Are home prices in San Diego County actually dropping? Maybe only for a short time.
In its latest report on the home sales and prices, the California Association of REALTORS® (C.A.R.) said the median sales price of an existing single-family home in San Diego County was $605,000 in August, compared to $613,000 in July, a drop of a mere 1.3 percent.
However, the relatively small reduction in home prices is not leading REALTORS® to say that prices are heading south. In a year-to-year comparison, C.A.R. said the August 2017 median home price of $605,000 was higher than the August 2016 figure of $563,000, an increase of 7.5 percent.
Statewide, August’s median home price reached its highest level in a decade and remained above the $500,000 mark for the sixth straight month. The median price rose 2.9 percent from $549,460 in July to $565,330 in August and climbed 7.2 percent from the revised $527,490 recorded in August 2016. The median sales price is the point at which half of homes sold for more and half sold for less. It is influenced by the types of homes selling, as well as a general change in values.
In addition, California home sales increased in August despite lower inventories. Closed escrow sales of existing, single-family detached homes in California remained above the 400,000 benchmark for the 17th consecutive month and totaled a seasonally adjusted annualized rate of 427,630 units in August. The number of home sales in California in August was up 1.5 percent from July and 1.3 percent from August 2016. In San Diego County, C.A.R. said the number of homes sales in August was up 11 percent compared to July and 4.9 percent from August 2016.
“It’s really a tale of two markets,” said C.A.R. President Geoff McIntosh. “Despite sales growth across all segments of the market, lower-priced homes are particularly inventory constrained, which leads to weaker sales growth, faster-rising prices and fierce competition for the few homes that are listed. These homes are selling faster than historically and for top dollar, adversely impacting entry-level buyers who are already struggling to afford to buy their very first home.”
“August marked the third straight month that the median price gained 7 percent or more year-over-year, indicating that prices are not only growing but are accelerating into the end of the year,” said C.A.R. Senior Vice President and Chief Economist Leslie-Appleton-Young.
Other notable outcomes from the C.A.R. market report for August 2017:
In San Diego County, the median number of days it took to sell a single-family home was 14 days in August compared with 13 days in July and 17 days in August 2016. Statewide, the median number of days it took to sell a single-family home was 18 days compared with 16 days in July and 28 days in August 2016. C.A.R. figures are based on a 28-day median period for a home on the market.
Statewide active listings continued to decline in August, dropping 11.9 percent from a year ago.
Mortgage rates declined further in August as the 30-year, fixed-mortgage interest rate averaged 3.88 percent in August, down from 3.97 percent in July but was up from 3.44 percent in August 2016, according to Freddie Mac. The five-year, adjustable-rate mortgage interest rates ticked down in August to an average of 3.15 percent from 3.22 percent in July but it was up from 2.74 percent in August 2016.
Meanwhile, according to other reports from various industry sources:
There appears to be no end in sight for the inventory shortage. The imbalance of supply and demand is continuing to push costs higher. The limited supply is driving demand and prices, as well as millennials aging into home ownership, the labor market is booming and wages are growing.
The typical San Diego home seller made $125,000 on the sale of their home in 2016, according to Zillow. The real estate website crunched the numbers on 33 U.S. metropolitan areas and found the best return on investments for homes was in Oakland, where homeowners saw a 78 percent return on what they originally paid, followed by Portland with 64 percent earned. San Diego County ranked No. 17 as the best return for buyers with a 33 percent jump, behind Nashville, Mesa, Philadelphia, Phoenix and other cities.
Zillow also said that in eight years and 11 months (typical length of stay for a San Diego owner) that a seller earned $16,000 per year on their investment when they sold in 2016.