COVID-19 was unable to stop the upward pressure on property prices in San Diego County, which hit a new high of $ 600,250 in June.
The average home price in San Diego County exceeded the $ 600,000 mark for the first time in June, according to CoreLogic data provided by DQNews. This corresponds to a modest price increase of 1.7% per year, but is still remarkable as unemployment is at historic highs.
The biggest drivers of rising prices are sellers who take houses off the market during the pandemic and cause price wars among buyers. Other factors include the strong desire for home ownership, as many work from home, low mortgage rates, and construction of homes in San Diego County at the Great Recession level.
San Diego was not alone in this phenomenon. Three of the six counties in Southern California hit record prices in June.
Real estate analyst Gary London said higher prices are a direct result of a small number of homes for sale, as buyers remain skeptical about listing homes. He also said that housing construction in the county has been reduced in recent years, so it's not like there are more houses to make up the difference. 8,053 homes were built in the county in 2019 – the lowest since 2014.
"It's just about scarcity," he said. "We have an imbalance between supply and demand."
From June 8 to July 5, 4,786 properties were available for sale in San Diego County, according to the Redfin Data Center, a 37% decrease year-over-year. However, sales rose sharply in June – and buyers are willing to pay more than just asking the price.
During the same period, about 32% of the houses had a drop in prices. This corresponds to 41.6% in the same period in 2018 and 48.4% in 2019.
Conventional evidence could say that San Diego County's June unemployment of 13.9% near record highs would affect the market, but not so many analysts. London said that many low-income workers who lost their jobs while ordering at home are tenants and not in the home market. He said that job loss is much more likely to affect the rental market before it affects property prices.
"This pandemic is not an equal opportunities pandemic," he said.
According to DQNews, there were 2,239 home sales in June, a decrease of 1.6% over the previous year, but a massive increase compared to the past few months. From May to June, home sales increased 56%. Some experts say that falling interest rates have largely kept the market alive.
Interest rates remain at historical lows and seem to continue to fall. The interest rate on a 30-year fixed rate mortgage was 3.16% in June, Freddie Mac said, compared to 3.8% at the same time last year.
Evan Morris, a real estate agent based in Golden Hill, said competition in areas you couldn't expect has become tough. He said in June that he was working with a customer to buy a three-bedroom, two-bathroom family home in Azalea Park, a small area in City Heights.
The property was $ 675,000, more than any sales comparison in the area, and still had five offers. Morris said they made an offer for $ 685,000 but were beaten and the property was sold for $ 700,000.
He said that sellers with COVID-19 are still unlikely to want to market houses.
"Sellers are at home, on the spot, and only sell when they really need to," said Morris.
Resale of single-family homes in San Diego County reached a record high of $ 655,500, exceeding the previous high in April by more than $ 5,000. The median for resale of condominiums was $ 449,500, a decrease of $ 4,750 from the April high. Newly built homes remained a fraction of the market with a median of $ 622,500 compared to 2,239 resale single family homes and 1,001 for resale condos.
Average home prices in Southern California rose 2.9% annually. The biggest gain was in Riverside County, where it rose 7.8% in one year and reached a median of $ 430,000.
This was followed by San Bernardino County, with an increase of 7.4% with a median of USD 365,000, Orange County with an increase of 4.1% with a median of USD 765,000, Los Angeles County with an increase of 4% with a median of $ 643,000 and Ventura County rose 3.5% with a median of $ 600,000 and San Diego County had the lowest increase at 1.7%.