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63.4 F
San Diego
Tuesday, May 21, 2024
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Single-Family Home Prices Picking Up

Single-family home prices ticked up ever so slightly in May from April, according to the Greater San Diego Association of Realtors.

The median price of an existing single-family home in May was $955,000 compared to $950,200 in April, the association reported.

That’s still 2.6% below what they were a year ago, when the association reported a median price of $980,122, but Association President Frank Powell said that he expects prices to continue a slow rise after dropping sharply when the Federal Reserve started raising interest rates.

“I don’t see them going up 20% or 30% anymore, but I do see them increasing, not decreasing,” Powell said. “It’s almost like an old school trend where house prices will continue to increase 3% to 5%, if this situation we’re in right now continues, but situations change and none of us can be speculators anymore and speculate whether interest rates go up or down, building permits go up or down.”

Few Homes Available

Among existing single-family homes tracked by the association, the most expensive sold in May was a 5,500-square foot beachfront home in La Jolla with five bedrooms, four full bathrooms, and two half bathrooms that went for $17.4 million.

Existing condominium and townhome prices also rose slightly in May, with the median price rising from $625,000 in April to $640,000 in May. A year ago, the median price was $670,000.

What the association called “a sparse inventory of homes on the market” was largely responsible for the rising home prices, with 23.4 % fewer single-family homes up for sale in May 2023 versus May 2022.

Fallbrook led the county in May with 54 single-family homes sold in May, followed by Rancho Bernardo with 42, Santee with 38, Encinitas with 34, and Escondido and Romano with 33 each among five areas with the highest number of sales.

Following a rush of refinancing when interest rates were running at 3.5% or less, owners have to have incentive to sell.

“The only people who are selling right now are people who have to sell – they’re divorcing, they’ve inherited (a home), they’re going into senior living, or they have medical expenses. Everyone’s just holding tight,” Powell said.  “Unless San Diego builds more, we’re going to always have a low inventory and the housing market, even if interest rates rise, the prices are going to keep going up because there’s no supply. Unless something happens when interest rates go up to 9%, 10%, or 11%, then we may have a crash in the housing market.”

For frustrated buyers, Powell said: “You’re just going to have to figure out how to make a bigger down payment – save more or delay your home search.”

Ever the optimist, Powell said housing prices tend to run in cycles, driven in part by the overall economy.

“The pendulum always swings from one side to the other and we may see an economic boom,” Powell said.

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