If you think San Diego’s rising home prices are off the charts, you should check out Phoenix.
The S&P CoreLogic Case-Shiller Indices reported Tuesday that the San Diego metro area saw a 24.4 percent increase in home prices in one year, making it the sixth-fastest-growing market in the index. 20 cities.
San Diego had been in the top two markets on the closely watched index for most of 2021, but has now been in sixth for two months.
Phoenix dominated the November list with a 32.2 percent increase, followed by Tampa at 29 percent and Miami at 26.6 percent.
While the increase is difficult for people who live in those cities, it is much less expensive than San Diego. The median home price in Phoenix, for example, was about $410,000 in November — about $340,000 less than the San Diego median.
The rise in home prices across the country has skyrocketed throughout the pandemic as the fortunes of many workers, especially those staying at home, have improved. With the increase in demand for homes, the supply has not been able to keep up, and prices have continued to rise.
Zillow senior economist Kwame Donaldson said national price growth has slowed slightly, but low inventory continues to push prices higher.
“(Buyers) are also finding fewer homes to choose from,” he said. “The number of homes listed for sale fell to an all-time low last month.”
Donaldson predicted that price appreciation would taper off later in the year due to reduced government tax relief, stabilizing job growth and rising mortgage rates.
The interest rate on 30-year fixed-rate mortgages was 3.07 percent in November, Freddie Mac reported, down from 2.77 percent a year earlier. The rate has also risen from the December 2020 average of 2.68 percent, which was the lowest on record going back to 1971.
Analysts believe the greater San Diego area (which includes all of San Diego County) may not see as much of a hit from higher rates. Many buyers are forgoing mortgages altogether to submit more competitive offers. Nearly 27 percent of San Diego County home sales were for cash in the third quarter – the highest in seven years.
San Diego County has seen huge growth in the Case-Shiller index before. In July 2004, home prices rose 33.4 percent in one year. The party didn’t last, with prices falling 26.7 percent annually in October 2008.
CoreLogic Deputy Chief Economist Selma Hepp wrote that Tuesday’s report showed that many of the country’s major markets appear resilient to COVID-related economic shifts, mortgage interest rates and changes in demand.
“As these areas have also had the relatively largest gains in immigration,” he wrote, “price pressure has persisted and will likely remain for the next year.”
The Case-Shiller indices are not limited to looking at median home prices. It takes into account repeat sales of identical single-family homes—and is seasonally adjusted—as the years go by. The median price of a single-family resale home in San Diego County in November was $820,500.
San Diego has been the fastest appreciating California metro area since July 2019. Los Angeles prices were up 19 percent year over year through November, and San Francisco was up 18.2 percent.
The metro areas with the slowest gains were Minneapolis, at 11.2 percent, and Washington, DC, at 11 percent.
The increase in prices throughout the country was 18.8% in November, which represents a slowdown compared to the figures for this summer, close to 20 percent. While noteworthy, 18.8 percent still represents the sixth highest reading in the index’s 34-year history, wrote Craig J. Lazzara, managing director and global head of index investment strategy at S&P Dow Jones Indices.
“We continue to see very strong growth at the city level,” he wrote in Tuesday’s report. “All 20 cities saw price increases in the year ending November 2021, and prices in 19 cities are at their all-time highs.”
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