San Diego home prices continue to rise, but not as much as elsewhere
Speaker 1: (00:00)
Double digit real estate price increases are not just a California problem anymore. New numbers show increases in Phoenix and Florida are even higher than San Diego. Meanwhile, here in San Diego, an incredibly low inventory of houses for sale is keeping the median home price growing and encouraging per to come up with more competitive offers for the homes available. Joining me is San Diego union Tribune, senior business reporter Philip Moar and welcome back. Thanks Maureen. So home prices in Phoenix are rising even faster than here. Yeah,
Speaker 2: (00:38)
It's pretty incredible in Phoenix. Home prices are, are up there 32.2% in a year. Now San Diego is up 24.4%. This is according to the S and P CoreLogic case Scher indices for November. So even though San Diego, I mean, you're talking about nearly 25% in a year and that's pretty shocking. But when you look at at Phoenix at 30.2%, I mean, that is just extreme.
Speaker 1: (01:04)
And what other areas are seeing the biggest increases?
Speaker 2: (01:07)
So Tampa was up 29% Miami up 26.6% Las Vegas, up 25.7 and Dallas was pretty similar to us at 24.6%.
Speaker 1: (01:20)
But I think the actual cost of housing remains lower in those cities than here in San Diego. Is that right?
Speaker 2: (01:27)
Yeah, that's right. So even in Phoenix where you've seen this amazing price growth, their median home price is around $410,000, which is about more or less $340,000 less than what we have in San Diego counties. It's, it's a considerable discount
Speaker 1: (01:44)
Are the factors that are driving home prices up here, the same across the country.
Speaker 2: (01:50)
You know, it is pretty similar. So fortunes have really increased a lot during the pandemic for stay at home workers, especially, but there was a lot of people lifted outta poverty with all the stimulus checks. So in general, people are doing better financially than they were a couple years ago. So that has sort of motivated a lot of people to get into houses. We still kind of have a hangover from the great recession where builders basically stopped building, you know, for a, basically a four to five year period because the market wasn't. So there aren't a lot of homes to get there. Isn't a lot of new building going on that has sort of met that demand. So what a lot of these markets, what you're seeing is people just fighting over resale, single family homes, really competing for that, cuz there's, there's not a big inventory of new homes just about anywhere. And
Speaker 1: (02:43)
That's certainly happening here. How low is the housing inventory here in San Diego?
Speaker 2: (02:48)
So things have gotten really extreme in San Diego county. At one point in December, we were down to about 1700 homes for sale. And if you consider we we're a county of 3.3 million people, San Diego county is the fifth largest county in America and you have less than 2000 homes for sale. So that's creating like insane competition. People always bidding over asking price and just making all sorts of concessions just to try and get a home. Now,
Speaker 1: (03:16)
What about rising more good rates? Do they seem to be having any effect on driving prices down?
Speaker 2: (03:22)
No rising rates do have an effect on probably some other markets in San Diego. I'm not as convinced that we're gonna see it in the third quarter of last year. We saw cash sales increase to their highest level in seven years. So almost 27% of all home sales in the third quarter here in San Diego were in cash. And that's because buyers are trying to get an edge over other offers by offering cash offers. So the funny thing about that is, and that's most ironic is that mortgage rates are these really low rates right now. You know, it's supposed to be motivating people to get into homes. But the funny thing in San Diego is things are so competitive. People are doing without the mortgage.
Speaker 1: (04:08)
Uh, what does so many cash sales? What does that signal does it indicate that there are a lot of investors in the housing market?
Speaker 2: (04:17)
No, actually we've seen investor track as far as the single family homes be down. And a big part of that is you might remember last year, Zillow offers had a home buying program where they were buying up all these houses and anyways, it didn't go that well, they lost millions of dollars on it. They end up closing their Zillow offers thing. So we've seen investor traffic actually slow, which is not the narrative that you hear a lot. You know, if you're at a bar in town or a restaurant, everyone talks about, oh, all the investors are buying up the homes and not really, you know, the, the data shows us that it's, it's, it's us buying the homes. It's San Diego residents, or maybe people moving in from out of town. But they're, they're not big investors typically that are by these single family homes. When I talk to realtors across the county, it's usually a situation where typically the, the main thing is like a millennial couple that is really trying hard to get into a home. And they have to come up with a cash offer because they wanna stay competitive or they feel they need to do that. So they're by borrowing from family members to get that cash sale.
Speaker 1: (05:25)
Are we in danger of that bubble bursting the way it did during the great recession?
Speaker 2: (05:30)
Just about every economist I talked to and housing experts says, no, that we're not in danger because credit requirements are tougher. People are better economically. They're not as on she achy ground. But one thing that is kind of similar to back then is this exuberance just to get into a home at any cost. And that's the only thing that might give me pause that we might be seeing something that's sort of unhealthy in the market. And
Speaker 1: (05:58)
What's the outlook for this year. Do we expect to see prices stop rising so much
Speaker 2: (06:04)
Prices? According to most people I talk to just about everyone are gonna be higher than they are right now at this time next year. But hopefully they're, they're saying they're not gonna be up as much as they were this year. Any
Speaker 1: (06:18)
Good news? thank you so much. I've been speaking with San Diego union Tribune, senior business reporter Philip Moar Phil.
Speaker 2: (06:26)
Thank you. Thank you so much.
While home prices in San Diego continue their climb, some cities are seeing even greater gains. Increases in cities such as Phoenix, Tampa, and Miami surpassed San Diego's nearly 25% home price increase, according to the latest S&P CoreLogic Case-Shiller Indices.
Locally, an incredibly low inventory of houses for sale is keeping the median home price growing and encouraging prospective buyers to come up with more competitive offers for the homes available, leading to a sharp rise in cash buyers.
San Diego Union-Tribune senior business reporter Philip Molnar joined Midday Edition on Thursday with more on San Diego's outlook on housing prices.
Molnar said that experts he has talked to believe home prices in San Diego "are going to be higher than they are right now at this time next year. But, hopefully, they're saying, they're not going to be up as much as they were this year."