Before coronavirus, San Diego County home prices were rising. Will it last?
San Diego region’s median home price was up 7 percent in a year in February
San Diego County’s median home price continued to rise in February 2020 to $587,000, reflecting optimism in the home market before the coronavirus crisis.
Sales in February represent purchases that began in late December 2019 and January 2020, meaning concerns over the virus were hardly a blip on the American radar.
There were 2,835 home sales in February 2020, a 14 percent rise from the same time last year, said CoreLogic data provided by DQNews. Also, the median price was up 6.8 percent in the 12-month period, nearing record highs.
Jordan Levine, senior economist for the California Association of Realtors, said he expects prices to decrease in San Diego and throughout California.
“We’re expecting prices will not be as strong as they were in January and February,” he said. “I think economic uncertainty will cut against demand.”
Levine said forecasts are changing daily with the spread of the virus, and there are a lot of competing forces that are pushing prices in opposite directions.
Low mortgage interest rates might still bring more buyers out. Also, he said there are other people who might decide to get money out of the stock market and into real estate.
On the other hand, he said real estate agents across the state are reporting potential buyers pulling back from home searches in recent weeks, as well as clients walking away from home purchases close to closing.
Some San Diego analysts have pointed to the high demand for homes in the area and low inventory as unlikely to change. But, Levine said the demand factor could weaken if the virus and the economic situation gets worse.
He said San Diego was on strong economic footing going into the crisis, which led to a big demand/home inventory imbalance. But, he said it’s hard to say if that level of demand will remain.
“If folks start being laid off,” he said, “you start to see that demand erode.”
The mortgage interest rate for a 30-year, fixed-rate loan was 3.47 percent in February, said Freddie Mac, down from 4.33 percent at the same time last year.
There were 4,085 homes for sale in February, said the Greater San Diego Association of Realtors, down from 6,362 at the same time last year.
Levine said it is likely the brunt of the economic impact will not be seen soon, especially as many February home sales close this month. But, after May onward, it will be more obvious what happened in the market.
Not everyone was convinced the market could see prices go down. Real estate analyst Alan Nevin, of Xpera Group, said the home inventory numbers are so low in San Diego County that he thought home prices would stay about at the level they are at now, or even go up. However, he predicted a slowdown in sales of luxury homes.
“The meat and potatoes of the market — homes $400,000 to $700,000 — will continue to sell,” he said.
Here’s how the different home types fared in February 2020:
- Resale single-family homes: Median of $647,000, down from the peak of $649,000 in June. There were 1,691 sales, up from 1,576 at the same time last year.
- Resale condos: Median of $445,000, a new record peak. There were 892 sales, up from 694 at the same time last year.
- Newly built homes: Median of $676,750, down from a peak of $812,500 reached in October 2018. There were 252 sales, up from 217 in February 2019.
Home prices were up across Southern California by 6.1 percent. Orange County saw the biggest jump, an increase of 6.9 percent for a median of $748,000.
It was followed by San Diego County with the 6.8 percent increase; Los Angeles County up 6.2 percent for a median of $621,250; Riverside County also up 6.2 percent for a median of $400,000; San Bernardino County up 4.5 percent for a median of $350,000; and Ventura County up 1.8 percent for a median of $575,000.