San Diego – Appreciation in County Continues Downward Trend

San Diego County prices rose once again in September, but the pace continues to slow.

The S&P/Case-Shiller Home Price Index showed Tuesday that from August to September, the index grew 0.9 percent, which is down from 1.8 percent from July to August.

“As we head into the fall we should normally see a slowdown in the rate of activity in the housing market, with probably some easing of house price increases, just as a normal seasonal factor,” said Michael Lea, a real estate professor at San Diego State University.

Annually, prices rose 20.9 percent on the index from September 2012 to September 2013, slightly below San Diego’s post-Great Recession peak of 21.5 percent from August 2012 to August 2013. The county’s September year-over-year gain ranks it fourth on the 20-city index. The national average yearlong gain was 11.2 percent.

“Housing continues to emerge from the financial crisis: the proportion of homes in foreclosure is declining and consumers’ balance sheets are strengthening,” said David Blitzer, chairman of the index committee at S&P Dow Jones Indices. “The longer-run question is whether household formation continues to recovery and if home ownership will return to the peak levels seen in 2004.”

Lea said the number of sales is still below normal levels, which is causing the higher yearly price gains. He noted that rising interest rates would contribute to lower affordability and therefore lower demand and put a strain on prices. In September, the average 30-year-fixed mortgage rate was 4.49 percent, up from the 3.47 available in September 2012, according to Freddie Mac.

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