San Diego home prices keep going up, outpacing other California cities

San Diego home prices continued to increase into the second month of the COVID-19 crisis and grew at a quicker pace than other California cities.

The San Diego County median home price for a resale single-family home in April was $650,250, according to CoreLogic data provided by DQNews.

Home prices in the San Diego metropolitan area had risen 5.8 percent in a year, the S&P CoreLogic Case-Shiller Indices reported June 30. It was the highest annual increase since July 2018. The Case-Shiller indices take into consideration repeat sales of identical single-family houses as they turn over through the years. Prices are adjusted for seasonal swings.

Across the United States, home prices in April were up an average of 4.7 percent, with experts attributing the rise to a shortage of homes for sale, low mortgage interest rates and continuing high demand.

“The price trend that was in place pre-pandemic seems so far to be undisturbed, at least at the national level,” said Craig Lazzara, managing director and global head of index investment strategy at S&P Dow Jones Indices.

Phoenix had the biggest annual increase of the 19 cities covered by the index, at 8.8 percent. It was followed by Seattle at 7.3 percent and Minneapolis at 6.4 percent. Chicago had the smallest gain at 1.4 percent.

Other California cities were behind San Diego’s nearly 6 percent gain, with Los Angeles at 4.1 percent and San Francisco at 2.8 percent.

Selma Hepp, deputy chief economist for CoreLogic, said a lot of factors that pushed up demand in the months before COVID-19 have continued and may even have accelerated.

“Supply headwinds, such as declining for-sale inventories, will continue to keep a lid on the number of transactions but also push up home price growth,” she wrote.

A drastic increase in sellers pulling homes off the market to wait for the virus to go away is seen as contributing to price wars for a limited number of properties.

In San Diego County last year, the smallest number of housing units (apartments, single-family homes and condominiums) were built since 2014. The 8,053 homes constructed represented a 16 percent drop, according to the Real Estate Research Council of Southern California, and was the biggest homebuilding drop in Southern California. In April, the same time as the Case-Shiller report, there were about 5,160 homes listed for sale, according to the Redfin Data Center, a drop of 27 percent from the same time last year.

Zillow economist Matthew Speakman wrote that the April index illustrates how low mortgage interest rates fueled demand even as there were fewer homes to choose from, and helped drive up prices.

The mortgage rate for a 30-year, fixed-rate loan was 3.31 percent in April, according to Freddie Mac, down from 4.47 percent at the same time last year.

“Substantial risks remain and the longer-term outlook for home prices is still very much unclear,” Speakman wrote, “but at least for now, the housing market continues to cruise through this historic downturn more or less unscathed and prices seem poised to continue their ascent for the coming months.” ◆