New home sales in San Diego County fell 20 percent in January from a year earlier, hitting an 11-year low, real estate tracker CoreLogic reported Wednesday.
Sales were down across Southern California with analysts attributing the reduction to wages not keeping up with home prices and fluctuating mortgage rates, and to a lesser extent the partial government shutdown and stock market volatility.
Good news for homeowners: Prices are still going up, just at a much slower pace. The median home price in San Diego County was $542,000, a rise of 2.5 percent in a year.
“We seem to be reaching that point at which housing prices are exceeding, at least perceived, affordability,” said real estate analyst Gary London. “What I have advised most people is we are probably post-peak.”
He said the real estate market was not experiencing a bubble pop but a normal adjusting after hitting a high point. The problem is not a lack of demand, because numerous people want to buy, but that the type of housing is too expensive for many, London said.
In January, 2,115 homes sold, down from 2,625 at the same time last year.
Resale condo sales appear to be hardest hit, with sales down 25 percent in a year — 592 compared to 787 last year — and increasing in value less than 1 percent annually. The condo median in January was $412,000, down from a July peak of $432,000.
Newly built home sales were the third lowest for a given month — not just January (but it is usually the slowest month) — since at least 1988 when CoreLogic started recording. In January, 113 homes sold for a median of $669,000, up 2.8 percent in a year. The lowest-ever month in January 2015 with 74 sales, followed by January 2017 with 106 sales.
A lack of sales in the new home market is a reflection of historically slow construction, as well as developers holding off on new building until the market kicks up again. The 20 slowest months for new home sales are mainly in the last five years.
“Developers are probably not real anxious to put out new homes right now,” London said.
Resale single-family homes remained the dominate part of the market with 1,410 sales, 67 percent of all sales, and a median of $588,000. That’s down from the all-time peak of $630,000 reached in June and July. Still, the resale home median is up 4.1 percent in a year.
Good news for potential buyers: There are more homes to chose from, said data from the Greater San Diego Association of Realtors. In January, 5,884 homes were for sale, up from 4,241 at the same time last year and 4,463 in January.
Rich Toscano, who predicted the housing crash in November 2005 on his housing blog Professor Piggington’s Econo-Almanac, said it’s possible that a decline in interest rates won’t mean a complete turnaround for sales.
Interest rates are back to where they were in August — around 4.5 percent for a 30-year, fixed-rate mortgage — so one might assume this would mean more sales now.
The number of homes for sale each year in San Diego County tends to go down after August, at the end of the summer buying season. That didn’t happen this year.
“Even back down at the (interest rate) level we are at now, it was already starting to slow,” said Toscano, a partner at Pacific Capital Associates.
He said a real test would be how the market reacts in the spring when the homebuying season kicks off, because the winter is normally a slow time.
The most expensive markets in San Diego County tended to feel the brunt of the slowdown.
In La Jolla (92037), the resale median home price, $1.95 million, was down 28 percent in a year. In Rancho Santa Fe (92091), the median was $1.3 million, also down 28 percent in a year.
The highest appreciating market was Oceanside (92058), which had 39 percent increase to a median of $540,000. Ironically, Oceanside’s more expensive part of town (92054) had a 19 percent drop to a median of $610,000.
All of Southern California experienced a drop in sales in January, but Ventura County had the biggest with a 21 percent drop in sales compared to the same time last year.
It was followed by Orange and San Diego counties, both down 20 percent; Riverside County, down 17 percent; Los Angeles County, down 16 percent; and San Bernardino County, down 13 percent.