Median prices slightly increased 1.3% for detached homes in San Diego County from the end of the second quarter to the end of the third quarter. Attached residences in San Diego County slightly decreased 0.5% over this same period. Detached homes had higher prices at the end of the third quarter, up 8.6% from the end of September 2015. Attached homes also had higher prices, up 10.3% compared to last year. An interesting market trend to note is this is the first time in the last 5 years that the median home price for attached homes was lower at the end of the third quarter than they were at the end of the second quarter of the same year. Median prices for detached homes have historically both increased and decreased over the last 5 years over this same period, so there is no definitive trend to report on that front.

Market Update

 

The number of detached single family homes on the market at the end of the third quarter decreased from June by 10%, which is relatively consistent with the last few years considering seasonal factors. Inventory for attached properties in San Diego again decreased from June and is now hovering around the lowest level recorded in the last 5 years. Again, this is not painting a pretty picture for folks looking for price relief for starter homes or downsizing opportunities. Inventory for attached homes is 29% percent lower than it was at this time last year and inventory for detached homes is 12% lower. Similar to the lack of supply for starter homes, detached single family homes available for sale have only been lower than current levels for 5 months in the last 5 years, and these 5 months occurred in the slow winter season of 2016.

Market Update - Inventory

Homes in San Diego County have stayed true to the seasonal trend of being on the market slightly longer at the end of the third quarter than during the peak buying season at the end of the second quarter. Thus, the average amount of days each property spent on the market has increased from June but still remains at historically low levels. In September, detached homes averaged 36 days on the market which is 2% lower than September of 2015. Attached dwellings averaged 29 days, which is 17% lower than September of the previous year. Again, all of this data points to San Diego being in desperate need of some new attached housing supply as demand for starter homes in urban settings continues to outpace supply.

Market Update - Days on Market

As housing inventory in San Diego County remains low, affordability continues its creep downward. The lack of supply and strong demand is pushing up prices at a faster pace than household income growth in the region, thus continuing to negatively influence affordability. Interest rates have rebounded from their lows following the Brexit at the end of the second quarter and have begun to pick up steam over the last few weeks as FED rate hike speculation has begun to intensify.

The housing market in San Diego and across the nation has become accustomed to artificially low interest rates over the last few years fueling price increases, only time will tell how the normalization of borrowing costs will affect the housing market and affordability. This next quarter will be significant in determining the trajectory of the housing market as the FED faces increased scrutiny for monetary policy and the election is clearly shaping up to be one for the ages.

Market Update - Affordability

*The variables considered in the San Diego Association of Realtors Home Affordability Index are: median household income, median home values, and average interest rates. This index is a great measure of market conditions, as it considers the three main variables that drive the local San Diego County housing market.*

About the Author

Greg Robertson is a Broker at Class Realty Group’s San Diego office. Reach him by email at grobertson@classrealtygroup.com or by phone at 858-333-2422.

By |2017-05-08T18:54:52+00:00March 8th, 2017|Residential, Southern California Real Estate Report|0 Comments

About the Author:

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