San Diego home sales plummet to level not seen in nearly 30 years

Housing sales in San Diego County had their biggest annual drop in nearly 30 years in May as COVID-19 brought the market to crawl.

There were 2,327 home sales in May, down 40.7 percent from the previous year, said CoreLogic data provided by DQNews. Analysts point to a lack of consumer confidence and sellers pulling homes off the market to wait out for a better selling time as reasons for few transactions.

It represents the biggest annual drop in home sales since January 1991 when sales were down by 41.5 percent.

Despite few sales, home prices were largely unchanged. The median home price of $590,000 was down about $4,000 from last month, and still up 3.5 percent in a year. The home inventory decline resulted in bidding wars for a limited number of properties and pushed up prices or, at the very least, meant almost no price reductions.

Here’s how the median price fared by type:

  • Resale single-family: Median of $650,000, down $250 from an all-time peak reached the previous month. There were 1,435 sales, its lowest since January 2019, typically the slowest month of the year.
  • Resale condo: Median of $430,000, down from an all-time peak of $453,250 in March. There were 623 sales, also the lowest since January 2019.
  • Newly built: Median of $681,750, down from the peak of $812,500 reached in October 2018. There were 269 home sales, typical for newly built homes.

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Aussies share how to upgrade your home to keep cool during summer

The key to affordably cooling a home is diagnosing why the building is hot, according to architect and Envirotecture director Andy Marlow.

“Normally, it’s because you’ve got poor shading over the windows,” he says. “The sun getting into the building has a huge impact.”

Marlow says windows are a major source of heat gain into a home, and protecting these surfaces from direct heat is the upgrade that delivers the most bang for buck for home owners.

“Fundamentally, the aim is to keep the sun off the windows in summer. It’s the single most cost-effective thing you could do.”

Options for shading windows include fixed or retractable awnings, shutters and blinds, but exterior protection is best.

“Blinds are much more effective when they’re outside the glass than inside the glass,” he says. “Once the heat passes through the glass, it’s inside your building.”

Marlow says home owners should also investigate the quality of their windows and doors, and replace ineffective components that are letting heat in.

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The economy is tanking so why aren’t home prices dropping?

Why isn’t the tanking economy bringing home prices down with it? It’s a reasonable question given that so much of the economy moves in lockstep, and the last economic crisis in 2008 sent the housing market into free fall.

So what’s different this time around? Let’s break it down. The price of anything is a function of the relationship between supply and demand. Generally, home prices have been pushed up over the last 5 years by high demand created by a then-booming economy and a low supply of housing for sale, due in part to relatively low levels of housing construction and available land on which to build.

After the outbreak of the pandemic, housing demand fell as buyers lost their jobs, part of their income, or simply didn’t want to be shopping for a house in the middle of a viral outbreak and what figures to be a period of great economic uncertainty.

Demand dropping was evident in a number of metrics. Although a weak indicator of buyer demand, traffic to real estate portals like Zillow and Redfin dropped significant in the beginning of the outbreak, as did more reliable indicators like pending home sales and weekly mortgage applications.

Usually, a huge drop in demand would put downward pressure on prices; home sellers would be competing with each other to attract a limited number of buyers by dropping their asking price. But while housing demand has dropped substantially, housing supply also dropped in lockstep as potential home sellers pulled out of the market for many of the same reasons buyers are.

New home listings is a good indicator of housing supply, and after stay-at-home orders were enacted, new home listings cratered by as much as 80 percent year-over-year. Redfin reported that 41 percent of offers were subject to a bidding war over the last month, suggesting demand is outpacing supply—just as it was before the pandemic.

While both supply and demand have dropped, the relationship between the two went largely unchanged, meaning the drops in supply and demand were generally proportional to each other. Furthermore, home sales also dropped after the pandemic hit, and it’s hard for prices to move when there aren’t as many housing transactions to make prices move in aggregate. Together, this leaves prices much where they were before the pandemic.

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