Median San Diego Home Price Hits New Record: $750,000

Speaker 1: 00:00 Bidding wars are breaking out among buyers as home prices in San Diego. Reach another record high in June. The median price for a home in the county reached $750,000 up about $150,000 from this time last year and extremely low inventory of homes for sale and low mortgage rates are two big factors driving prices up, but so is my Gracian from buyers coming into San Diego from even higher priced housing markets in California. Joining me is San Diego union Tribune, reporter Mike Freeman, and Mike, welcome to the program. Speaker 2: 00:38 They're happy to be here. Remind Speaker 1: 00:40 Us if you would, first off, what does median home price mean? Is that the average home price? Speaker 2: 00:46 No, it means that half of the homes sold for more than 750,000 and half of the homes of the month sold for less than that. So yeah, it's, it's kind of a way to take out the extremes, right? So if you had a $35 million purchase, the average would really shoot high, but in the media, and it's just one of the data points above the metal. And does that Speaker 1: 01:11 Include condos or just single family homes? No, Speaker 2: 01:14 That's condos condos as well. Speaker 1: 01:17 Keeps climbing June's numbers are even higher than they were in may, Speaker 2: 01:22 Right? Correct. It's been a very hot summer. It's really driven again by the, you know, the low mortgage rates and, you know, also kind of their increased opportunities for people to work from home, coming out of the pandemic or wanting to work from home, coming out of the pandemic. And therefore, you know, it's kind of fueled this strong, strong demand for housing, particularly in the suburbs, right? Lower density areas, um, where people can, um, you know, kind of have their castle and work from it. Is that Speaker 1: 01:51 The theory about why people aren't selling? Speaker 2: 01:54 Well, I think the, uh, the theory from the real estate agents I spoke to about what people aren't selling is, you know, if you sell, where do you go from there? So, you know, the idea is, is, or the notion is that, uh, you couldn't replace what you've got. You know, even if you sold for, you know, $750,000, you pocket that profit, um, uh, on your equity, if you wanted to live somewhere in San Diego county, you would have turned around and probably pay more talking Speaker 1: 02:24 About home in inventory being so low. Is there any way to express how low that inventory is? I mean, is it historically low? Is it, um, what, what are they talking about in terms of how low the housing inventory is? Is there any way that you can describe it? Speaker 2: 02:42 Well, the, I mean, the MLS has data that showed that the inventory in San Diego county for homes and condos was actually, you know, that's the number of homes for sale listed for sale, uh, was actually less than a month. And typically two years ago before the pandemic, San Diego had 5.5 months of inventory, uh, you know, available. So some 10,000 listings on single family and some 3000 listings on condos and townhomes. So, you know, now it's down to 2000 homeless things and 1000 condo listings. And so the inventory is just very, very thin right now, Lego has failed Speaker 1: 03:27 To hit the state targets for new home construction. Hasn't it? How far behind Speaker 2: 03:32 Then the same limits? The target was about 88,000 units and the city builders delivered about 4,200 units, um, on some updated figures that I've found this morning. So it's still, you know, 50% below what the target was. Oh, Speaker 1: 03:50 Is that low inventory playing out in actual real estate sales in San Diego? What typically happens when a house goes on the market? Speaker 2: 03:59 Well, from what realtors have told me is that, you know, particularly in a, you know, a new property that is highly sought after coming on the market, I mean, it just launches a bidding war. Um, and people are coming in and bidding above the asking price. And, and one anecdote, a realtor told me her clients bid, uh, $10,000 over the asking price on a, you know, kind of a newly listed hot property. And, and they didn't get it because, you know, someone else bid 45,000 over the asking price. And that home was like right in the sweet spot of the, you know, median price homes. I think it was a 7 75 or thereabouts price. So you get people at routinely now at doing, um, overbidding. Wow. Okay. Well, Speaker 1: 04:47 What about young couples who might be looking for a starter home, have those prices risen dramatically? Speaker 2: 04:52 Well, that, that has been a kind of the category with, again, anecdotally from re realtors has been the category that has been the hardest for people to break into because that's where a lot of the overbidding is happening. Buyers who are stretching to reach, um, the median to get into a home. Yeah. Speaker 1: 05:09 You're reporting that buyers from orange county and elsewhere in California are also driving home prices up in San Diego. Why is that? Speaker 2: 05:18 Yeah. Well, if you look at the median prices up there it's even higher and, you know, San Francisco is another sort of situation. And, and again, um, uh, from what I was told is, you know, if you're in, uh, in those regions and, you know, your money just goes a lot farther down here, you can, instead of getting a smaller place or, you know, a townhome and attached to home, um, you know, down here you can get a single family home for less. Do we have to wait Speaker 1: 05:45 Until San Diego can build itself out of this low inventory housing market? Or are there other factors that might start to stabilize the market? Speaker 2: 05:55 The other clearly other factors that would, would start to stabilize the market because building would be, would be a long, long process, right? Um, but clearly higher interest rates if inflation really takes hold and, and, uh, interest rates start to rise that that clearly will put a damper on the demand. Um, so the, you know, that's one of the things and I mean, there's just, you know, general, uh, economic conditions, you know, we're, we're coming out of the pandemic and it ended up in a hot market. So that, that could be an issue, uh, if, if their economic conditions start to slow. Um, and another thing too, and, and kind of I'm in a different tack, there is, I was told anecdotally that, you know, home construction is really been slow, new home construction, you know, in part, because there was a lumber shortage earlier this year, right. And things how very, very expensive, um, building materials and hard to find labor. So construction employment, I understand this now back to pre pandemic levels, but, you know, still hasn't really taken off. And so, you know, that's slowed it down to, you're not seeing a lot of the new home inventory coming on Speaker 1: 07:08 Or cast for San Diego real estate for the rest Speaker 2: 07:11 Of them. Well, according to the CoreLogic people, they, they continue to think that this is going to continue. CoreLogic economists estimated that there'll be 11% price gain between now and May, 2022. And the median Speaker 1: 07:27 Speaking with San Diego union Tribune, reporter Mike Freeman, and Mike, thank you so much. Thank you.