San Diego Home Prices Drop For 5th Month In A Row

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A townhouse for sale in mid-November for $600,000 on Santa Victoria Road in Chula Vista. 
(Phillip Molnar/The San Diego Union-Tribune)

San Diego County’s home price has now dropped five months in a row.

The median home price was $775,000 in October, said CoreLogic on Tuesday. It reached an all-time high of $850,000 in May, but the market has slowed considerably with rising interest rates.

From September to October, San Diego County’s median price dropped 2.2 percent, making it one of the biggest monthly decreases in Southern California. The median — the point where half of all homes sold for more and half for less — combines all single-family, condo and townhouse sales.

Home prices are down across the nation, but expensive markets like San Diego are dropping the quickest. Although prices are down, higher interest rates mean bigger monthly payments.

Jan Ryan, an RE/MAX agent based in Ramona, said she typically has four to six homes in escrow at any given time. Now she has none. Ryan said she is seeing many potential buyers struggling financially with higher interest rates, and many sellers are having a hard time accepting that sales prices are lower now.

“The crazy thing is inventory is still down,” she said. “Sellers are keeping the price up there, rather than reduce, hoping that things will change in the future. Some are taking (houses) off the market and waiting for spring.”

The interest rate for a 30-year, fixed-rate mortgage was 6.90 percent in October, said Freddie Mac, up from 3.07 percent the year before. Assuming 20 percent down, monthly payments for a $775,000 San Diego County home would have been around $2,920 at this time last year, compared to $4,366 now.

San Diego had one of the fastest appreciating home prices in the nation for much of the pandemic. Prices are still up 5.4 percent in a year. Yet that is quite different from May when it was up 17.2 percent.

The median days on market for a San Diego County home to sell was 28 days in October, said the Redfin Data Center. That’s up from nine days at the start of the year. Redfin said around 46 percent of listed homes had a price drop — up from 12 percent in January.

Home inventory has been dropping as more houses are pulled from the market. There were 5,007 homes listed from Oct. 3-30, Redfin said. There were nearly 6,000 listed in late July.

Lawrence Yun, chief economist for the National Association of Realtors, recently predicted home prices will still increase modestly in 2023 — 1 percent — because inventory is so low. He also forecasted that prices would increase 5 percent in 2024.

Yun said the nation won’t see a Great Recession-style plummet in prices because there are fewer homes available today than back then. For example, San Diego County built 17,306 homes in 2004, compared to 8,053 so far this year. Meanwhile, the population increased by around 356,000 people in that time.

Here’s how the San Diego County price changed by home type in October:

  • Resale single-family home: Median of $842,000, with 1,392 sales. It is down from a peak of $950,000 in April.
  • Resale condo: Median of $628,500, with 727 sales. Down from the peak of $663,000 in May.
  • Newly built: Median of $840,000, with 203 sales. This figure combines single-family homes, townhouses and condos. Down from the peak of $890,500 in August.

Almost all of Southern California saw price drops from September to October. Riverside County had the biggest drop, down 2.7 percent for a median of $545,000.
It was followed by San Diego County with its 2.2 percent drop; Ventura County, down 1.3 percent for a median of $755,000; San Bernardino County, down 1 percent to $490,000; and Orange County, down 0.1 percent for a median of $950,000. Los Angeles County was up 0.2 percent for a median of $801,500.

Article Written By: Phillip Molnar 11/22/22 in The San Diego Union-Tribune

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