Home prices in Southern California and the West outpaced the rest of the nation in April as low interest rates continued to bolster the home market, said the S&P/Case-Shiller Home Price Index released Tuesday.
San Diego County’s median home price increased 6.3 percent in the last 12 months, while Los Angeles and Orange counties increased 5.9 percent.
Portland had the biggest gains at 12.3 percent, followed by Seattle at 10.7 percent and Denver at 9.5 percent. Nationally, home prices rose 5 percent.
“The home price increases reflect the low unemployment rate, low mortgage interest rates and consumers’ generally positive outlook,” said David Blitzer, managing director of the index committee for S&P Dow Jones Indices, in a statement.
The index noted that several cities had passed their pre-recession peaks — Denver, Dallas, Portland, San Francisco, Seattle, Charlotte and Boston.
Dana Kuhn, real estate lecturer at San Diego State University, said it isn’t surprising that cities are hitting peaks again.
“It’s what happens after that that becomes a little less predictable,” he said.
Kuhn said affordability concerns will continue as low interest rates push up prices, as well as efforts to get buyers into homes with smaller down payments.
Anthony Andaya, president of San Diego County’s Pacific Southwest Association of Realtors, echoed concerns of many experts who fear millennials and first-type home buyers are being pushed out of the market.
“They are paying higher rents but having challenges saving for down payments,” he said. “They are a huge part of the market in the years to come.”
In addition to affordability concerns, last week’s vote by the United Kingdom to leave the European Union had some analysts concerned.
Zillow chief economist Svenja Gudell said the Brexit meant interest rates would not rise meaningfully any time soon. But, the Home Price Index said the economic impact of the exit could distract homebuyers and investors in the coming months.
Real estate tracker CoreLogic reported last week that San Diego County’s median home price reached$490,000 in May. The county has yet to reach its pre-recession peak of $517,500 from November 2005.
The Case-Shiller index is considered the gold standard for measuring and comparing overall big-city housing markets because it tracks repeat sales of identical single-family houses as they turn over through the years.
Posted on the San Diego Union Tribune website on June 28, 2016, by Phillip Molnar, [email protected] (619) 293-1891 Twitter: @phillipmolnar
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