Home sales fell for the fifth month in a row in San Diego County in October and prices were also down, real estate tracker CoreLogic reported Thursday.
The latest numbers show continued signs of a slowdown in the real estate market — across the nation, not just locally — but analysts cautioned it was not similar to conditions that caused the 2006 housing crash. Still, there was evidence home prices would continue to decline or, at least, stay at current levels.
In October, the median home price was $558,000, down by $25,000 from the all-time peak reached in August, but still up 5.4 percent for the year. Sales were down 12 percent compared to the same time last year and at their lowest level since 2011. There were 3,162 home sales in October, down from 3,592 in 2017, 3,597 in 2016 and 3,356 in 2015.
“I think the boom is over,” said financial analyst Rich Toscano, who predicted the housing crash in November 2005 on his housing blog Professor Piggington’s Econo-Almanac.
He said price declines in the fall are typical and not that big of a deal, but the concern for the market is how rapidly the number of homes for sale went up while sales also dropped.
There were 7,918 homes for sale in October, up from 5,436 — 46 percent — from the same time last year, said the Greater San Diego Association of Realtors. There were 6,211 homes for sale in October 2016, 6,964 in 2015 and 8,295 in 2014.
Toscano, an analyst with Pacific Capital Associates, said the market has been driven in recent years by an intense supply and demand imbalance that drove up prices.
“Home prices got really high based on this perpetually low inventory, and now that’s gone,” Toscano said. “Can prices be supported at this level? I think you could make the argument with more inventory and less demand that prices will back off a bit.”
He said current market conditions were much different than before the housing crash: The cost of homes compared to rents or incomes is not nearly as out-of-whack as it was in 2006, it’s much tougher now to get home loans and mortgage interest rates aren’t as high.
Sales across all housing types were down:
Resale single-family homes — 1,989 sold, down from 2,240 at the same time last year. Median price was $610,000, down from the peak of $630,000 in June and July.
Resale condos — 952 sold, down from 1,102 in 2017. Median price was $415,000, down from the peak of $432,000 in July.
Newly built homes — 221 sold, down from 250 last year. Median price hit an all-time high of $812,500.
Nathan Moeder, principal with real estate analysts London Moeder Advisors, said the market is reacting to rising mortgage interest rates. Sellers are trying to get their homes on the market because they want to get the most they can before interest rates go up even more, and buyers are holding off to see what happens with home prices and interest rates.
“Right now, the fact there is a lot of inventory compared to previous Octobers, that tells us people are testing the market if they can sell it because they know they are at the peak,” he said. “But, I think there is some market resistance because there are only 3,162 sales.”
Moeder said the only way he could see an actual market crash happening is if interest rates hit 8 percent.
The interest rate for a 30-year, fixed-rate loan was 4.97 percent at the end of October, said Mortgage News Daily. That’s up from 4 percent at the same time in 2017.
That means the monthly payments for October’s median priced home have gone up $321 a month.
Investors seem to remain bullish about market. Absentee buyers, typically investors who don’t intend on living in the home as a primary residence, made up 21.2 percent of sales in October. It was about the same, 21.9 percent, in October last year.
The average time on market in October was 38 days, which is just three more than the same time last year.
Andrew LePage, CoreLogic data analyst, said fall and winter may make for a good time for buyers, but it doesn’t change the fact that prices are still very high for many buyers.
“Fall-winter home shoppers could find a much more favorable shopping environment,” he wrote in the report, “but many will still be hit by the one-two combo of higher prices and mortgage rates.”
Real estate agent Michael Chandler, based in Kensington, said sellers are becoming more understanding with price cuts, and more willing to sell to investors in off-market deals.
“Sellers are getting a little nervous that their time has come,” he said. “At the same time, I advise everyone to look at the information. Even the California Association of Realtors are projecting an increase in price next year. It’s just the acceleration that is decreasing.”
Southern California sales were their lowest since October 2011 with sales down on a year-over-year basis for the third consecutive month. Still, prices were up 6.1 percent in the 12-month period.
Ventura County’s median home price went up the most in a year, 9.1 percent, for a median of $595,250.
It was followed by Riverside County with a 6.1 percent gain for a median of $380,000; San Diego’s 5.4 percent gain and median of $558,000; Los Angeles County up 5.3 percent with a median of $595,000; Orange County up 3.9 percent for a median of $720,000; and San Bernardino County up 3.4 percent for a median of $330,909.
San Diego County’s year-over-year drop in sales, 12 percent, was the most out of the six counties.
It was followed San Bernardino County, down 8.9 percent; Los Angeles County, down 7.2 percent; Orange County, down 7 percent; Ventura County, down 6.2 percent; and Riverside County, down 3.2 percent.