Home prices in San Diego will maintain their skyrocketing rise over the next 12 months, according to a new study, with a sharp increase of 24.7% for a median home price close to $ 1 million.
Home improvement site Porch, which provides research into housing market trends, said the San Diego metro area will experience the third highest price increase in the country – based on current data showing how many homes are selling. sell above demand and wage growth. He said Austin, Texas will see the largest increase at 37.1%, followed by Phoenix at 26.2%.
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The San Diego metro area (which includes all of San Diego County) saw prices rise 15.2% year-on-year in July. Analysts said low mortgage rates, scarcity, improving the fortunes of homemakers and millennials first-time buyers are the main reasons prices continue to climb.
Porch predicts that US home prices will rise over the next year for the same factors and will be led by the western states. He used various sources for his predictions – Zillow, Redfin, US Census, the S&P CoreLogic Case-Shiller indices – to show where homes were selling above asking prices, how much they had already risen, and median household incomes high. .
If Porch’s prediction comes true, the median home price in San Diego County will be $ 940,933 around the same time next year.
“The US real estate market is reaching all-time highs,” Porch researchers said in the report.
Nathan Moeder, director of San Diego real estate analysts, London Moeder Advisors, said Porch’s forecast was plausible, but a 24.7% county-wide increase is likely high. However, he said, if you look at the housing types and their specific locations, it’s not that hard to imagine.
Moeder said North County single-family homes could easily grow 25% in a year, as this is where wage growth is highest and single-family home construction is dropping significantly. The Porch study took all types of homes – townhouses, condos, single-family homes – for its prediction, but Moeder said the single-family home market is where we’ll likely see the most striking results.
“You can never be 100% correct in a forecast,” he said. “If someone asked me if single family homes were increasing by 25%, I could see that was a plausible scenario because we don’t build anymore.
Single-family home construction in San Diego County has yet to recover since the Great Recession, with most regional planners favoring multi-family construction to accommodate more people in rapidly declining available land. Moeder said the problem with this scenario is that the majority of demand is for single-family properties, which means they will continue to go to the highest bidder for the reasonable future.
There were 3,160 single-family homes built in 2020, 3,043 in 2019 and 3,389 in 2018, said the Real Estate Research Council of Southern California. Compare that to 9,555 in 2004 and 7,904 in 2005.
Alan Nevin, Xpera housing analyst, also estimated Porch’s forecast to be high, with a 12-15% increase more likely next year. He said that the things that could slow growth are an increase in mortgage rates or a change in loan-to-value terms. He said mortgages that only require a 3% cut for steadily rising house prices could be seen as increasingly risky. However, Nevin said neither of the two scenarios has yet shown any signs of materializing.
In his latest report for the Greater San Diego Association of Realtors, Nevin wrote that there had only been 1,373 single-family homes sold for less than $ 500,000 in July 2021 (using a 12-month moving average). This compares to 3,445 at the same time last year. There were 7,130 condos sold for less than $ 500,000, using the same formula, compared to 7,226 for the same period in 2020.
Porch predicts that nationwide home prices will rise 15% while the San Diego subway will jump 24.7%. California subways are all set to make great strides next year. Porch said San Jose would increase by 24.5%, Riverside by 21.8%, San Francisco by 21.2%, Sacramento by 18.7% and Los Angeles by 18.5%.
Forecasting house prices is generally considered a tricky business, as changes in mortgage rates, unforeseen events (such as COVID-19), and natural disasters can dramatically alter the market. The 12-person panel of business leaders and economists from the San Diego Union-Tribune predicted in December 2019 that the median home price at the end of 2020 would be $ 570,000 low to $ 624,500 at most high. He ended the year at $ 715,500.
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Annual Price Growth Forecast by Porch
Austin, Texas: 37.1%
Phoenix, Arizona: 26.2%
San Diego, California: 24.7%
San José, California: 24.5%
Salt Lake City, UT: 23.5%
Las Vegas, NV: 23.3%
Riverside, CA: 21.8%
San Francisco, California: 21.2%
Dallas-Fort Worth, Texas: 21.1%
Denver, CO: 20.8%
Fresno, California: 19.8%
Pittsburgh, Pennsylvania: 19.8%
Tampa, Florida: 18.8%
Sacramento, California: 18.7%
Tucson, Arizona: 18.6%