Low Inventory Pushes San Diego Prices Higher
Low mortgage rates and a tight real estate supply have helped push San Diego County home prices to a nearly five-year high and have kept sales brisk, according to a recent report from local real estate tracker DataQuick. The median price for all residential properties sold in March increased to nearly 19 percent from a year ago to $380,000, the highest price since May 2008, when the median value was also $380,000.
The report also indicates that a 19 percent year-over-year home-price increase for a March is uncharacteristic. The last previous high close to that, which was 20 percent, was recorded in March 2004, just before the peak of the real estate market. Sales also saw a major jump this last March. They rose 16 percent from a year ago to 3,762, the best recording for a March since 2006, when around 4,300 properties were sold.
Experts say that price measures are continuing to rise for two reasons. First, demand for homes has risen during a time when the available supply is unusually low. Second, in many areas, prices have had nowhere to go but up. Gains are also higher than normal right now because of the change in market mix. Sales of lower-cost homes have fallen at the same time activity in higher price ranges have increased.
Inventory has been a challenge to potential buyers for at least a year. There were about 4,200 active listings in San Diego County in March, about half of what was available to buyers the same time a year ago, according to figures from the Greater San Diego Association of Realtors. Listings hit their highest point at 13,123 in September 2010, when foreclosures peaked in San Diego County, according to the Association’s numbers, which began in summer 2009.
Limited inventory has pushed homebuyers to go to greater lengths to increase their chances of snagging a property and how to stand out from the competition. Increasingly, popular tactics have included submitting cover letters with personal stories and photos with their purchase offers. According to one realtor, as long as interest rates remain low, then the demand is going to stay high and any inventory that is placed on the market is going to get grabbed quickly.
The current 30-year fixed mortgage rate is at 3.43 percent, close to the record low of 3.31 percent set in late 2012, according to mortgage-finance company Freddie Mac. Those figures date back to 1971. The share of San Diego County homeowners who owe more on their home than what they are worth has also seen some improvement. The percentage dropped from 31 percent in the third quarter to 28 percent in the fourth quarter, based on numbers from the real estate website Zillow.