Homeownership is up from last year, but renting becomes decisively more affordable
IRVINE AND SILICON VALLEY, CALIF. – August 8, 2017 – Ten-X, the nation’s leading online real estate transaction marketplace, has released its First Quarter 2017 Economic and Single-Family Housing Market Outlook Report for San Diego, California, which reveals home prices have surpassed their pre-recession levels but are pushing affordability further out of reach. The region’s homeownership rate improved more than 700 basis points from one year ago to 58.1 percent, yet remains nearly 400 basis points below the U.S. rate.
“Home prices in the San Diego area have finally eclipsed pre-recession levels, but for most residents, renting has become much more affordable than buying a home,” said Ten-X Executive Vice President Rick Sharga. “While home sales dropped slightly in the first quarter, they have steadily increased since 2012 in the metro region and have led the U.S. in year-over-year gains. Meanwhile, San Diego’s economic expansion is softening, although the unemployment rate remains well below the national average.”
San Diego Homeownership Rate Swings Upward
Sources: US Census Bureau, Ten-X Research
San Diego Home Sales Dip Slightly
Sources: IHS, Ten-X Research
Existing home sales in San Diego edged higher in Q1 to a seasonally adjusted annual rate (SAAR) of more than 40,562, a 3.0 percent gain from last year but below the U.S. average increase of 4.6 percent. Inventory of homes for sale in San Diego dropped 25.4 percent from a year ago to a seasonally adjusted rate of 5,222.
The metro’s new construction segment is still struggling to recover from a steep recessionary fall. Housing completions fell 16.2 percent year-over-year, although they remain 40.2 percent higher than the previous recessionary low. Housing starts increased 1.7 percent year-over-year, but remain well below prior cyclical levels.
“With higher prices and tight inventory, single family home affordability in the San Diego area is at its lowest level since 2008. Local apartment rentals are now decisively more affordable. Meanwhile, we see little relief coming soon through housing starts, which are up less than 2 percent from a year ago,” Sharga said.
San Diego Home Prices Continue to Climb
Sources: FHFA, Census, IHS, Ten-X Research
San Diego home prices continue to grow with a 6.4 percent year-over-year gain, which is slightly above the U.S. pace. The median home price in the first quarter was $541,171, surpassing pre-recession peaks. However, price increases have slowed in recent quarters.
Economic and Demographic Fundamentals
San Diego’s economic expansion softened over the past year but remains solid. Unemployment stood at 3.8 percent, below the U.S. rate, while annual job growth cooled from 3 percent to the 1.5 percent range. Despite seeing slower growth in the metro’s crucial professional and business services and leisure/hospitality sectors, public employment-the region’s largest job sector-continued to expand, with jobs up 2.5 percent year-over-year.
San Diego added 27,504 residents in 2016 to account for a 0.8 percent year-over-year increase, slightly above the U.S. growth rate. Most of the metro’s population growth stems from natural increases. San Diego’s substantial international in-migration was diluted by heavy domestic outflows, bringing total net migration to just over 6,000. San Diego’s population is relatively young. Residents between 25 to 44 years old comprise the region’s largest demographic, while there is a higher percentage of residents between 18 and 24 years of age compared to the national average.
Ten-X is the nation’s leading online real estate transaction marketplace and the parent to Ten-X Homes, Ten-X Commercial and Auction.com. To date, the company has sold 292,000+ residential and commercial properties totaling almost $48 billion. Leveraging desktop and mobile technology, Ten-X allows people to safely and easily complete real estate transactions online. Ten-X is headquartered in Irvine and Silicon Valley, Calif., and has offices in key markets nationwide. Investors in the company include CapitalG (formerly Google Capital) and Stone Point Capital. For more information, visit Ten-X.com.