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County sees low inventory, rising home prices

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This might just be the most average real estate market that agent Carey Guthrie has seen in 25 years in the business.

Though inventory is incredibly tight, there are finally buyers on all levels, interest rates are poised to remain at historic lows, and prices are strong for buyers and sellers.

“I watch our numbers, and they’re so, so consistent every month,” said Guthrie, branch manager for Windermere Real Estate SoCal in La Mesa Village and president of the Pacific Southwest Association of Realtors.

The real estate season is off to a strong start, based on April’s monthly numbers, real estate professionals say, and all corners of the county are poised to continue seeing steady price increases through 2015.

“This is the time of the year when more people are placing properties on the market so there’s an influx in inventory, and it’s a beautiful coupling with the great interest rates,” said Chris Anderson, president of the Greater San Diego Association of Realtors. “It’s allowing people to come in, not only the entry buyers, but also those selling to move up.”

North, south, east and metro San Diego saw increases in the 5 percent to 7 percent range in April compared to 2014, and countywide, prices rose 6.3 percent year-over-year to hit a median price of $520,000 for a single-family detached house.

And for San Diego, that number -- though high -- is still affordable.

“For people from Northern California, San Diego is like a candy store to them,” Anderson said. “If you’re coming from Arkansas or Tennessee, it’s not a great deal. It depends on what your perspective is.”

County housing prices

Of course, pockets throughout the county are more robust than others, pointed out Alan Nevin, director of economic and market research at the Xpera Group.

“Coastal areas remain hot, and hot basically means that homes are selling with relatively few days on the market,” Nevin said. “Typically, 60 days is the norm for a unit to sell in the county, but if you’re at the beaches, sometimes it’s not even one day, and you get multiple offers. It’s extremely competitive.”

Homes that were built in the 1950s and 1960s in Ocean Beach, Pacific Beach and Point Loma are essentially being priced as if they were new homes, Nevin said. Median prices in these areas range from $793,500 to $1 million, according to data from the local Realtor associations.

The median-priced single-family detached home in San Diego County remained at $520,000 in April, but increased 6.34 percent from April 2014, according to monthly statistics from the North San Diego County Association of Realtors.

The median price of a single-family detached home in North San Diego County fell 2.83 percent to $600,000 in April from $617,500 in March, and increased 5.08 percent year-over-year.

In East County, the median home price increased 2.24 percent to $434,500 in April from $425,000 in March, and increased 7.28 percent compared to April 2014.

The median price in South County increased just 0.57 percent to $441,500 in April from $439,000 in March, and increased 5.12 percent year-over-year.

In the San Diego Metro, the median price dropped 2.21 percent from $567,550 in March to $555,000 in April, but increased 5.59 percent over the past year.

In the metro area, neighborhoods just outside downtown are also seeing a strong marketplace, Nevin said, particularly the 92104 ZIP code which includes parts of South Park, North Park, Normal Heights and University Heights.

“It’s the two-job-per-household millennials, who can afford basically in the $400,000 to $800,000 range, and want to be close in,” Nevin said.

Low affordability rate

Here the median price in April hit $615,000, up 11 percent year-over-year, with an affordability level of 26 percent.

That low affordability rate still remains a concern for many potential homeowners in San Diego. It’s the percentage of households that can buy a median-priced home with 20 percent down and spend no more than one-third of their income on housing.

Buyers in San Diego need to earn at least $96,405 for a household to afford a median-priced home, according to HSH.com. San Diego continues to rank just behind the country’s least affordable metro, San Francisco, where buyers need the highest salary nationwide at $141,417 in order to purchase a median-priced home.

Nationally, a buyer needs a salary of $47,250 to afford the median-priced home, HSH.com said.

HSH.com used the National Association of Realtors’ first-quarter data for median home prices, using a median home price of $510,300 in San Diego, a 3.87 30-year fixed mortgage rate and a 20 percent down payment. Monthly payments would be $2,249.

Anderson said San Diego’s earned income is on its way up, and the increasing number of educated workers being attracted to San Diego the region’s strong industries makes the area affordable.

But not all household incomes are keeping pace with house prices.

The average household income in 2014 in the county was $85,420, according to statistics from the Realtors Property Resource, while the median household income came in much lower at $60,904. The unemployment rate in San Diego fell to 4.8 percent in April.

In all of San Diego County, 33 percent of households are able to afford the median-priced home, according to the HomeDex report by the North San Diego County Association of Realtors.

Affordability levels are lower both in North County at 27 percent and in the metro area at 31 percent. East and South County report higher affordability levels, at 42 percent and 41 percent, respectively.

