San Diego County’s home price has dropped for the sixth month and is close to erasing all yearly price gains.
The median home price was $765,000 in November, said CoreLogic on Tuesday. It is down 10 percent from the all-time high of $850,000 in May as elevated interest rates have slowed the market.
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Sales — there were 2,288 in November — continue to slow and are down 2.8 percent month-to-month. But year-over-year sales are down almost 40 percent.
Housing analysts and real estate agents say potential sellers have mostly declined to put homes on the market to wait out the downturn or don’t want to buy a new home to avoid higher interest rates. Meanwhile, potential buyers are having a harder time qualifying.
The San Diego County home price is now up 2 percent annually, a far cry from earlier this year — April — when the price was up 20 percent annually. If trends hold, it is likely annual price gains will be erased for buyers who purchased at the height of the market.
Jeff Grant, owner and agent with Sand & Sea Investments, said buyers got spooked by rising rates in October and November, and many could no longer finalize deals.
“There’s thousands of dollars in difference,” he said. “I have 10 to 15 buyers that would buy if interest rates were lower, but they can’t afford the move right now.”
The interest rate for a 30-year, fixed-rate mortgage hit 7.08 percent in November, said Freddie Mac, up from 3.07 percent the year before.
He has a listing on North Rios Avenue in Solana Beach, one of the most desired locales in San Diego, that recently went on sale for $1.9 million and isn’t getting much attention. His seller purchased the home in April, when home prices were peaking, for $2.45 million. For personal reasons, the buyer has to sell now and has put it on the market for a considerable discount.
“I cannot get an offer,” Grant said. “It is worth all day, $2.3 to $2.4 million, and we lowered the price, but not a single offer has come in.”
The number of homes for sale also has dropped.There were 4,750 homes for sale from Oct. 31 to Nov. 27, said the Redfin Data Center, down from nearly 6,000 in July and August.
Raylene Brundage, an agent who sells in several North County communities, said sellers don’t have much desire to put homes on the market when it means a new mortgage will have a higher interest rate. She said a sale only works out, for most, if they can buy a new property with cash or are moving to another state.
Brundage also said some potential sellers she spoke with decided to just rent out homes, rather than sell if they had to move for some reason.
“People are thinking a little longer and harder about the moves they are making,” she said.
San Diego isn’t alone in the downturn in sales. . Year over year, Orange County sales were down 50 percent, Ventura County was down 53 percent, San Bernardino County was down 44.5 percent and Los Angeles County was down 44 percent.
San Diego County has seen slowdowns in the past, and somewhat recently. A brief slowing in the fall of 2018 and into 2019, erased annual price gains. As of September 2019, annual prices were down 1 percent. The market started to recover after that and prices accelerated wildly in 2020. The biggest annual drop was 35 percent in January 2009.
All home types experienced a downturn in November:
- Resale condo: Median of $610,000, with about 611 sales. It is down from a peak of $663,000 in May and was the slowest sale month since January 2019.
- Resale single-family home: Median of $825,000, with roughly 1,167 sales. Down from a peak of $950,000 in April, and the slowest sale month since February 2008.
- Newly built: Median of $860,000, with about 332 sales. This figure combines single-family homes, townhouses and condos. Down from the peak of $890,500 in August. Sales were up from previous months, in part, because there is a lack of resale homes on the market.
Home price drops don’t necessarily make homes more affordable for borrowers. For instance, if you bought a resale single-family house in April at the peak, $950,000, when the average mortgage rate was 4.98 percent, the monthly payment would have been around $4,353 (assuming 20 percent down). Yet if you bought the same type of home at this November’s price ($825,000) and interest rate (7.08 percent), the monthly cost would be around $4,674.
Here’s a look at the median prices of other Southern Californian markets for November, compared to the previous year.
Orange County — Had a monthly increase of 1 percent to $960,000; up 4.92 percent for the year
San Diego County — Had a 1.9 percent monthly drop to $760,000; up 2 percent for the year
Riverside County — Had a 0.23 percent monthly drop to $543,750; up 2.2 percent for the year
Ventura County — Had a monthly increase of 0.86 percent to $761,500; up 1.53 percent for the year
San Bernardino County — Had a 4.9 percent drop to $466,000; up 0.92 percent for the year
Los Angeles County — Had a 2 percent monthly drop to $785,000; up 0.48 percent for the year