San Diego home prices kept rising in the third month of the pandemic and grew at a faster pace than other California markets.
As of May, prices in the San Diego metropolitan area had risen 5.2 percent in a year, the S&P CoreLogic Case-Shiller Indices reported Tuesday. The county’s price gains have outpaced those of Los Angeles and San Francisco for 10 months.
The local gains mirror what is happening nationwide, with prices rising an average of 4.5 percent. Experts attribute the increase to low mortgage interest rates and a declining number of homes for sale. Amid the COVID-19 crisis, analysts say sellers have taken homes off the market, which has fueled price battles among motivated buyers.
“With inventory low and a recent surge of home buyers interested in finding a home where they can feel comfortable no matter what life presents them, we will likely see steady increases through the rest of the summer,” wrote Bill Banfield, a Quicken Loans vice president.
Phoenix had the biggest annual increase of the 19 cities covered by the index, at 9 percent. It was followed by Seattle at 6.8 percent and Tampa at 6 percent. One city normally on the index, Detroit, was left off because its recording office was closed as a result of the pandemic. Chicago had the smallest gain, at 1.3 percent.
Los Angeles prices were up 3.7 percent and in San Francisco, prices rose 2.2 percent.
There is some data that supports a slowdown in home price gains. Craig J. Lazzara, managing director and global head of index investment strategy at S&P Dow Jones Indices, noted that even though all cities showed price increases, only three had accelerated from the previous month — Phoenix, Tampa and Miami. San Diego was up 5.8 percent annually in April, its highest in nearly two years.
“More data will obviously be required in order to know whether May’s report represents a reversal of the previous path of accelerating prices,” Lazzara wrote, “or merely a slight deviation from an otherwise intact trend.”
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. The San Diego County median home price for a resale single-family home in May was $650,000, according to CoreLogic data provided by DQNews.
Selma Hepp, deputy chief economist for CoreLogic, said home prices will likely be a bright spot for the U.S. economy in the coming year as families likely see homeownership as more important for safety and security.
“While recent data shows that the current resurgence in COVID-19 cases undermines the sustainability of economic recovery — and may restrain available for-sale homes — home buying fundamentals driven by demographics and favorable mortgage rates suggest housing demand will remain solid,” she wrote.
The rate for a 30-year, fixed-rate mortgage in May was 3.23 percent, reported Freddie Mac, down from 4.07 percent at the same time last year.
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S&P CoreLogic Case-Shiller Indices
Yearly 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, D.C.: 3.5 percent
Dallas: 2.8 percent
San Francisco: 2.2 percent
New York: 2.1 percent
Chicago: 1.3 percent
NATIONWIDE: 4.5 percent