San Diego home prices have hit a new, possibly inevitable, landmark.
The median price of a resale single-family home reached $1,001,500 in May, CoreLogic revealed this week, up from a revised $985,000 the previous month. It is a record high for San Diego County, joining only one other Southern California market, Orange County, in having prices top the $1 million mark.
San Diego County’s overall median, which includes newly built homes, resale homes and condos, also reached a new high in May of $898,000, up 10.9 percent in a year. Experts say the single-family milestone was unavoidable with limited homes for sale and strong competition for whatever is out there.
“It was inevitable,” said Mark Goldman, a San Diego loan officer and real estate analyst, about the $1 million mark, “and it will surpass that.”
Goldman said as long as there are more buyers than sellers the price will keep rising. By the middle of 2023, 91.8 percent of U.S mortgage holders had a rate below 6 percent, said Redfin, making it unlikely they would want to move and take on a new mortgage around the 7 percent mark. This creates a low inventory of properties for home shoppers.
There were around 4,500 homes for sale in May, said the Redfin Data Center. That’s up from a low point of roughly 3,000 to start the year, but still down from historical averages. For example, experts were bemoaning 6,300 homes for sale in 2019 as too low.
Resale single-family homes make up the majority of the real estate market in San Diego County, accounting for more than 60 percent of home sales in May. New homes have very little impact on the market. There were 1,225 single-family homes constructed last year in San Diego County, according to the Construction Industry Research Board — a number so low compared to past years that it surprised housing analysts.
So will San Diego homeowners of the future all live in townhouses and condos? Goldman said that’s not necessarily true, considering single-family homes are still the most desired, but he did point to recent data that homes are getting smaller. In the first three months of the year, a new single-family home in the U.S. had a median 2,140 square feet of floor space, according to the U.S. Census, down from 2,256 square feet at the same time last year.
Mauricio Perez-Vazquez, a Chula Vista real estate agent and board member on the National Association of Hispanic Real Estate Professionals, said the market is beginning to feel like a few years ago with multiple offers.
He put a 1,608-square-foot single-family home in south San Diego, near Imperial Beach, on the market last week for $775,000 and has received four offers over asking. The three-bedroom, two-bathroom home was built in 1960 and Perez-Vazquez said he anticipates it will sell somewhere above $800,000.
“I think people have gotten used to this as the new norm,” he said of higher interest rates. “The old 3 percent (mortgage rate) is now kind of an urban legend.”
On the last day of May, the average interest rate for a 30-year, fixed-rate mortgage was 7.17 percent, said Mortgage News Daily. It was down to 7.08 percent by Wednesday afternoon. In May 2021, the average rate was 3.13 percent.
Assuming 20 percent down, the monthly cost for a resale single-family home ($1,001,500) in May would be around $5,850. With May 2021’s rate, it would be about $3,860.
The resale condo median was $715,000 in May, down from a peak of $723,000 the previous month. The newly built median was $843,500, a figure that combines single-family homes, townhouses and condos. It was down from a peak of $1.2 million in July, when there was an influx of newly built single-family homes, lifting the median higher.
Home sales are still down considerably from historical norms. There were 2,485 home sales in May, the second-lowest figure for that month in records going back to 1988. The lowest was May 2020, with 2,327, when the start of the pandemic greatly slowed the market.
The Greater San Diego Association of Realtors said in September 2023 that the median home price had crossed $1 million. However, that figure included only transactions that used a Realtor, unlike CoreLogic data, which tracks all sales regardless of a real estate agent’s involvement.
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All Southern California markets have seen price increases annually, but some have had monthly slowdowns. Here’s a look at the median prices across the region:
Los Angeles County: Up 1.7 percent monthly for a median of $890,000; up 10.6 percent annually.
Orange County: Flat month-over-month for a median of $1.2 million; up 20 percent in a year.
Riverside County: Down 0.8 percent monthly to a median of $585,000; up 5.4 percent annually.
San Bernardino County: Flat month-over-month for a median of $500,000; up 5.3 percent in a year.
San Diego County: Up 1.5 percent monthly for a median of $898,000; up 10.9 percent in a year.
Ventura County: Down 1.6 percent month to a median of $822,000; up 2.2 percent annually.