If you think San Diego home price gains are off the chart, you should see Phoenix.
The S&P CoreLogic Case-Shiller Indices reported on Tuesday that metro San Diego saw a 24.4% rise in home prices in a year, making it the sixth-fastest growing market in the index. of 20 cities. San Diego had been in the top two markets of the closely watched index for most of 2021, but is now sixth for two months.
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Phoenix topped November’s list with a 32.2% gain, followed by Tampa at 29% and Miami at 26.6%. While the increase is difficult for people who live in these cities, it is much cheaper than San Diego. The median home price in Phoenix, for example, was around $410,000 in November, about $340,000 lower than the San Diego median.
Nationwide house price increases have surged throughout the pandemic as the fortunes of many workers, especially those in housekeeping jobs, have improved. As demand for homes increased, supply could not keep up and prices continued to climb.
Zillow senior economist Kwame Donaldson said nationwide price growth showed a slight slowdown, but low inventories continue to put upward pressure on prices.
“(Buyers) are also finding fewer homes to choose from,” he said. “The number of homes for sale fell to a record low last month.”
Donaldson predicted that price appreciation would slow by the end of the year due to reduced government fiscal support, a stabilization in job growth and rising mortgage rates.
The interest rate for a 30-year fixed-rate mortgage was 3.07% in November, Freddie Mac reported, down from 2.77% the year before. The rate is also up from the December 2020 average of 2.68%, which was the lowest on record since 1971.
Analysts believe the San Diego metro area (which includes all of San Diego County) may not be affected as much by the rate hike. Many buyers are foregoing mortgages altogether to offer more competitive deals. Nearly 27% of San Diego County home sales were in cash in the third quarter, the highest in seven years.
San Diego County has already seen strong growth in the Case-Shiller index. In July 2004, house prices had increased by 33.4% in one year. The party didn’t last, with prices falling 26.7% a year in October 2008.
CoreLogic Deputy Chief Economist Selma Hepp wrote that Tuesday’s report showed that many of the country’s major markets appear to be resilient to COVID-related economic shifts, mortgage rates and shifts in demand.
“Given that these regions also saw the relatively largest immigration gains,” she wrote, “price pressure has persisted and is likely to persist over the coming year.”
Case-Shiller indices are different from simply looking at the median house price. It takes into consideration repeat sales of identical single-family homes — and is seasonally adjusted — as they turn over the years. The median price for a resale single-family home in San Diego County in November was $820,500.
San Diego is the fastest appreciating metro in California since July 2019. Prices in Los Angeles rose 19% annually in November and in San Francisco 18.2%.
The metros with the slowest gains were Minneapolis at 11.2% and Washington, DC, at 11%.
Nationwide price gains were 18.8% in November, a deceleration from this summer’s figures of almost 20%. While remarkable, the 18.8% still represents the sixth-highest reading in the index’s 34 years, wrote Craig J. Lazzara, managing director and global head of index investing strategy at S&P Dow. Jones Clues.
“We continue to see very strong growth at the city level,” he wrote in Tuesday’s report. “All 20 cities saw price increases in the year ended November 2021, and prices in 19 cities are at their all-time high.”