The major news in North County thus far this summer is a continuing willingness on the part of buyers to select homes from a shrunken inventory, pay more, and take less time to do so than in recent months.
By no means is a housing market with high demand peculiar to the region of the county north of Highway 56, but it’s just as evident there as anywhere else, according to home sales numbers for last month, compiled in the monthly HomeDex® report by the North San Diego County Association of Realtors.
Prepared for the Realtor group by Dr. Robert Brown, an economics professor at California State University San Marcos, the report monitors median prices of homes in all county Zip Codes, including the 35 in North County, as well as other indicators of the region’s housing market.
In June, the median-price for the 1,015 single-family detached North County homes sold that month inched up 1.71 percent, from $555,500 to $565,000 -- the highest it’s been since late 2007. Last month’s median price was 20.21 percent higher than 12 months ago. Prices per square foot jumped from $252 to $261 in one month, reaching a five-year high and a 23.4 percent increase over a year ago.
By all appearances, the trend is well set. June was the 11th month in which there were year-over median price increases and the fourth consecutive month in which year-over price increases exceeded 20 percent.
At the same time, the number of detached homes sold in the region decreased by nearly six percent from May to June which is partially explained by the continuing dearth of homes on the market. The number of new listings increased by just under six percent in that 30-day period but was still down by 26 percent from number of homes on the market a year ago.
In June, two of the four Escondido Zip Codes showed the greatest gains in year-over prices, compared to other North County postal codes. The 92027 area posted a 43 percent gain in median prices with 35 homes sold in the city’s eastern neighborhoods while Escondido’s central area, zoned as 92025, saw a 42 percent hike in prices with 39 homes sold. Other communities where year-over-year price gains of more than 30 percent were posted in June included Vista, Oceanside, Bonsall, Encinitas, and Del Mar.
Another indicator of consumer confidence in the housing market is the dramatic drop in the median days on market for North County detached homes. In June, the median number was 19 days on market, compared to 46 days a year ago.
All this would seem to become interesting, if not compelling data, for public agencies to look favorably on more new-home communities in a region considered by many to have been built out. The sharp upticks in home prices, spurred by lack of product, have adversely affected the ability of people with median incomes for the county to afford homes in North County Zip Codes.
In June, the monthly principal, interest, taxes and insurance payment for homes purchased that month was $2,649, relatively the same as the month before but substantially higher than the $2,303 payment a year ago. That means only 28 per of county households could afford the median-priced home in North County in June -- down from 33 percent of those that could a year earlier.
The concern now is what the impact increasing interest rates will be on a diminishing supply of homes; a problem not unique to North County. Rates are now in the mid-four percent range with the prospect of moving into the fives. The theory that remains to be seen is that such hikes will prompt buyers on the fence to move more quickly into making a purchase.
What also remains to be seen, among several things, is the impact rising loan rates and short inventories will have on investors who were major buyers during the downturn and into the early stages of the housing recovery. North County has had its share of non-occupant buyers. What happens if owner-occupants are no longer competing to buy with investors? To what extent, if any, will that diminish the number of multiple offers and the bidding wars they tend to beget? How will that impact continuing price hikes for properties in the lower $200,000 to $450,000 range where investors have focused?
On the other end of the price spectrum, increased consumer confidence and personal prosperity has bolstered the luxury home market; in particular upscale submarkets such as Rancho Santa Fe where the June median price was $2.2 million, Fairbanks Ranch as well as Del Mar where the median was $1.8 million -- 35 percent higher than a year ago.
Oceanside, Carlsbad, Vista, San Marcos and Escondido are searching for a theme with which to brand that region of the county. They might start with what they all share in common -- a healthy housing market.
Daniels is a North County Realtor as well as a public relations practitioner consultant and a former Escondido city councilman.