San Diego Home Prices UP 6.2%
Southern California home prices continued to outpace the national average, and many major cities, said the S&P/Case-Shiller Home Price Index released Tuesday.
Prices nationally, adjusted for seasonal variation, rose 5.2 percent in the 12 months ended in March, with the Pacific Northwest and West seeing the biggest gains.
San Diego County’s median home price increased 6.2 percent , lower than the 6.4 percent increase in February and 6.9 percent in January. Los Angeles and Orange counties were up 6.5 percent, down from 6.8 percent in February and 6.9 percent in January.
Portland had the biggest gains at 12.3 percent, followed by Seattle at 10.8 percent and Denver at 10 percent.
Economists said home prices continue to rise because of improved labor markets and employment rates, low mortgage rates and limited home supply.
Mark Goldman, finance and real estate lecturer at San Diego State University, said a slower rate of appreciation is a good thing. He said price increases of 3.5 percent to 5 percent are more sustainable.
“If prices go up too quickly, then there is speculation in the market and that’s dangerous,” he said.
Goldman said the slowed rate of appreciation was likely the result of affordability issues, with incomes not keeping up with what is needed to buy a house.
Rising prices tend to affect lower-cost homes the most, driving up prices for first-time homebuyers, Zillow chief economist Svenja Gudell said in a statement.
“The competition is locking out some first-time buyers, who instead are paying record-high rents,” she said. “For homebuyers looking for a home, the luxury market, including the condo market, are the places to find a better selection and even some price cuts as supply outpaces demand.”
All home prices increased in the last 12 months in the 20 metropolitan areas the index studied.
Washington, D.C. had the lowest year-over-year home price increase at 1.5 percent, followed by Chicago at 1.9 percent.
Real estate tracker CoreLogic reported two weeks ago that San Diego County’s median home price reached $489,000 in April, despite a 2 percent reduction in sales from the year before. CoreLogic said a lack of homes for sales, as well as credit and affordability issues, were keeping potential buyers out of houses.
The San Diego County median price has still not hit its pre-recession peak of $517,500 reached in November 2005. Los Angeles’ April median, $520,000, was also 5.5 percent away from its peak level.
Orange County tied its all-time high median sale price in April of $645,000, reached nearly nine years ago.
The Case-Shiller index is considered the gold standard for measuring and comparing overall big-city housing markets because it tracks repeat sales of identical single-family houses as they turn over through the years.