By Phillip Molnar | San Diego Union-Tribune
San Diego home prices are, once again, rising at one of the fastest rates in the nation.
The metropolitan area’s annual home price increased 6.5% in September, according to the S&P Case-Shiller Indices report released Tuesday. It was the second-highest in the 20-city index behind Detroit and San Diego’s highest showing in just over two years.
To the north, the Los Angeles metro area ranked sixth with home prices up 5.2%.
The lack of homes for sale across the nation was cited by analysts as the biggest reason for climbing prices. In San Diego County there were 2,101 home sales, marking the lowest ever recorded for a September in records going back to 1988. The larger LA metro saw just 13,051 sales in September, down 22.5% from the year before and down almost 17% from August levels. It was Southern California’s second-lowest sales tally for a September in records dating back to 1988.
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Prices were up 3.9% nationwide, despite rising mortgage rates. In the last week of September, the average interest rate for a 30-year, fixed-rate mortgage was 7.31%, said Freddie Mac. That was up from 6.7% at the same time last year.
“Even as rates began to rise quickly earlier this fall, buyers were able to put more money down — or buy in cash — which continued to put upward pressure on prices,” wrote Bright MLS chief economist Lisa Sturtevant.
She wrote that it is likely home prices will start coming down in the winter because of a typical seasonal slowdown, and a slight increase in listings.
The Case-Shiller Indices track repeat sales of identical single-family houses — and are seasonally adjusted — as they turn over through the years. The San Diego County median resale single-family home price was $930,000 in September.
Detroit was the fastest-appreciating market in September, up 6.7% in a year. The median sale price in that metro area was $183,000 in September.
Other top markets in the index were New York, up 6.3% annually, Chicago up 6% and Boston up 5.3%. At the bottom was Phoenix down 1.2% in a year and Las Vegas down 1.9%.
Zillow senior economist Orphe Divounguy wrote that while the increases were notable, it was important to remember that mortgage rates were just starting to really increase around this time last year.
“While price growth remained somewhat flat in September,” he wrote, “annual price growth accelerated — mostly due to the lower base from a year ago, as prices were falling this time last year.”
Lack of inventory — largely caused by homeowners not wanting to give up low mortgage rates — has been pushing up prices. Experts are unsure how long that will last. A telling sign is that the other half of the real estate market, rentals, are seeing a slowdown or drop in prices.
The University of Southern California’s real estate school said in its annual forecast this month that San Diego County will likely only see a 2% annual rent gain in the next two years. That is a huge change from the last few years, which saw a 13.8% annual price rise in 2022.
A big reason for the stabilized rental market, said the USC report, was a bigger increase in rental construction, as opposed to for-sale housing. Last year, San Diego County built 6,171 multifamily homes (mainly apartments), said the Construction Industry Research Board, compared to 3,471 single-family homes.
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Annual price growth by metropolitan area
S&P/Case-Shiller Home Price Index, September 2023
Detroit: 6.7%
San Diego: 6.5%
New York: 6.3%
Chicago: 6%
Boston: 5.3%
Los Angeles: 5.2%
Cleveland: 5%
Miami: 5%
Charlotte: 4.7%
Washington: 4.4%
Atlanta: 4.3%
Minneapolis: 2.4%
Tampa: 1.5%
Denver: 1%
Seattle: 0.9%
San Francisco: 0.5%
Dallas: 0.3%
Portland: -0.7%
Phoenix: -1.2%
Las Vegas: -1.9%
National: 3.9%
This story originally appeared in San Diego Union-Tribune.
Source: Orange County Register
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