San Diego home prices continued to rise in the third month of the pandemic and grew at a faster rate than other California markets.
As of May, prices in the San Diego metropolitan area had risen 5.2 percent in one year, the S&P CoreLogic Case-Shiller indices reported Tuesday. The county’s price hike has outstripped that of Los Angeles and San Francisco for 10 months.
Local increases reflect what’s happening across the country, with prices rising an average of 4.5 percent. Experts attribute the increase to the low interest rates on mortgages and the decrease in the number of houses for sale. Amid the COVID-19 crisis, analysts say sellers have taken houses off the market, fueling price battles between motivated buyers.
“With low inventory and a recent wave of home buyers interested in finding a home where they can feel comfortable no matter what life presents to them, we are likely to see steady increases throughout the rest of the summer,” wrote Bill Banfield, vice president of Quicken Loans.
Phoenix had the largest annual increase of the 19 cities covered by the index, at 9 percent. Seattle followed with 6.8 percent and Tampa with 6 percent. A city that is normally listed in the index, Detroit, was left out because its registry office was closed as a result of the pandemic. Chicago had the lowest gain, at 1.3 percent.
Los Angeles prices rose 3.7 percent and San Francisco 2.2 percent.
There is some data to support a slowdown in earnings from home prices. Craig J. Lazzara, CEO and Global Head of Investment Strategy for the S&P Dow Jones Indices, noted that while all cities showed price increases, only three had accelerated from the previous month: Phoenix, Tampa and Miami. San Diego rose 5.8 percent annually in April, the highest in nearly two years.
“Obviously more data will be needed to know whether the May report represents a reversal of the previous price acceleration path or simply a slight deviation from an intact trend,” Lazzara wrote.
Case-Shiller indices take into account repeat sales of identical single-family homes over the years. Prices adjust to seasonal changes. The median price for a single-family resale home in San Diego County in May was $ 650,000, according to CoreLogic data provided by DQNews.
Selma Hepp, deputy chief economist at CoreLogic, said home prices will likely be a bright spot for the U.S. economy in the coming year, as families likely view home ownership as more important to safety.
“Although recent data shows that the current resurgence of COVID-19 cases undermines the sustainability of the economic recovery – and may constrain homes available for sale – the fundamentals of home buying driven by demographics and Favorable mortgages suggest that housing demand will remain strong, ”he wrote.
The rate for a 30-year fixed-rate mortgage in May was 3.23 percent, Freddie Mac reported, down from 4.07 percent at the same time last year.
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S&P CoreLogic Case-Shiller Indices
Annual increase by metropolitan area
Phoenix: 9 percent
Seattle: 6.8 percent
Tampa: 6 percent
Cleveland: 5.7 percent
Minneapolis: 5.5 percent
Charlotte: 5.4 percent
San Diego: 5.2 percent
Boston: 4.3 percent
Atlanta: 4.2 percent
Las Vegas: 4.2 percent
Portland: 4.2 percent
Miami: 4 percent
Denver: 3.9 percent
Los Angeles: 3.7 percent
Washington, DC: 3.5 percent
Dallas: 2.8 percent
San Francisco: 2.2 percent
New York: 2.1 percent
Chicago: 1.3 percent
Detroit: Not available
National: 4.5 percent