Monthly Archives: May 2013

San Diego home prices soar 12%

By : Lily Leung, May 28, 2013

A new home in Carmel Valley.
                A new home in Carmel Valley.                                     — Howard

San Diego home prices have reached their highest level in more than 4 1/2  years, said the S&P/Case-Shiller Home Price Index on Tuesday.

The local market’s index came in at 167.84 in March, the highest since August 2008, according to the monthly report, which has a two-month lag. March prices are up 12 percent from the same time a year ago. That marks the second double-digit annual increase for two consecutive months.

All 20 U.S. metros featured in the report posted year-over-year increases for the third straight month, the report said. A dozen of those 20 areas recorded double-digit annual growth. When looking at the price performance for all 20 metros together, analysts saw the best year-over-year returns in seven years.

Does all this data indicate that we’ve completed a national housing recovery? Not yet, says David M. Blitzer, chairman of the S&P’s index committee.

“Other housing market data reported in recent weeks confirm these strong trends: housing starts and permits, sales of new home and existing homes continue to trend higher,” Blitzer said.

“At the same time, the larger than usual share of multi-family housing, a large number of homes still in some stage of foreclosure and buying-to-rent by investors suggest that the housing recovery is not complete,” he added.

San Diego has seen either flatness or increases in home values for the past 14 months, Case-Shiller numbers show. Local and regional real estate experts have consistently pointed to an inventory shortage and increased buyer demand as key drivers of San Diego’s home values.

The number of homes on the market are near a multi-year low because a sizable share of homeowners are underwater on their mortgages, which means they’re unable to sell. New-home construction has been unable to keep up with demand. Meanwhile, mortgage rates are near historic bottoms, making real estate more affordable for buyers.

The Case-Shiller monthly figures aren’t seasonally adjusted and may reflect the beginning of the spring buying season.

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Home prices hit 5-year high

By: Lily Leung, UT San Diego
Homes in San Marcos.
                Homes in San Marcos.    
  — John Gastaldo / Union-Tribune staff

San Diego County home prices have hit the highest level in five years, as distressed sales continue to fall and mortgage rates are still near record lows.

The median price of a home sold in April rose to $400,000, up 21 percent from the same time a year ago, reported San Diego-based real estate monitor DataQuick on Tuesday.

Last month’s median price matched the median in April 2008, and the all-time peak was $517,500 in November 2005. Sales, which remain brisk, rose 7 percent from a year ago to 3,792.

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The county has seen double-digit annual increases for the past eight months, prompting some concerns of a lead-up to another housing bubble.

Michael Lea, a real estate economist at San Diego State University, believes those fears are overblown. Continued hikes in home prices are due largely to a shift from a distressed market, which brought consumers heavily discounted deals, to a more traditional market. Short sales — deals that let borrowers sell their homes for less than what they owe — are also declining.

Properties that were lost to foreclosure in the past year and resold in April made up 10 percent of total home resales, the lowest share in six years, DataQuick numbers show. They peaked at 55 percent in January 2009. The median price at that time was $280,000.

“The market has seen a significant decline in the number of lower-priced transactions, in part because foreclosures and short sales are petering out,” Lea said.

As the supply of lower-priced homes dwindles, more San Diego homebuyers are moving up in price range. That also has caused the countywide median price to shoot up.

About a third of residential transactions sold for $500,000 or more in April, the highest share for any month in five years, according to DataQuick figures. A year ago, that share was 23 percent.

That significant jump is due to overall price appreciation during the past 12 months and “just more activity in the move-up market with the improving economy,” said DataQuick analyst Andrew LePage.

“It’s a big change in psychology … in just a year,” he added.

Lower-than-normal supply continues to play a role in countywide prices firming up.

The number of homes on the market has steadily risen in the past four months but remains about 31 percent lower than a year ago, based on numbers from the Greater San Diego Association of Realtors. Fewer homes on the market means increased competition among buyers, everyone from first-time buyers to investors. Stories of bidding wars continue to surface.

Low mortgage rates, which have made homeownership more affordable, keep driving housing demand, said Lea, the economist at SDSU’s Corky McMillin Center for Real Estate.

Fixed rates rose for the first time in six weeks but remain near historic lows. The 30-year fixed is averaging 3.42 percent, while the 15-year fixed rate is averaging 2.61 percent, based on Freddie Mac numbers.

The Federal Reserve has continued to buy mortgage-backed securities to boost the overall economy. Fed Chairman Ben Bernanke said the stimulus plan should keep both long-term interest rates and mortgage rates down, allowing more people to buy homes and refinance their home loans.

Norm Miller, professor at University of San Diego’s Burnham-Moores Center for Real Estate, said the plan has worked so far. But if it goes on for too many years and double-digit price hikes persist, those conditions could be unsustainable and a real estate bubble could form, he said.

For now, another bubble can be avoided if homebuyers continue to buy what they can afford and underwriting standards for mortgages continue to be strict, Miller said. A key difference between the housing climate now and during the lead-up to the real estate crash is that lenders aren’t issuing subprime or second mortgages, which got a lot of homeowners into trouble.

“People buying homes today have more equity,” Miller added. “That was the whole problem in 2006-2007, people were buying homes without much equity and refinancing. “The next cycle will likely be less severe than this one was.”

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