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San Diego fell as one of the top markets for home price hikes in September.
The S&P CoreLogic Case-Shiller Indices reported Tuesday that the San Diego Metro saw a 25 percent increase in home prices in one year, making it the fourth fastest market on the 20 City Index. It was the first time in 13 months that America’s Finest City hadn’t made the top three.
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Phoenix was the top market with an increase of 33.1 percent in one year. It was followed by Tampa with an increase of 27.7 percent and Miami with an increase of 25.2 percent. The San Diego Metro (which encompasses all of San Diego County) was level with Dallas in fourth place, also up 25 percent.
While nationwide price gains are still sizeable averaging 19.5 percent, many pundits looking at the closely watched index said there are signs of the housing market cooling off. September marked the first time since May 2020 that national price gains slowed.
“If I had to choose one word to describe the September 2021 home price data, it would be ‘slowdown’,” wrote Craig J. Lazzara, Managing Director and Global Head of Index Investment Strategy at S&P Dow Jones Indices.
Housing analysts say a variety of factors are affecting the market, including an expected slowdown after a record-breaking price spike during the pandemic, a typical fall and winter buying slowdown, and buyers’ willingness to overpay.
Kwame Donaldson, a Zillow economist, said the recent turn of events shouldn’t be a sign that home prices will fall.
“With low mortgage rates, a robust labor market, labor and material shortages and a flood of first-time buyers,” he wrote, “property price growth will well exceed historical averages next year.”
Mortgage rates are still historically low, and even a slight increase didn’t seem to convince a real estate expert that it was affecting the market.
The rate on a 30-year fixed-rate mortgage was 2.9 percent in September, Freddie Mac reported, up from 2.89 percent a year earlier. The rate is also up from the December average of 2.68 percent, the lowest since 1971.
The Case-Shiller indices differ from the consideration of the average home price. It takes into account seasonally adjusted repeat sales of identical single family homes over the years. The average price for a single family home for resale in San Diego County was $ 831,250 in September.
The San Diego Metro’s gain is still high at 25 percent by historical standards, but there have been other peaks as well. The rate rose 27.8 percent for a year in July, the largest since December 2004. The highest annual increase was 33.4 percent in July 2004.
Among the Californian metros, San Diego is still the fastest winner – a title it has held since July 2019. In September, San Francisco was up 19.8 percent in a year and Los Angeles was up 18.3 percent. The markets with the lowest increases were Minneapolis with an increase of 12.8 percent and Chicago with an increase of 11.8 percent.
Selma Hepp, CoreLogic’s assistant chief economist, said prices are likely to continue to rise, but conditions for home buyers could improve somewhat.
“There is still a low availability of homes for sale,” she wrote, “which continues to drive price growth, but competition has faded and has eased some of the intensity of the bidding war.”
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