Home prices in San Diego metro increased 1.1 percent in a year, the lowest of the 20 cities measured by the Case-Shiller Index. California cities have all seen a slowdown in price gain.
Home prices in the San Diego metropolitan area have gone up 1.1 percent in a year, slower than anywhere in the nation, said the S&P CoreLogic Case-Shiller Indices released Tuesday.
San Diego metro has been at the bottom of the 20-city index for three months, despite having some of the highest increases in the nation 1 1/2 years ago. In September 2017, San Diego prices had increased 8.2 percent in a year.
The reversal of fortunes has spread throughout California with analysts attributing the change, typically, to higher interest rates. But, with mortgage rates ticking back down, much of the finger pointing has been at affordability issues. Las Vegas had the biggest increases in the last year, rising 9.7 percent.
“Regional patterns are shifting,” wrote David Blitzer, managing director of the index. “The three California cities of Los Angeles, San Francisco and San Diego have the three lowest price increases over the past year.”
Lower-cost cities, in addition to Las Vegas, had the biggest gains. Phoenix was up 6.7 percent, Tampa up 5.4 percent and Atlanta up 4.7 percent.
Home gains across the country have seen a major reduction, averaging an annual 4 percent rise nationwide. In February last year, national home prices were up 6.3 percent over 12 months.
Ralph McLaughlin, deputy chief economist of CoreLogic, wrote that home price declines were the result of affordability constraints in the largest, most expensive markets. He said Pacific Coast metro areas were not buyer’s markets yet, but might be on the cusp of experiencing price declines.
“In places like San Diego, San Francisco and Los Angeles, the proverbial chickens will be coming home to roost this spring,” he wrote, “because they haven’t been able to find a decently affordable coop.”
The indices evaluate home prices by more than just price, tracking repeat sales of identical single-family houses as they turn over through the years. Prices are adjusted for seasonal swings. The median home price for a resale home in February was $595,000, said CoreLogic
The last time San Diego metro had such low annual gains was July 2012. Home prices have not been down on an annual basis since June 2012 (-0.29 percent). Still, it could be more extreme. In October 2008, home prices had fallen 26.6 percent in a year.
While home price gains are slowing, very few analysts are predicting a crash similar to the Great Recession. Matthew Speakman, Zillow economic analyst, wrote that the market was stabilizing after years of sizable gains.
Speakman’s analysis was that buyers will have more homes for sale to chose from, because of months of houses not selling, which may mean breathing room with prices. He wrote that falling mortgage rates might bring more sales in the spring, but that rates had been low for so long that it seemed to no longer spur intense demand.
Sean Karafin, a vice president at the San Diego Chamber of Commerce, said business leaders continue to be concerned about affordability in the market.
“It’s limiting economic opportunity for the San Diego families that need it most,” he said. “Adding housing supply is the only long-term effective strategy for getting a hold of our affordability crisis.”
S&P CoreLogic Case-Shiller Indices for February 2019
Yearly increase by city
Las Vegas: 9.7 percent
Phoenix: 6.7 percent
Tampa: 5.4 percent
Atlanta: 4.7 percent
Denver: 4.7 percent
Minneapolis: 4.4 percent
Miami: 4.3 percent
Charlotte: 4.2 percent
Detroit: 4 percent
Dallas: 3.4 percent
Boston: 3.2 percent
Portland: 3 percent
Washington, D.C.: 3 percent
Cleveland: 2.8 percent
Seattle: 2.8 percent
New York: 2.6 percent
Chicago: 2.2 percent
Los Angeles: 1.8 percent
San Francisco: 1.4 percent
San Diego: 1.1 percent