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After slight slowdown, San Diego home prices shoot up near record highs

Homes in Clairemont.
San Diego home prices keep increasing, said the S&P CoreLogic Case-Shiller Indices. Pictured: Homes in Clairemont.
(K.C. Alfred/The San Diego Union-Tribune)

A key index shows San Diego prices are hitting record territory — 27.1 percent annually — after a slight slowdown.

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After cooling off slightly toward the end of last year, home price gains in San Diego accelerated in January.

Home prices in the San Diego metro area rose 27.1 percent year-over-year in January, the fifth-highest price increase in the nation, according to the S&P Case-Shiller Indices, which was released Tuesday. The top markets were Phoenix, up 32.6 percent, and Tampa, up 30.8 percent.

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The latest increase is nearly the highest in the last two years for San Diego metro, which includes all of San Diego County. The metro area had its highest annual increase in July 2004 when prices rose 33.4 percent in a year. The highest price point of the pandemic was in July 2021 when the price increased 27.8 percent annually.

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Nationwide, home prices increased 19.2 percent annually, with 16 of the 20 metros having bigger price gains than the previous month. Analysts and local real estate agents point to a rush of homebuying to get ahead of rising mortgage rates as one of the main reasons for the increase.

“Looking to the months ahead, competition between buyers will be intense,” wrote Zillow economic data analyst Dan Handy.

He said the number of homes for sale continued to be low nationwide in January and winter tends to be the slowest months for real estate sales — but none of that seemed to matter to buyers. Handy said potential buyers who hope that more homes will hit the market in spring should brace themselves because there is no evidence that will happen.

“In the short term, it all adds up to what is looking to be another few months of a history-making for-sale market,” he wrote.

San Diego continued to have the highest price increases in California for the 30th month. San Francisco prices were up 20.9 percent and Los Angeles prices were up 19.9 percent.

Even the lowest growing markets were increasing at record rates. Minneapolis was up 11.8 percent, and Washington, D.C., was up 11.2 percent.

The Case-Shiller Indices are different than just looking at the median home price. It takes into consideration repeat sales of identical single-family houses — and are seasonally adjusted — as they turn over through the years. The median price for a resale single-family house in San Diego County in January was $845,000.

January’s acceleration of prices comes after a slight slowdown at the end of 2021. CoreLogic Deputy Chief Economist Selma Hepp said the increase is unsurprising given low inventory of for-sale homes, in part, driven by potential home sellers who would need to compete for higher-priced homes with larger interest rates if they parted with their property.

“And while surging interest rates were expected to have a dampening effect on demand,” she wrote, “there are still many buyers in the market who are able to afford the rising costs of homeownership.”

The interest rate for a 30-year, fixed-rate mortgage was 3.45 percent in January, said Freddie Mac, up from 2.74 percent the year before. The rate is up from December 2020’s average of 2.68 percent, which was the lowest in records going back to 1971. Loan rates have continued to accelerate, with Mortgage News Daily reporting Tuesday the average for a 30-year, fixed mortgage was 4.9 percent.

Pessimism about buying a home continues to grow. The majority of respondents — 67 percent — in the recent Fannie Mae Home Purchase Sentiment Index said now was a bad time to buy a home, compared to 43 percent at the same time last year.