Nationally, U.S. house prices rose 1.3 percent in the first quarter of 2015, according to data from the Federal Housing Finance Agency. This marks the 15th consecutive quarterly price increase in the FHFA purchase-only, seasonally adjusted index, based on mortgages sold to or guaranteed by Fannie Mae and Freddie Mac.

In San Diego, prices rose 2.58 percent for the quarter, according to FHFA, and are up 28.39 percent over five years. Since 1991, prices have appreciated a whopping 162.22 percent.

The National Association of Realtors reports that home sales slowed in April, but total sales are still up 6.1 percent from a year ago. The median existing-home price for all home types in April was $219,400, up 8.9 percent from the year prior, according to NAR data. Nationwide, demand exceeds supply and homes are selling in about 39 days, the fastest pace since July 2013.

In California, the median home price was $481,760 in April, 7 percent higher than a year ago. Properties spent about 34 days on the market, and the statewide housing affordability index rose slightly in the first quarter to 34 percent, according to the latest data from the California Association of Realtors.

Golden Hill

In San Diego County, the most expensive area is Rancho Santa Fe (92067) with a median house price of $2.5 million in April, and an affordability of just 2 percent. There were 19 sales in April, and homes spent a median of 57 days on the market.

Other pricey areas reporting a 4 percent affordability include Del Mar (92014) with a median price of $1.7 million; La Jolla (92037) with a median price of $1.725 million; and Coronado (921118) with a median price of $1.66 million.

The area with the highest affordability level in April was Borrego Springs (92004) with 78 percent and a median house price of $195,000.

Of the areas with more than 10 sales in April, Golden Hill (92102) reported the greatest changes in prices and affordability. The neighborhood -- roughly bound by Interstate 5 on the west, Imperial Avenue on the south and Euclid Avenue to the east -- saw a 40 percent change in the median price of homes sold, with the price coming in at $409,500 for the 22 sales. Listings were on the market for a median 16 days.

Affordability here dropped from 57 percent in April 2014 to 45 percent in April 2015.

Nevin said that 92102 is interesting because it’s essentially four separate neighborhoods separated by Broadway and 30th Street.

“One of the good things about Golden Hill is a lot of the homes are of quality architecture and lend themselves to nice renovations,” Nevin said. “You see a lot of the apartment projects are being renovated, because it’s a hot area to live in because of the proximity to downtown. It’s still a bargain compared to downtown.”

Areas with high “walk scores” -- where residents can walk to stores, restaurants or workplaces -- have recouped and become popular, said Guthrie of PSAR. This includes neighborhoods like North Park and South Park, or what some real estate professionals may call the “urban burbs.”

Nevin described his neighborhood -- Carmel Valley -- as the hottest in the county. “A home across the street from me sold in three days for $1.2 million with three offers. We were all kind of stunned. And last month, another one sold for $1.3 million and it was snapped up,” Nevin said.

Underpriced cities

Some areas are underpriced and playing catch up -- Escondido, El Cajon and Chula Vista are all good values right now, Nevin said.

The median sales price for homes in Chula Vista’s five ZIP codes ranged from $396,000 (in 91911) to $584,000 (in 91914); the average median priced home in the city sold for $476,400. Homes here spent an average of 46 days on the market so far in 2015, down 13 percent from the 53 days for the first four months of 2014.

Home prices in El Cajon range from a median of $410,000 in 92021 to $475,000 in 92019.

In Escondido’s ZIP codes, prices ranged from a median of $410,750 in 92027 to $450,750 in 92026.

Supply and demand

Guthrie owns homes that are reaping benefits from the strong price appreciation on both sides of the county. Country homes near her property in Alpine that were going for $60,000 are now priced in the $200,000s just three years later. And her 400-square-foot condo in La Jolla has nearly doubled in value after she purchased it for $300,000.

“It’s over half a million. That’s insane to me. How lucky for me -- but that’s crazy,” Guthrie said.

The imbalance between lack of inventory and excess of buyers remains an issue countywide.

“It makes people realistic right now,” Guthrie said. “You can’t play around, you can’t write lowball offers, and you have to be completely pre-approved on loan. In a lax market, you wouldn’t see that.”

Inventory is tight, with just about 2.5 months worth of homes on the market. A healthy market has about five to six months.

Anderson of SDAR, and a realtor at Town & Country Real Estate in Ramona, said she’d like to see the inventory normalize, which would open up buying opportunities for some potential buyers who can’t find what they need.

“If we had double our inventory, and we had a normal balance, it would blow up a little bit, so it wouldn’t be so hasty and competitive on the offers,” Anderson said.

Another positive this year in the market is the re-emergence of buyers who filed for bankruptcy or foreclosure in 2007 to 2009. After seven years, they’re eligible to re-enter the market.

“We have a whole bunch more buyers available, and we are expecting to see this for the next to three years because they see the value in homeownership and they want to buy again,” Anderson said.

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