The San Diego County median home price soared to its highest point ever, $550,000, in March, said real estate tracker CoreLogic.
Home prices increased 6.8 percent in a year, which experts attribute to a lack of homes for sale and a strong economy. The previous home peak was $545,000 in June.
The big picture: San Diego County's median home price is technically still down from the height of the housing boom. In November 2005, the median hit $517,500, which is more than $650,000 when adjusted for inflation. The San Diego region is still a cheaper option in coastal Southern California compared to Los Angeles and Orange counties, which also hit new price peaks in March, CoreLogic reported Monday.
What is causing the price increase: A strong economy is fueling demand for homes while the number of houses available remains limited, said Chris Thornberg, economist and founding partner of Beacon Economics. There were 4,857 homes listed for sale in March, said the Greater San Diego Association of Realtors. That is 488 more than March of last year. However, those listings are down from 5,652 in March 2016, 6,101 in 2015 and 6,223 in 2014.
Are we in a housing bubble? No. Economists say today's upswing is more sustainable, driven not by risky lending but by an improving economy, low mortgage rates and a shortage of homes for sale. Thornberg said March's peak should not be viewed as the start of a bubble, which assumes housing prices are very overvalued.
"The value of real estate was never worth that value," he said of housing boom prices reached in the mid-2000s. "That was an insane number driven by crazy credit and should be viewed the same as gods of ancient Greece and other fables or myths."
How prices could change: Mortgage rates are rising and that makes the cost to borrow money to buy a home more expensive. The rate for a 30-year fixed rate mortgage was 4.58 percent Monday, said Mortgage News Daily, up from around 4.3 percent at the start of the year.
Rich Toscano, who predicted the housing crash in November 2005 on his housing blog Professor Piggington's Econo-Almanac, agreed with Thornberg that March's rise was not indicative of a housing bubble. Toscano, a partner at Pacific Capital Associates, said the only thing that might affect the housing market in the near future are rising interest rates. Right now monthly payments for a mortgage aren't that bad when compared to rent and wage growth, but higher mortgage rates might negate that advantage.
"If rates were to go up a couple percent, which is completely plausible, that would really change that arithmetic," he said, "so that all of a sudden this thing that helped home prices stay high could go away. That would be my main contender for what could actually cause the boom to end."
The Federal Reserve raised its key interest rate last month and said it would raise rates two more times this year. This indirectly affects mortgage rates, which could make homeownership more expensive in the long run, because rates typically track the yield on the U.S. 10-year Treasury. Monday, the 10-year yield closed at 2.98 percent and continues to trade near a four-year high. (Yields move in the opposite direction of bond prices.)
How quickly homes are selling: Homes stayed on the market an average 28 days in March, down from 32 days at the same time last year, said the Greater San Diego Association of Realtors. Homes between $250,001 and $500,000 sold the fastest, an average of 23 days. Homes going for $1.25 million and up stayed on the market an average 58 days.
How different home types fared: The median for a resale single-family home hit $608,750, a new peak, in March with 2,126 sales. Resale condos were at a median of $418,000 with 1,038 sales, and down from a peak of $425,000 reached in February. Newly built homes were a median of $619,500 with 365 sales, down from a peak of $792,250.
Hot markets: There were 3,529 home sales in March, down by 208 from the same time last year. Oceanside (92057) had the most sales, 82, with a median sales price of $477,000. It was followed by another Oceanside ZIP code, 92056, with 79 sales and a median of $529,000. For resale condos, downtown (92101) had the most sales with 90 and a median of $595,000. Rancho Bernardo (92128) and Mission Valley (92108) both had 42 sales each for medians of $455,000 and $343,000, respectively.
Interesting data points: Absentee buyers, typically investors who don't intend on living in the home as a primary residence, made up 22.3 percent of all homes sold in March, up from 20.9 percent at the same time last year. In early 2013, more than 30 percent of sales went to absentee buyers.
How the rest of Southern California compares: Southern California's median home price hit a record high of $519,000 in March, increasing 8.4 percent in a year. Orange County had the biggest increase, 8.7 percent, for a median of $725,000. It was followed by San Bernardino County with a 7.5 percent increase for a median of $328,000; Riverside County with a 7.1 percent increase for a median of $375,000; San Diego County with the 6.8 percent increase; Los Angeles County with a 6.6 percent increase for a median of $585,000; and Ventura County with a 6.8 percent with a median of $656,000.