Real Estate Report presented by Tom Dunlap

January 2018 Report

Single Family Homes in Central San Diego, All Cities, All Neighborhoods Change >


Median Price
$640,000
-1.5%
Average Price
$974,028
+7.5%
No. Sold
387
-4.2%
Pending Properties
427
-18.8%
Active
541
-25.3%
Sale/List Price Ratio
98.2%
0.0%
Days on Market
40
-2.1%
Days of Inventory
42
-19.3%

Market Barometer

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Market Commentary

Prices Up, Sales Down to End the Year

Although the median price for single-family, re-sale homes in San Diego County slipped from the record high set in November, it was up 7.1% year-over-year.

That’s sixty-seven months in a row the median price has been higher than the year before.

The median price for condominiums was up 11.4% year-over-year, again, that’s also sixty-seven months in a row it has been higher than the year before.

Home sales, meanwhile, were down 14% from last December. For the year, home sales were off 6.4%. Condo sales were down 9.7%, year-over-year, and they were down 0.6% for the year.

Homes continue to sell quickly, taking only thirty-nine days from coming onto the market to when they go under contract. The average since January 2001 is fifty-seven days. Condos are selling in twenty-eight days, whereas the average is fifty-five days.

The sales price to listing price ratio continues to tease the 100% level: 98.1%. The ratio for condos is 98.8%.

Inventory continues to be abysmal. It is less than one-third the average since 2001. As of the 10th of December, there were 2,488 homes for sale. We average 8,515!

This is reflected in our Days of Inventory statistic which is forty-four. The average is one-hundred and forty-four.

If you would like to know what’s going on in your neighborhood click on Recent Sales & Listings. That will tell you what is for sale and what has sold.

Home Prices Up, Sales Slip in 2017

Prices for single-family, re-sale homes rose smartly in 2017. The median price gained 9.6% and the average price rose 8.2%. This is the sixth year in a row of year-over-year price increases. 

Condo prices were also up, albeit more modestly. The median price gained 5.3% and the average price rose 4.2%. (See tables on next page for details.)

Home sales fell 5% in 2017. Condo/townhome sales were up 13.4%.

Inventory continues to be problematic. Days of Inventory for the year averaged thirty-seven for homes and it was twenty-seven for condos.

How Will the Tax Cut Affect Real Estate?

The Tax Cuts and Jobs Act has been signed into law. There were some big "wins" in the final bill from the perspective of homebuyers, owners, and real estate investors. However the bill removes important incentives for homeownership and may have an adverse impact in some markets. According to the National Association of Realtors, home prices will grow at a slower pace of 1-3% nationally, though some local markets in high cost, higher tax areas will likely see price declines.

"WINS" FOR REAL ESTATE

The final bill did not modify the current law on the exclusion on the gain of sale of a principal residence. The current law states that, to qualify for at $250,000 (single) or $500,000 (married) exclusion on the gain of sale of a primary residence, a homeowner must have resided in a property for 2 out of the previous 5 years. The Senate-passed bill would have stipulated that homeowners must live in their home for 5 out of the past 8 years to qualify. The change would have likely further restricted housing supply in an already constrained market locally and nationwide.

Interest remains deductible on second homes, but is subject to the $1 million / $750,000 limits (see below). The House-passed bill would have eliminated the deduction for second homeowners. This will be particularly important for the demand-side of the Santa Cruz real estate market, where second-home buyers have been trending upwards over the past two decades. 

The final bill allows an itemized deduction of up to $10,000 for the total state and local property taxes and income or sales tax. While less favorable for homeowners than the previous law, this was a major improvement from the House and Senate bills which proposed complete elimination of state and local taxes. 

CAP ON MORTGAGE INTEREST DEDUCTION

The Tax Cuts and Jobs act reduces the limit on deductible mortgage debt to $750,000 for new loans taken out after 12/14/17. Current loans of up to $1 million are grandfathered in and are not subject to the new $750,000 cap. Capping the deductions could contribute to slower home value growth in the priciest communities by limiting some buyers' purchasing power. Santa Cruz is one such community, and will be disproportionately affected.

Interest paid on home equity loans (second mortgages) through 12/31/25 will not be deductible unless the proceeds are used to substantially improve the residence. Typically, this kind of deduction is important for financing major home renovations, so eliminating it could contribute to underinvestment in home repair and updates.

The standard deduction will be doubled from $6,350 to $12,000 for single filers and from $12,700 to $24,000 for couples filing jointly. This change will have a significant impact on the number of homeowners that decide to take advantage of the mortgage interest deduction. According to a study by Zillow, itemizing and claiming mortgage interest deduction will only be advantageous for 14.4% of homes nationwide, a steep decline from the previous 44% of all homes. This reduces the incentive to buy a home and may hurt housing-demand.

Prices & Sales

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Days of Inventory

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Sales to Date

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Sales Price Ratio

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