GAINS IN AREA HOME PRICES DECELERATING

Regional increases slow to 6th fastest-growing market nationwide

San Diego continued to slide down in rankings of the nation’s hottest real estate markets in October.

The S&P CoreLogic CaseShiller Indices reported Tuesday that San Diego metro saw a 24.2 percent home price gain in a year, making it the sixth fastest-growing market in 20-city index. San Diego had been in the top two markets in the closely watched index for most of 2021.

Nationwide prices showed signs of finally cooling after record-setting pandemic gains, so San Diego metro (which includes all of San Diego County) was not alone in showing a slight deceleration. U.S. average home prices are still up 19.1 percent in a year.

Phoenix was the top market, up 32.3 percent in a year. It was followed by Tampa, up 28.1 percent, and Miami, up 25.7 percent.

CoreLogic deputy chief econo mist Selma Hepp wrote in her analysis that in high-priced markets, like San Diego, homebuyers may have less wiggle room in budgets as prices continue to increase. However, she wrote that limited home supply across the U.S. still means determined buyers will continue to push prices up. “This suggests that 2022 will be another year of strong home price growth, averaging 7 percent for the year,” she wrote, “which is slower than 2021 but still above the 5 percent average increase seen between 2010 and 2020.”

The number of homes for sale in San Diego County has continued to drop. There were about 3,700 homes for sale in October, said the Redfin Data Center, down from more than 5,000 at the same time in 2020. Inventory has continued to drop in the winter, suggesting increased competition could once

again push San Diego to the top of Case-Shiller rankings.

The Case-Shiller Indices are different than just looking at the median home price. It takes into consideration repeat sales of identical single-family houses — and are seasonally adjusted — as they turn over through the years. The median price for a resale single-family house in San Diego County in October was $830,000.

Kwame Donaldson, Zillow senior economist, wrote that low unemployment, strong wage growth and millennials aging into homeownership would continue to put upward pressure on prices.

“House price appreciation will continue to slow from this summer’s unsustainable levels,” he wrote, “but these conditions ensure that growth will comfortably exceed normal rates over the next year.”

Donaldson said nationwide prices throughout the pandemic have been pushed up by low supply, increased savings and low mortgage rates.

The interest rate for a 30year, fixed-rate mortgage was 3.07 percent in October, reported Freddie Mac, up from 2.83 percent the year before. The rate is also up from December’s average of 2.68 percent, which was the lowest in records going back to 1971.

Among California metros, San Diego still has the fastest home price appreciation — and it has been that way since July 2019. In October, both Los Angeles and San Francisco had prices increase of 18.5 percent.

Metros with the slowest price gains, still way above historical norms, were Washington, D.C., (up 12 percent) and Chicago and Minneapolis (both up 11.5 percent).

“We continue to see very strong growth at the city level. All 20 cities saw price increases in the year ended October 2021,” wrote Craig J. Lazzara, managing director and global head of index investment strategy at S&P Dow Jones Indices.

Lazzara wrote that 19 of the cities in the index were in the top quintile of historical experience. However, he noted 14 of the 20 cities in October had decelerated from the previous month.

A recently released report from the Greater San Diego Association of Realtors suggested San Diego would continue to be a hot spot for real estate in 2022. Using data from Apartment List, it said America’s Finest City continues to be a desirable location with 43.5 percent of renters considering a move here.