A Pause In San Diego Housing Market Price Increases May Be Temporary
Speaker 1: 00:00 COVID-19 has affected the housing market in some counter-intuitive ways. Prices in San Diego of homes continued their upward climb for the most part during the quarantine, but recent figures suggest San Diego County home prices stalled last month here to talk about whether this is a trend that will continue, or what analysts predict for the uncertain coming months in San Diego is union Tribune, reporter Phil Molnar, Phil. Welcome to midday. Speaker 2: 00:26 Thank you so much for having me. Okay. Let's start Speaker 1: 00:28 With the, the, the median price of a home in San Diego last month. That's for all homes, condos, single family town homes. What was the Speaker 2: 00:35 That's? Right. So the, the median home price was $650,000, which was kind of interesting because that's the same price. It was last month. And, you know, in San Diego, it's kind of funny because something small like this that happens is a big deal where maybe if you're in Minnesota or Michigan, it's not that big of a deal. You know, sort of we wrote a few months ago, how rent prices had only gone up about, or they were flat about 0%. And that was a big story. That rent prices hadn't gone up that much. So this is sort of in that same vein because San Diego home prices have been shooting up like crazy all year, especially since the pandemic began. So it was kind of shocking to see an October that we didn't see this gigantic jump again. Yeah. So what do you think was behind that? So I think according to a lot of the experts I talked to is that our home prices went up so rapidly in July, August, September, October. It just finally slowed down a little bit to catch up. However, what I will say is a lot of the analysts are expecting home prices to increase still in the next coming months, because a lot of the same factors are still present that have driven home prices to record territory. Speaker 1: 01:50 Oh, I just wanted to talk about single family homes, which the median price is 730,000, which is pretty high. How is that trending and what would the average monthly mortgage be for that? Speaker 2: 02:01 Oh my God. Well, there's a lot of different ways to look at how much, how much it could cost, but yes, 730,000 just to keep in mind. That is the highest than it's been in all time in San Diego for a resale single family home. And if you looked at the monthly cost of a mortgage, assuming 20% down, which is very hard to do 30 year fixed rate loan, that would be around $2,430 a month for your mortgage payment. Now, if you looked at that about a year ago and you looked at what the median home price was then compared to the interest rates, then it's only up a little bit. So it would've been about $2,390 a month last year at this time. So the monthly payment for a home is sort of around the same area. The only problem though is your 20% down payment would be now a hundred and thousand compared to 114,000. About the same time last year. Speaker 1: 03:03 It does seem like in this pandemic, the rich are getting richer and the poor are getting poorer. Is that reflected in the price of luxury homes in San Diego? Are they whizzing up faster? Speaker 2: 03:15 Luxury homes still are kind of going up slower, but sort of what you said about like the haves and the have nots. We're seeing that at an extreme level in San Diego because our economy is so we have so many jobs in tourism and restaurants and those folks have been hit harder than ever. Whereas we see this other side of the market, if you're able to work from home and you've kept your job and you may have some ties to the stock market you're doing really well. And those are the kinds of people that are buying houses in this market. The people that were working paycheck to paycheck, even before the pandemic, they were not in the home market to begin with and are very high prices here in San Diego. And they're kind of left out from this entire conversation. Speaker 1: 04:04 Obviously a lot has changed since last month. How could the news of a change of the administration in Washington, DC, you know, a new president affect the housing market here. Speaker 2: 04:14 There are a lot of policies from president elect, Joe Biden that could make things a little more in favor of renters. It sort of depends on what happens with the Senate. If it's going to be Democrat control or Republican control, he might have difficulty passing a lot of it. But what I will say is a lot of his policies could benefit renters. The biggest one is he wants to extend the expansion of section eight, which is housing vouchers for very low renters. So in San Diego, about 16,000 households receive section eight every year, but there are 80,000 households on the waiting list. So one of his things is to really expand section eight, so that could pump up a lot of money into the rental market. He's also proposed a renter's tax credit, and that is sort of interesting. I'm not totally sure how it's going to play out if it gets passed, but it's sort of based on a policy idea out of a housing program at UC Berkeley, which basically says if you're a household spending more than 30% of your income on rent and utilities, you would receive a tax credit when you file your return. Speaker 2: 05:26 Now, what we know about San Diego County is there is a lot of people, even up to 25% that are spending more than half their income on rent. So this could have a big impact on the fortunes of renters in San Diego County, Speaker 1: 05:41 Right? Of course, rent depends on the price of the home that the landlord has bought. And if those prices keep going up, that's pressure on rent, just going back to the changes, what would the appearance of vaccines on the horizon do to the housing market? Speaker 2: 05:56 Well, the housing market, it's sort of similar to the stock market in that it's forward-thinking. So in some ways, one way you could look at it is because we don't really know how it's all going to play out. But one thing is it could give potential home buyers, more confidence in the market and be more willing to buy a home, knowing that they're not presumably going to die or get really sick. However, another way it could react, which I think some potential home buyers would be happy about is right now, one of the things driving up prices is we have very few homes on the market in, in the month we're talking about right now, there was around 5,000 houses, which is just crazy considering we're the fifth largest County in America. It's a very, very slow amount of homes for sale. So one of the reasons we don't have a lot of listings is a lot of people that were looking to sell their home, have held off in this environment because they don't want a bunch of potential buyers with presumably COVID-19 walking through their house. You know, it's very cautious way to look at it, but that's one thing we're seeing is still a lot of sellers. I talked to real estate agents all the time. A lot of sellers are just waiting to put their homes on the market because they don't want those people coming through, or they might incorrectly be thinking that they can't get enough for their house, but you could get a lot for your house right now. Speaker 1: 07:22 Well, Phil, thanks for keeping such a close eye on this for us. Thank you so much. Speaker 3: 07:38 [inaudible].