Hello friends… just the charts this month but note the pop in the price/square foot. I suspect it’s some more catch-up to the Case-Shiller index as discussed in the February data post. Enjoy!
Hello friends… just the charts this month but note the pop in the price/square foot. I suspect it’s some more catch-up to the Case-Shiller index as discussed in the February data post. Enjoy!
Appreciate the data as always!
Any chance you could provide an update on the mortgage-vs-rent ratio?
San Diego is unstoppable and I’d be curious whether condos and detached are diverging. My gut says detached will enjoy larger gains as they can’t build more backyards or ranch homes.
San Diego has been stopped (in terms of price gains) for the last three years (or 5 years inflation adjusted, take your pick) based on the charts above and the “largest gains” have been vastly outside of housing during that time frame (stock market up almost 2x since 2023). I am a strong believer that this price stagnation will last until monthly rent to monthly payment balances out by a significant amount, buying makes zero sense for basically anyone that isnt ultra rich right now.
Also San Diego’s population has been stagnant for awhile now. Lastly, I think Rich only reports on detached homes right? Like this data does not take into account Condos I believe (correct me if Im wrong)
Your response lacks context though. San Diego is THIRD of 20 major cities tracked by case shiller for price increase since January 2020 at 67% increase only beaten by Miami and Charlotte. Comparing the same 20 cities in relation to their price changes relative to their individual peaks in 2022, San Diego is middle of the pack at 11th place with a 3% increase.
The reality that we increased so high in prices and have been able to hold it is exceptional (I’m up more than 3% in my late 2022 purchase). I show 8 out of 20 cities having price declines in varying degrees since their 2022 peaks.
So IMHO, San Diego is unstoppable because everyone said it was bubble, it would burst, prices would plummet, and doom would prevail.
None has come to fruition and in fact it only costs MORE to buy a home since 2022 and exceptionally higher when considering mortgage costs. My home would cost me 30-35% more to finance today than my current costs. Layer in my NEM2 solar and the delta is even higher.
I guess it depends on what you mean by “unstoppable.” If prices staying relatively flat for several years despite strong GDP and stock market growth counts as unstoppable, then sure, although that’s a different definition than I would personally use.
Also, according to the charts above, the inflation-adjusted Case-Shiller for San Diego is roughly around the same level (or even slightly below) the 2021-22 peak, so I’m not sure housing is actually much more expensive in “real” terms than it was back then. A 3% nominal increase over 4 years is also well below cumulative inflation, and significantly below what you would have gotten in a HYSA or the stock market over the same period.
Not saying buying was a bad decision by the way, especially if you like the house, plan to stay long term, and locked in a good rate. I just personally think the era of viewing housing primarily as a high-return investment may be fading, and hopefully we move more toward viewing it as a place to live first.
I also think demographics matter here. California’s population growth has slowed a lot, and San Diego itself seems fairly stagnant population-wise compared to prior decades. That doesn’t automatically mean prices crash or anything, but I do think it changes the long-term equation somewhat.
That said, I do agree San Diego has been relatively resilient compared to many other major markets, especially considering how much rates increased.
Appreciate the monthly info Rich. I always still look to the comments and information to see if it’s good time to sell/buy a house! I know prices are outrageous now and just fully regret not pulling the trigger to upgrade our house a few years ago.
Hi all, sorry, late to the party here.
First – Yes, time for a mortgage to rent update, I will put that on my list.
Second – Bribrah is correct that all the price data is for single family only. I do track condo info but don’t include it here. FWIW there hasn’t been much difference over the past year anyway… the SFH price/square foot is down 1.4% year over year, vs. down 3.7% for condos.
Third – I also have some trouble with the “unstoppable” framing, fwiw. Real home prices have gone nowhere (are actually slightly down) for over 4 years — not exactly a juggernaut. Citing pandemic era gains shows only that it WAS a juggernaut. But the forces that drove that incredible surge are in the rearview mirror, as I wrote about here.
I will grant that “only declining a little bit in real terms over 4 years” is a pretty good outcome considering starting valuations and the rise in rates since then. But “unstoppable” is overstating it a bit imo.
I think the unstoppable comment only makes sense if San Diego is a vacation town with high percentage of short term rentals. But I do think people building ADU right now may be getting worried about the long term return on investment. It does seem crazy people are buying a 7k a month mortgage on something that rents for 5k. I own one home and I’m looking to upgrade but things seem inflated still, maybe this fall who knows.
I really don’t understand the problem with real home prices going nowhere when we now live in a 3-4 percent annual inflation world, where buying a home leverages your down payment 5x so if the stock market goes up 15 percent you still make the same return on the down payment you invested. Also the magic of a fixed 30 year mortgage which exists basically nowhere else outside of US means you will be paying it back with cheaper future dollars. Add on top of that a solid deduction on mortgage interest, expanded SALT deduction, as well as future tax protection if you do end up selling, it seems to me like buying a SFH if you can afford it in supply-constrained SD is still a pretty good bet compared to other places you could put your money.