Back in the day, you could really chart things by what was going on with mortgage rates. If they ticked up just a little bit, you'd start to see the price, start the price gain, start to slow or decrease. But what we're seeing now is even as mortgage rates are climbing up very slowly, it's really not affecting the market. What seems to be affecting San Diego. Most of all is how many homes are for sale. It's really amazing. So we actually did a graph in the union Tribune showing the inventory, and you could almost put the inventory numbers and that's the homeless for sale. You can put the number of homes for sale chart and overlay it on top of the home price. You can see as soon as the number of homes for sale, it starts to decrease. The price starts to go up. It's really fascinating.
Speaker 1: (02:47)
The median price that's 740,000 number includes all kinds of homes, single family condos, et cetera. Where's the market seeing the biggest price increases.
Speaker 2: (02:58)
You know, what's interesting. So the last few months, uh, what we have seen is the biggest increase in resale condos. When I talked to real estate agents across San Diego county, they say basically that a lot of shoppers were, everybody wants us to go family home. There's lots of surveys out there that show that's the most desired type of home in the United States. But what
Speaker 1: (03:20)
A lot of potential buyers are doing is saying, well, Hey, the price went up too much on that single family home. So we're going to settle for a condo. It makes a little more sense. So what we've seen though is because of that, the resale condo median has gone up to its highest point ever in September, which was $565,000. So that's sort of our biggest area of growth. Are there areas of the county where inventory is particularly low?
Speaker 2: (03:45)
Yeah. A lot of the north county coastal markets is really the, where you're not going to get a lot. The city of San Diego has done a lot of stuff, really aggressively to sort of increase home building. So some areas in the city are doing a little bit more than what you might find in north county, but especially our, our inventory numbers are the highest in anywhere, south county. So basically Chula Vista is the Mecca for home sales right now. There's a lot of inventory, not a lot by even historic standards, but if you want to look somewhere, it's basically Chula Vista San, you see Joe, those sort of areas that have the most available housing.
Speaker 1: (04:23)
One thing that could be keeping people from selling is that they may not be able to find a new house. Can you tell us about that?
Speaker 2: (04:30)
Oh yeah. I hear it all the time for real estate agents, because what my favorite thing to do is to call them every month and ask them for different stories. And a lot of the stories are the same. It's very interesting. So there will be people in San Diego county that are like, now's my time to sell this condo and move up to a single family home. But a lot of times they might actually back out of a deal because they can't seem to find anything to move into. So there's that factor, but a secondary factor is there are we, we don't have exact numbers, but a lot of real estate agents tell me that about half their clients are selling their homes and moving out of state. If you can cash out here and move back to Michigan or wherever your family might be from, you can really get a lot of bang for your buck. With that money with the problem is we have a nationwide housing shortage. So prices are going up across the nation and it's getting tougher to find a place, even if you're going to move to Texas or something like that. It's not as easy as it was a couple years ago.
Speaker 1: (05:24)
So Phil, what's the forecast for the housing market for the rest of the
Speaker 2: (05:27)
Year? Well, a lot of people think prices are going to continue to increase. There was one study we had a few months ago that predicted San Diego home prices would be nearing $1 million. There's always the possibility that as soon as we start getting just a few more homes on the market in San Diego county, if more people decide, Hey, I want to sell, get out of here before Christmas time. I guess it's possible. But a lot of the forecast just say, it's going to keep going on.
Speaker 1: (05:53)
All right, then I've been speaking with San Diego union Tribune, reporter Phillip Molnar, Phil. Thank
Speaker 2: (05:59)
You. Thank you so much.
The median price of a home in San Diego County moved up to $740,000 in September.
Let’s start with a decades-long truism. San Diego is a nice place to live and the price of homes here reflects that.
“Got nice weather, and actually the economy is doing pretty well and so a lot of people then like to live here.”
There you have it from USD Economics Professor Alan Gin. It’s a matter of supply and demand. So, then why the downturn in prices over July and August? Turns out that can also be chalked up to supply and demand.
“There’s been more supply of houses on the market, more houses were made available. And so when supply increases, then that puts a little bit of downward pressure in terms of prices," Gin said.
Gin said that extra supply has now been gobbled up, so in September, prices started climbing again.
The latest data from CoreLogic/DQNews spelled it out. The median price for a home in San Diego County rose to $740,000 in September. Prices are up nearly 14% this year, but the median price is still off of the peak of $749,750 reached in June.
Professor Gin said he thinks prices will continue to rise for the foreseeable future, especially if interest rates stay low. As an economist, that concerns him.
“That could lead to people being priced out of the region. They might have to move as a result of that... That could have an adverse effect on the economy in the sense that we cannot attract high quality workers to work here because of the high cost of housing," he said.
Plus, Gin said businesses that are able to attract quality workers often have to pay such high wages that they become less competitive. He said leaders must do more to deal with the issue, to make living here in this beautiful corner of the world, at least somewhat affordable.