The pace of home price appreciation in San Diego County hovered around its historical norm in January, as the housing market continued to be paced by traditional factors like employment, wages and population growth.
The S&P Case-Shiller Home Price Index showed Tuesday that resale single-family home values rose 5.1 percent from January 2014 to January 2015. The pace is down from the 19.4 percent annual growth seen in January 2014, which was led by fix and flip investors.
Jordan Levine, of Beacon Economics, said historically home prices grow 4 percent to 6 percent in San Diego County, a rate he considers healthy.
“We had a period of rapid growth following the downturn,” Levine said. “A lot of those kind of arbitrage activities have been eroded. The prices have appreciated to a point where there’s not as many of those deals out there, and so we’re starting to see a shift more back toward the kind of owner-occupied side of the market rather than investor driven.”
The index, which lags two months, showed that San Diego’s annual gain ranked 10th out of the 20 cities it measures. Denver, Dallas and Miami had the biggest growth, of more than 8 percent, while Washington, D.C., and Cleveland both saw growth slower than 2 percent. The 20-city composite rose 4.6 percent over the year.
David Blitzer, chair of the Index Committee at S&P Dow Jones, said in a statement that low interest rates and increasing consumer confidence will continue to boost home prices. He cautioned, however, that the housing market overall faces some threats.
“Home prices are rising roughly twice as fast as wages, putting pressure on potential homebuyers and heightening the risk that any uptick in interest rates could be a major setback,” he said. “Residential construction is still below its pre-crisis peak. Any time before 2008 that housing starts were as low as the current rate of 1 million, the economy was in a recession.”
Levine said he expects the Federal Reserve to increase interest rates later this year. He said that could increase activity, although rates would still be historically low.
The housing market is now entering its spring peak season, which was markedly slow last year. Gary Kent, a San Diego real estate agent with Keller Williams, said he’s cautiously optimistic about the coming months.
“Prices have recovered quite a bit, they’re not quite to where their peak was and rates are low,” he said. “If rates start to creep up, we’ll see an increase in activity and then a decrease. The people on the fence will want to buy, and then we’ll tend to see the negative effect of rates going up.”
Annual appreciation has hovered between 4.5 percent and 5.1 percent in San Diego County since September, showing signs of stability. From December to January, San Diego home prices on the Case Shiller index rose 0.7 percent. The index now sits at 204.85, highest since November 2007, two months before the Great Recession.
CoreLogic DataQuick, another real-estate tracker, reported in January that the median single family home sold in the county for $472,000, up 6.7 percent over the year.
