Median Sales Price

Median prices again increased for both detached and attached residences in San Diego County throughout the second quarter of 2016. At quarter end, detached homes were priced 4.2% higher and attached homes were priced 8% higher than last June. Since the end of March 2016, detached homes median sales price increased 3% and attached homes increased a whopping 5%. This drastic increase for condos and townhomes illustrates the heightened demand for ‘starter homes’ and the lack of affordability for single family homes in San Diego County. So long as interest rates remain at record lows (thank you Brexit) and supply remains low, we again expect modest price increases into the 3rd quarter of 2016.

Inventory

The number of detached single family homes on the market at the end of the second quarter increased from March by 6%, which can be attributed primarily to seasonality. The more concerning statistic (and reason for the red arrow pointing down above) is that San Diego County single family housing inventory was 11% lower at the end of June 2016 than it was in at the end of June 2015.

Demand for attached ‘starter homes’ has been off the charts, and this can be seen in the 5% decrease in available attached housing inventory since the end of the first quarter of 2016. Even the seasonal influences on supply could not outweigh the current buying appetite for attached homes in San Diego County. Another alarming statistic is that current attached housing inventory is 27% lower than it was at this time last year. It is pretty clear that lack of supply is continuing to tip the scales in seller’s favor warranting higher prices, faster escrows, and more seller favorable terms.

Days on Market

Homes in San Diego County have again sold much faster in Q2 2016 than the previous quarter. Thus, the average amount of days each property spent on the market has decreased. In June, detached homes averaged 30 days on the market prior entering escrow and attached dwellings averaged 26 days. Once again highlighting the heated San Diego housing market for both attached and detached homes. The average days on market for the quarter was approximately 20% less than quarter 2 of 2015. This proves current home buyers in San Diego County must act swiftly to purchase a home.

Affordability

As housing inventory in San Diego County remains low, affordability continues its creep downward. Low inventory and strong demand is pushing up prices at a faster pace than household income growth in the region. This negatively influences affordability. Prior to the Brexit at the end of June, interest rates remained relatively constant throughout the quarter. The shocking decision by Britain sent mortgage rates plunging at the end of June, spilling into early July. This helps short-term affordability, but will likely add fuel to the fire that is the San Diego County housing market. Only time will tell how the uncertain political and economic environments at home and abroad will influence mortgage interest rates and the economy in the coming months. Stay tuned…