In The Midst Of The Pandemic, San Diego Home Prices Keep On Rising

Speaker 1: 00:00 Some economic effects of the pandemic are surprising in spite of job losses and high unemployment. The median price of a resale single family home in San Diego County is still rising and it hit an all time high of $700,000 in July here to explain what is going on and what this means for San Diego. Homeowners is Phil Molnar who covers residential real estate for the San Diego union Tribune. Welcome, Speaker 2: 00:24 Thank you so much for having me. Speaker 1: 00:26 Why are residential home prices still going up when we're also hearing about so much economic uncertainty and financial hardship in the community, Speaker 2: 00:34 Right. And even confuses and surprises me month to month. So one of the biggest things we have going on right now in San Diego County is we have very few homes for sale. Normally San Diego is a market without a lot of homes for sale, just because we're not really building a lot. And people that live here want to stay here. But what has been happening recently is a lot of people with good reason, do not want to put their homes on the market right now, if they'd been planning to sell. Part of the reason for that is you don't want to potentially drag COVID-19 into your home. A bunch of people looking at it and whatnot. And also during times of uncertainty, such as a recession, or in this case, a pandemic slash recession thing, people really want to stay where they're at. They don't want to move at the moment. Speaker 2: 01:22 So because of that, we don't have a lot of homes on the market, but the people in San Diego home buyers or potential home buyers that really want a home right now, they're getting into these crazy price Wars that are driving up the price of homes in San Diego County. So that's why we saw in July home prices. Overall median hit all time high of 634,000, which is just, it's kind of baffling to me because for so long, San Diego County was the one place in Southern California that never hit that 600,000 Mark. And not only did we hit it in June, we've now blown past it by a $34,000 jump. So it's pretty wild stuff. Speaker 1: 02:03 So that's 634,000 includes single family homes and condos. Right, Speaker 2: 02:08 Right. And newly built homes. But we really don't have a lot of newly built homes. So it's sort of statistically in Singapore. Speaker 1: 02:14 Hmm. No, despite there being fewer homes on the market, not only our prices up, but sales are up. Why is that? Speaker 2: 02:20 So it's weird. Sales have been down really, really sharply, like the biggest drop in 10 years, a few months ago. But what has been happening lately though, has been what we're seeing is people willing to pay more and more for home. So I think it's sort of increasing the number of sales because earlier the pandemic people weren't really willing to take that huge leap to really go that much over their asking price. But now we've started to see more of a softening of that in that people are willing to make multiple offers on different properties. So I think that's a big part of the reason sales are going up. And also we are to get, even though inventory is still really low, it is starting to go up a little bit from those first couple of months that pandemic. So some people, a few hundred, at least in San Diego County are feeling a little more comfortable putting their homes on the market, but just keep in mind, that's still lower than it's been the past couple of years. Speaker 1: 03:17 The buyers. I mean, now these investors from out of the County or people moving around internally, Speaker 2: 03:23 No, actually it's interesting not seeing a lot of investor traffic yet. The assumption right now with a lot of venture capital funding is a lot of big firms are sort of gearing up for say the home market go crashing down in December, if, and when that happens, um, and buy a property sense. We're not seeing a lot of traffic right now. What we're seeing right now is either people moving to the area or it's people that have lived here in San Diego for a long time. And they're seeing the value of homeownership. Now, maybe more than ever just saying, forget it, I'm going to do it. Speaker 1: 03:57 And our price is rising faster at the top of the market. You know, the luxury homes or also for your average family home, Speaker 2: 04:04 Our luxury market is on fire. Ever since the pandemic started, there have been tons of record breaking purchases. I think back to bill Gates, buying a home in Del Mar back in March, all these kinds of things and a lot of sales happening in Rancho Santa Fe, a big reason for that is affluent. People really want to get away from hot zones like in New York city. And they want to get a lot of space. San Diego County. When you look at the numbers has very few COVID cases compare to some of those dense areas and we're more spread out. So that made the luxury market take off. That was one of my first bigger stories around March. April is just all these huge sales. But what we're also seeing is on the lower end, the lower end to, you know, a lot of people try to dissuade me from writing about the price being so high and say, Oh yes, while we're getting all these big ones, but you can see it at the low end. I mean, just take a year ago, there were still homes on the market for 350,000 in city Heights, Logan Heights, those areas in the city of San Diego. But now you can't find them anywhere. It's all at least 400,000. I think that that kind of sums up that it's all parts of the market. Speaker 1: 05:20 So there's always this fear that we could be entering another bubble phase. Like the one before the 2006 crowd housing crash. Could that be a risk? Now? Speaker 2: 05:29 I want to say it's still could be a risk, but I think what's happening now. And what I've hear a lot of experts telling me is the reason we're seeing so many home buying things going on right now is people are taking advantage of low mortgage interest rates. So in that sense, they're sort of acting rationally. Whereas we can see back around 2005, 2006, when that housing boom was going on, people were acting irrationally. They were taking out loans on homes that would be very to pay back. Whereas now credit restrictions are still kind of tough. So these people that are actually buying these homes right now for really high amount of money and taking advantage of mortgage interest rates, they are actually possibly, and arguably making a rational decision based on these interest rates. This might be a good time for them to buy. So, um, in that sense, we have a lot of financially secure people buy homes right now, the low end workers, the low income workers that have lost their jobs because of the endemic. They couldn't buy a house before and they sure as heck can't buy a house. Now, Speaker 1: 06:35 Phil, thanks so much for keeping us up to date on the trends. Thank you so much for having me. We'd be speaking with Phil Molnar who covers residential real estate for the San Diego union Tribune.