San Diego home values are leading the country in appreciation, but they still have a very long way to go. Home prices in San Diego County might have shot up dramatically from a few years ago, but many are underestimating just how high they are headed over the next decade. So where are Southern California home prices at now? How do they compare to the rest of the U.S.? Why are some still blind as to just how much gas these prime slices of real estate have in the tank?
San Diego Home Value Growth Leads
According to DataQuick, San Diego County median home sales prices rose to $427k in March 2014, up from just $410k in February 2014. The S&P Case Shiller Home Price Index, which is often one of the more conservative projections, placed San Diego in first place out of the top 20 metros covered for growth from January to February 2014. Year-over-year, area home values reportedly grew 20%.
Market Factors Slowing & Propelling Home Price Growth
Multiple factors are at work in the San Diego County market, both moderating and propelling real estate values. CT Homes, LLC recently covered the major trend in homeowners keeping their former residences when taking advantage of the market to move up today. With almost 40% on average, and over 60% of some Southern California home buyers planning to keep old homes as rentals, there are fewer new property listings coming on the market than many expected. While foreclosures may be declining as a force in the real estate marketplace, they still obviously have a significant impact. According to the latest data from compiler RealtyTrac:
- Median foreclosure discount $104,750 (24.4%)
- Foreclosure savings from buying a foreclosure vs. regular listing jumped up 55.8% yoy
- Countywide pre-foreclosure notices and bank repossessions both rose in March 2014
Top 5 Zips for Most Foreclosures:
- 92139
- 92114
- 92113
- 92127
- 92154
Top Cities for Foreclosure Discounts:
- El Cajon
- Poway
- Escondido
- Spring Valley
- Chula Vista
Mortgage lenders are becoming hungrier than ever to make loans. Recent data shows almost half of all U.S. residential housing purchases being cash transactions. Lenders don’t like this. They see big opportunity, great borrowers, and lots of profit to be made from providing liquidity to markets. This will only fuel more transactions and property price growth. Growing demand, ability and the desire to buy homes is set to keep pushing transactions and prices. Pent up demand should result in lunar leaps in many areas, as peak summer buying and selling season takes hold.
What’s Ahead?
While some sensationalists have done a good job of scaring some individuals about the recent rise in Southern California homes prices, we’ve likely only begun to see the tip of the iceberg in growth. Even Beacon Economics, which is among those forecasting the most modest growth ahead, admits that San Diego County homes still have about another four years in growth just to reach previous home price levels. Data shows values are still approximately $150k under previous highs. Only then will we really hit the spring board to launch values to even greater heights.
So what does it all mean? Even though some may wish that they could find cheaper homes in this paradise, odds are most will look back on today’s prices as a steal. It’s a great time to move up or downsize or ramp up investing in real estate.
