Category Archives: Real Estate

Some of the hottest housing markets are falling the hardest



“Rising prices and mortgage rates have priced out some potential buyers while causing others to conclude that waiting to buy could pay off, especially as listings rise,” said Andrew LePage, a CoreLogic analyst. “For the past three months, sales have fallen year over year in all six counties and, in the last two months, across most major price categories including above $1 million.”

Mortgage rates rose sharply in September, and by October, the average rate on the 30-year fixed was more than a full percentage point higher than a year ago. With home prices already overheated in many major markets, higher rates broke the bank for most buyers.

Rates fell back again in November, but were still higher than a year ago. The drop did little to boost sales. Mortgage applications to buy a newly built home actually fell 11 percent year-over-year in November, according to the Mortgage Bankers Association, despite the rate relief.

And after one of the worst housing shortages in memory, supply is slowly starting to rise. Housing inventory in the large metropolitan markets Redfin tracks was up 5 percent in November annually, the largest supply boost in three years. Of course all real estate is local, and some markets are filling with listings faster than others.

Inventory jumped in formerly hot markets like San Jose (+123 percent), Seattle (+96.5 percent) and Oakland (+60 percent) but other markets are still seeing drops, like Philadelphia (-24 percent and New Orleans (-19 percent).

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San Diego home sales down for 5th straight month

Home sales fell for the fifth month in a row in San Diego County in October and prices were also down, real estate tracker CoreLogic reported Thursday.

The latest numbers show continued signs of a slowdown in the real estate market — across the nation, not just locally — but analysts cautioned it was not similar to conditions that caused the 2006 housing crash. Still, there was evidence home prices would continue to decline or, at least, stay at current levels.

In October, the median home price was $558,000, down by $25,000 from the all-time peak reached in August, but still up 5.4 percent for the year. Sales were down 12 percent compared to the same time last year and at their lowest level since 2011. There were 3,162 home sales in October, down from 3,592 in 2017, 3,597 in 2016 and 3,356 in 2015.

“I think the boom is over,” said financial analyst Rich Toscano, who predicted the housing crash in November 2005 on his housing blog Professor Piggington’s Econo-Almanac.

He said price declines in the fall are typical and not that big of a deal, but the concern for the market is how rapidly the number of homes for sale went up while sales also dropped.

There were 7,918 homes for sale in October, up from 5,436 — 46 percent — from the same time last year, said the Greater San Diego Association of Realtors. There were 6,211 homes for sale in October 2016, 6,964 in 2015 and 8,295 in 2014.

Toscano, an analyst with Pacific Capital Associates, said the market has been driven in recent years by an intense supply and demand imbalance that drove up prices.

“Home prices got really high based on this perpetually low inventory, and now that’s gone,” Toscano said. “Can prices be supported at this level? I think you could make the argument with more inventory and less demand that prices will back off a bit.”

He said current market conditions were much different than before the housing crash: The cost of homes compared to rents or incomes is not nearly as out-of-whack as it was in 2006, it’s much tougher now to get home loans and mortgage interest rates aren’t as high.

Sales across all housing types were down:

  • Resale single-family homes — 1,989 sold, down from 2,240 at the same time last year. Median price was $610,000, down from the peak of $630,000 in June and July.
  • Resale condos — 952 sold, down from 1,102 in 2017. Median price was $415,000, down from the peak of $432,000 in July.
  • Newly built homes — 221 sold, down from 250 last year. Median price hit an all-time high of $812,500.

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San Diego resale home price gains slow

Existing home prices in July for the San Diego metropolitan area increased 6.2 percent in a year, its slowest pace since January 2017, said the S&P CoreLogic Case-Shiller Indices released Tuesday.

San Diego’s price increases were the second-slowest in the West, only ahead of Portland, said the index which studies the metropolitan areas of 20 major cities. The San Diego region still slightly outpaced the national average of 6 percent.

The indices evaluate home prices by more than just price, tracking repeat sales of identical single-family houses as they turn over through the years. It is a favorite of economists, who use it to get a more complete view of the market instead of just the median home price.

Price increases have slowed throughout much of the nation, with experts citing a variety of reasons: A gain in the number of homes for sale, rising mortgage interest rates and rent growth slowing, which may limit some pressure to buy.

“A slight autumn chill has fallen over the housing market, and after an incredibly hot past few years, it’s probably fair to say the cool down is a welcome development for many would-be home buyers,” Zillow senior economist Aaron Terrazas wrote,

Las Vegas led yearly price increases at 13.7 percent, followed by Seattle at 12.1 percent and San Francisco at 10.8 percent.

David Blitzer, managing director of the index, wrote in the report that 15 of the 20 regions studied saw smaller monthly increases than the same time last year (including San Diego). Sales of existing single-family homes are down, he wrote, but residential building permits were up.

“Rising home prices are beginning to catch up with housing,” he said.

Following national trends, San Diego has seen more homes available for purchase over the last few months. In July, there were 7,021 listings in the county, up from 5,828 in July 2017 and 6,571 in July 2016, said the Greater San Diego Association of Realtors.

Mark Goldman, real estate lecturer at San Diego State University, said the local market was strongly affected by increasing interest rates, more so than other parts of the nation, because of higher prices in California.

“Even if the house stayed the same price,” he said, “the house got more expensive because interest rates are higher.”

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