Home prices jump with an increase by 0.8 percent in July and 5.4 percent over the full year in San Diego County, which posted the nation’s largest monthly gain, according to the S&P/Case-Shiller Home Price Indices released Tuesday.
The data, which are adjusted for seasonal swings, show the market was still delivering the kind of single-digit price appreciation considered sustainable by housing economists.
In 2013 and the first half of 2014, local prices increased at annual rates of between 10 percent and 20 percent. Such gains were reminiscent of the mid-2000s housing bubble and far outpaced the income growth of the average potential buyer. For perspective, personal incomes in San Diego County increased by an average 3.5 percent a year from 2009 through 2013, according to federal figures.
However, since August 2014 the annual rate of home price appreciation has bounced between 5 percent and 6 percent. This produces rising wealth for homeowners, because it’s still well above the 2 percent or so rate of general inflation that includes other consumer prices.
The national home-price index, which increased 0.7 percent in July and 4.7 percent over the year, reflected strong demand in the West. For example, San Francisco’s index increased by 10.4 percent, the nation’s highest annual figure.
“The three cities with the largest cumulative price increases since January 2000 are all in California: Los Angeles (138 percent), San Francisco (116 percent) and San Diego (115 percent),” said David Blitzer, managing director at S&P Dow Jones Indices, in a prepared statement.
He said housing has given a major boost to the overall U.S. economy, which grew at a 3.9 percent annual rate in the second quarter of this year. Residential investment grew faster than national GDP over the last three quarters, along with spending on furniture and household equipment.
Blitzer also predicted the housing market would continue to power the U.S. economy for the foreseeable future. “An interest rate increase by the Federal Reserve, now expected in December by many analysts, is not likely to derail the strong housing performance,” he said.
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.
Other reports are better at showing monthly activity in a region or ZIP code. For example, Corelogic reported recently that San Diego’s median price peaked for the summer at $530,000 in July before declining in August to $515,000, an increase of 5.7 percent from August 2014.
This article was originally published in the San Diego Union Tribune and can be found HERE.
