S&P CoreLogic Case-Shiller National Home Price Index examined 20 cities for year-over-year jump in house pricing.The study showed that the city with the biggest jump is San Diego in California. House prices in the Southern California city increased by 11% in January, according to the report.
A Decrease In Demand
It all started in January 2023, while observing the housing market in the United States. Back then, prices were being corrected as a result of a decrease in demand for homes.
That decline was triggered by an increase in mortgage rates, attributed to the Federal Reserve’s aggressive spike of the rates in its war against inflation. The correction ended in the spring of 2023.
Report Of The Price Index
The price index tracks a three-month moving average of home prices, with a two-month lag factor because a house purchase can take up to two months to be completed.
The S&P CoreLogic Case-Shiller Index reported that elevated mortgage rates are dampening people’s enthusiasm in buying a home. The rates declined from 8% in the fall but home loan costs rose again in the last few weeks.
Index Observed
The prices continue to go up! The index observed major metro areas, this included three cities in California alone (San Diego, San Francisco, and Los Angeles).
Other cities that were observed were Atlanta, Boston, Chicago, Denver, New York, and Seattle. In multiple areas the housing prices have increased, but in San Diego it is the most significant increase.
Los Angeles
San Diego isn’t alone in the price hike, another Californian city also saw a major price increase, Los Angeles.
However, the percentage in Los Angeles is lower than others, the surge there only went up about 8.6%. January saw San Diego house prices go up 2% from the previous month, while the uptick in LA was only 0.1%.
So Why San Diego?
Many ask why San Diego? According to a moving company called QShark it is the city’s warm environment and job opportunities that encourage people to move there. .
For those that have the California dream, San Diego has a lot of appeal.
Difficult Living
The appeal may be slowly decreasing though, thanks to the grim circumstances surrounding the fast food industry. Many wonder just how many jobs will be lost after everything settles.
San Diego is already known for being a city with an extremely high cost of living, even beating the city of Los Angeles. It’s hard to imagine that the city will inspire a massive migration to its land.
Inflation
Plenty of factors named San Diego as the most expensive city to live in. The report put out a list of different metrics to calculate the cost of gas and inflation rate, and San Diego was the highest.
Home prices far exceed the national average, combine that with the fees that San Dieagans have to pay like homeowners associations fees and the cost of housing becomes outrageous.
Other Places
Just because San Diego is high doesn’t mean that every city in the state shares the same issue, for example, in Oakland the value of properties has dropped and the prices are much lower.
As of 2023 the median sale price for a home in Oakland was around $892,000.
California Expensive To Live In
It is fairly common to find that most cities in California struggle with a high cost of living. 11 out of 25 areas in the United States most expensive cities to live in are located in California.
Included on the list with San Diego are Los Angeles, San Francisco, Santa Barbara, Santa Rosa, Salinas, Vallejo and Fairfield, San Jose, Sacramento, Stockton, Modesto, and Fresno.
Prices Will Increase Again
It is a mystery as to when housing prices in California will go down, it’s possible it may never happen, for some sellers this is good news.
January 2024 recorded over 65,000 houses for sale in the state, and there is no sign of the housing market crashing any time soon.
Housing Market
Housing market will only be able to offer decent prices if the mortgage rates settle down. Whether that happens this year or not (it’s still almost 7% for the 30-year fixed rate at the end of March), some people remain optimistic.
Kuba Jewgieniew of the real estate brokerage company, Realty ONE Group, is among those optimistic. Jewgieniew said that Americans can “definitely look forward to a better housing market in 2024 as interest rates start to settle around 6% or even lower.” Hopefully this becomes a reality.
