Rock bottom mortgage rates, a limited supply of available housing, and a surging demand for increased living space in San Diego have all contributed to rapidly rising home prices over the last year in an otherwise drifting and stagnant economy.
The median home price in San Diego for January 2021 was $744,000 a 12% increase year over year from $655,000. Looking at the latest data, the home purchase market is being driven for one by the many renters with stable incomes who have reached the tipping point and suddenly need more space. The data shows these buyers were going to buy anyway over the next few years but have moved up their commitment to the present.
Another factor is the ridiculously low mortgage rates that have dipped below 3% for well qualified buyers. The mortgage payment for a house at the College Area median home price is typically in the range of $2,500 to $3,000 for the mortgage and interest payment. This is somewhat comparable to rents currently which is more palatable to first time buyers. We just closed on a single-family property with a view of Mount San Miguel where the monthly housing payment actually went down for the buyers, although they made a pretty good size down payment.
When looking at the upcoming year, what can we expect? I read lots of different opinions, blogs, economic real estate newsletters and such. Few are expecting this year’s price rises to match last year’s increases of 9% to 14% throughout California. There are a few factors to consider. First, the median home price stayed somewhat steady in the later part of 2020 and even slightly declined in some areas. Another consideration is that the population of San Diego and other parts of Southern California did not increase and in fact dropped slightly in some area. People have started moving out of California to some extent, moving to such places as Arizona, Nevada, Oregon, Colorado, Texas and Florida. In 2020, more people left California than arrived.
As a side note, I was recently in the Tampa, Florida area and it was quite beautiful, with a lot of new construction going up and three-bedroom, two-bathroom single-family homes selling in the 300’s. A local realtor told me it’s the fastest growing area in the Southeast.
In addition to population growth subsiding, many are predicting quite a few homes having to be sold later this year by people who are, sadly, in a forbearance program and whose incomes have steadily decreased or dried up completely However, some experts are saying that the expected increase in housing supply should easily be absorbed by the current crowds of buyers looking to purchase a San Diego property. But it is likely, some say, that effect will keep property prices somewhat steady instead of another substantial jump this year. I would say the general theme of various experts is that prices will probably increase maybe 3% to 10% in San Diego and Southern California this year.
Looking at single-family homes in the 92115, College Area, the median home price is currently $656,500, up 10% for the year and with only 14 homes for sale. In 92119, San Carlos, the median home price is up 15% year over year to $785,000 and with an extremely low inventory of only nine homes for sale. And finally, in 92120, Del Cerro and Allied Gardens, the median home price hit $810,000 and with only eight homes for sale currently. As a comparison, there have been times when over 100 properties have been for sale in each of these zip codes. So as you can see the volume of homes for sale is at record lows.
Call me for a no obligation meet-up to discuss any real estate plans you have in the coming year and to get my opinion on your various options. 858-431-6043.
—Sarah Ward is a realtor with Fine & Coastal Real Estate. Reach her at [email protected]