‘Every week seems like a different market’: San Diego home price drops, down $20K from peak

Home prices continued to decrease toward the end of the summer as sales hit historic lows in what was the slowest August on record for San Diego County.

The county’s median home price was $875,000 in August, CoreLogic reported this week, down $20,000 from a peak reached in May. The median, which combines sales for newly built homes, resale condos and resale single-family homes, was still up 4.2 percent in a year.

There were 2,564 home sales in August, which is up from record lows (1,678 sales in January) but also makes for the slowest sales for an August — usually a busy month —  in records dating to 1988. Other low points were 2,619 sales in August 2023 and 2,741 sales in August 1992.

San Diego real estate agent Samantha O’Brien said it’s hard to put a finger on the market with all of the up-and-down interest rates, as well as homes that still seem to be flying off the market, while others need price reductions to sell.

“Every week seems like a different market,” she said.

O’Brien sold a home in August in the Paradise Hills neighborhood for $770,000 — $51,000 over asking price. She said the 1,642-square-foot, single-family home got eight offers with seven over the asking price. The home was off the market in a week.

Homes that are around the median home price or slightly below, O’Brien said, sell like hotcakes but the higher end is where sales can take longer.

The biggest change over the past few months has been an increased number of homes for sale. There were roughly 5,200 homes listed for sale in San Diego County in August, said the Redfin Data Center. That was near the high point of the year, and up from about 3,000 at the start of the year.

At the same time, mortgage rates were dropping. On the last day of August, the average interest rate for a 30-year, fixed-rate mortgage was 6.35 percent, according to Freddie Mac, down from a high point of 7.22 percent this year in May.

Chris Thornberg, economist and founding partner of Beacon Economics, said changes in the real estate market — such as lower interest rates and more inventory — take time to ripple through. Home shoppers might have a better market than a few months ago, he said, but don’t expect an instant change.

“That means we won’t see it in the data until October, November,” Thornberg said. “You have to find a house, you need to line up your down payment, you need to get the mortgage application done.”

Thornberg said the issue for the foreseeable future will continue to be homeowners who locked in lower mortgage rates unable to afford a new home if they attempt to move. He said that is especially true of buyers in the period of 2014 to 2018 when, he argues, real estate was at one of its cheapest points in U.S. history in terms of prices and low rates.

“Look, home prices are rising but not rising very rapidly. Incomes are rising faster. Interest rates are drifting down slowly. That says in a couple of years things will get back to something resembling a normal equilibrium,” Thornberg said. “Will things ever be as cheap as they were in 2018? No, there’s no way.”

In August 2018, the median home price in San Diego County was $584,500 and the average interest rate for a 30-year, fixed-rate loan was 4.52 percent. Assuming 20 percent down, the average monthly payment would be roughly $2,799. A home at today’s median and interest rates would have a monthly payment of about $4,780.

Here’s how different home types in San Diego County fared in August:

Resale single-family: Median of $985,000 with 1,501 sales. It is down from a peak of $1,007,500 reached in May.

Resale condo: Median of $703,000 with 851 sales. It’s down from a high of $723,000 in April.

Newly built: Median of $925,000 with 179 sales. This figure combines single-family homes, townhouses and condos. It was down from a peak of $1.2 million last July, when there was an influx of newly built single-family homes, lifting the median higher.

Home price gains were mainly down, or close to flat, across Southern California in August.  Here’s a look at the median prices in the counties:

Los Angeles County: Down 2.2 percent monthly for a median of $875,000; Up 4.8 percent in a year.

Orange County: Down 1 percent month-over-month to a median of $1,175,000; Annual rise of 8.8 percent.

Riverside County: Monthly drop of 2 percent for a median of $577,000; Up 3 percent annually.

San Bernardino County: Up 0.2 percent in a month for a median of $510,000; Up 3 percent annually.

San Diego County: Down 1.7 percent in a month to a median of $875,000; Up 4.2 percent in a year.

Ventura County: Up monthly 0.4 percent for a median of $858,500; Up 4.7 percent annually.