Increased Seller Volume and Lower Buyer Demand Yields Reduction in San Diego Median Home Sales Price
For the first time in 7 years, San Diego’s median home price has decreased on a year-over-year basis, according to real estate tracker CoreLogic. In September of 2019, the median home price in San Diego County was $584,000, 0.1% lower than it was at the same time last year. The last time home prices were down on an annual basis in San Diego County was in March of 2012. In the initial six months of 2019, home sales were down 8.4% from the same time in 2018.
Despite these trends, economic professionals say it’s time to buy, expecting a rebound beginning in 2020 with no recession indicators visible.
San Diego Housing Trend Indicators
Following a strong initial recovery from the 2008 recession and financial crisis, there have been indicators of the real estate market slowing over the past 5 years. At roughly 3300 sales per month, the average annual volume of 40,000 sales has remained relatively unchanged over the past decade. This is roughly 33% lower than the peak in 2003 at 60,000.
The average monthly sales volume for 2019 is expected to be well below the average for the past decade, with an average monthly volume of 3100 sales for the first six months. Higher interest rates and economic uncertainty will continue to maintain this trend for the remainder of 2019 and in to 2020.
The sales slowdown does not seem to affect only high or low cost areas as some of San Diego’s most visible real estate markets were affected. Imperial Beach is down 38.5% through the first six months, followed by Logan Heights (-26.7%), Rancho Santa Fe (-26.6%) and Solana Beach (-23.9%).
The Millennium Boom
Homeownership in San Diego has rebounded as millennials look to purchase their first homes. At 53.3%, San Diego County homeownership has rebounded slightly from a low of 50% in 2016. This improvement aligns with the general statewide and national figures despite rising home prices across all tiers.
Median House Price Trend
The median house price in San Diego has had a slight reduction in the past 18 months. Forecasting in to the future, the increased buyer purchasing power from lower interest rates, job recovery and the millennial boom mean that home prices are expected to continue to increase from 2020 forward in to 2021.
Price that are above the median of $590,000 experienced the biggest change in pricing with a 12% reduction between January and June of 2019. Below are the comps based on price range for the first half of 2018 compared to the same period in 2019.
The Real Estate Outlook from Economic Professionals
Despite this perceived sluggishness, there are signs that the real estate market will pick up steam over the next few months, said Chris Thornberg, economist and founding partner of Beacon Economics. A tight housing market, low mortgage interest rates (3.6%), and little indication of economic disruption in the foreseeable future indicate a continuance of the second longest expansion period in U.S. economic history. To those predicting a recession in the coming months, Thornberg has this to say:
Every recession has to be caused by some shock to the system. To date, we have yet to see something that would rise to that level and push the economy off the growth path on which it is currently… By the end of the year, price growth is going to be up again and next year it will be a very healthy number. It is all driven by the fact that these interest rates are low and giving a lot of life to the market.
The Median Home Price in the San Diego Backcountry
Indeed strong sales in Fallbrook, Rancho Bernardo and Ramona indicate that high inventory and more buyers entering the market mark the reverse of the declining trend from the first three quarters of 2019. Red Hawk Realty has listed 8 new properties for sale in the San Diego backcountry in the last month and continue to field inquiries from sellers on a daily basis. From bug-out cabins in Mount Laguna to 20-acre estates in Cuyamaca, the San Diego backcountry has options for all buyers and interests.
If you are considering selling or purchasing property during 2019, now is the time to act. If you would like a free real estate valuation or consultation, please contact Meriah Druliner (760-420-5131; Meriah@Donn.com) or Donn Bree (760-518-6669; Donn@Donn.com).