San Diego home sales hit lowest point since 2007

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San Diego County’s median home price ended the year at $550,000, one of its lowest points of 2018, real estate tracker CoreLogic reported Wednesday.

December’s price is reflective of reduced sales in the home market across the nation as rising mortgage rates at the end of the year kept buyers on the sidelines. There were 2,642 home sales in San Diego County, the lowest for a December since 2007. It was the seventh consecutive month of declining year-over-year sales for the county.

Southern California as a whole also recorded its lowest sales for the month since 2007.

Mark Goldman, an analyst with C2 Financial Corp., said it was important to note it appeared sales were increasing in January because of the end of the holiday season and as interest rates have started to drop.

“Is the market reversing? I don’t think so,” he said. “I think we’ll continue to see price appreciation, but the rate at which prices go up will not be as fast as we’ve seen in recent years.”

Goldman noted the Federal Reserve announced Wednesday that it would not raise interest rates during its meeting this week, as well as patiently deciding future moves based on “global economic and financial developments.” Mortgage rates typically track the yield on the U.S. 10-year Treasury, so the Fed’s decision could mean lower rates for the short term.

Although November and December are seen as slower months for the housing market, sales typically increase in December. Sales were down 10 percent in San Diego County between the two months, notable because the last time there were less sales in December than November was in 2000.

All types of housing saw sales decrease. The resale single-family home market, considered the most important part of the total market because it has the most sales, had 1,673 sales in December — its lowest since 2007 when 1,074 homes sold.

The median price for a resale home was $595,000, dipping from the all-time high reached in June and July of $630,000. Yet that is up from January’s median of $565,000, representing a gain of $55,000 in a year.

There were 701 resale condo sales, down to its lowest level since 521 sales in December 2007. The median price was $405,000, down from the record $432,000 reached in July.

Sales for newly built homes hit a record low in December with 268 sales, the lowest ever recorded by CoreLogic for that month since the company began studying the market in 1988.

Real estate analyst Gary London of London Moeder Advisors said he was not surprised by the numbers because developers have been slowing construction to avoid overbuilding — limiting the available new homes to purchase — as the housing market cooled at the end of 2018. He said other factors contributing to a slowdown are rising costs for materials for builders, and less enthusiasm from buyers because of higher prices and worries about the economy.

“The halcyon days of residential single-family home construction are fundamentally over because of limited land supply,” he said. “For builders, the action is in delivering housing that is substantially more dense.”

Gary Kent, a La Jolla-based real estate agent, said the market has transitioned in the past three weeks to becoming more balanced, after it seemed like more of a buyers’ market for months.

“The market did an about-face in August. Come Aug. 15, it seemed like everybody came together and said, ‘These prices are too high and these interest rates are too high’,” he said. “It was like whiplash. Like, what just happened?”

Fewer sales meant more homes to choose from. There were 7,298 homes listed for sale in December, said the Greater San Diego Association of Realtors, up from 4,088 at the same time last year.

Absentee buyers, typically investors who don’t intend on living in the home as a primary residence, made up 20.1 percent of sales in December. That’s down from 22.1 percent at the same time last year.

In ZIP codes with at least 10 sales, Encinitas (92024) had the biggest annual price increase for a resale single-family home, 36.1 percent, with a median of $1.4 million. It was followed by Cardiff-by-the-Sea (92007), up 34.1 percent for a median of $1.7 million, and Vista (92084) up 28.6 percent for a median of $612,500.

All of Southern California experienced a drop in sales in December, but Orange County had the biggest with a 26 percent drop in sales compared to the same time last year.

It was followed by San Diego County, down 22.2 percent; San Bernardino County, down 21.5 percent; Los Angeles County, down 20 percent; Riverside County, down 14.6 percent and Ventura County, down 13.5 percent.

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