Ten years ago, if someone said your home appreciated 7.5% in the past year, you would have been ecstatic, right? Well, that's exactly how much the median home price increased in San Diego County last year. Oh, in perspective, the Dow Jones Index lost 0.61%. Hmm? Do I still detect a little grumbling?
OK, so 7.5% is the lowest annual appreciation since before 1999, when appreciation gained 10.3%. That's as far back as our records go. The median home price for 1999 was $225,000. The median home price for 2005 was $575,000.
It has been quite a run. Remember, home appreciation historically averages one percent over inflation. Inflation was about 3% last year, so a net gain of 4.5% is quite nice.
The median price for condos increased 7.8% to $385,000.
Home sales dropped for the second year in a row, losing 7.7%. Condo sales were down 1%.
Other items of interest, the number of days on the real estate market reached an average of 53 last year, the highest number since 1998. Also, the sales price to list price ratio fell to 95.8%, the lowest since we've been keeping records.
2006 Forecast for US Real Estate & San Diego Real Estate
Let's start by examining last year's predictions.
The National Association of Realtor said:
1. National sales to drop 2.5%, 2005 will still be second best year ever.
2. Median home price to increase by 5.3%
3. Mortgage rates to increase, will be 6.5% at the end of 2005
Well, home sales set another new record, up 4.7%, the median national home price rose 12.7% to $208,800 and 30-year fixed mortgage rates ended the year under 6.5%.
Next, the California Association of Realtors:
1. California sales to decline by 2.5%
2. Median home price to increase by 1.5%
3. Mortgage rates to approach 7% by the end of the year
Sales rose 1.8% and the median price of a California home gained 16%
The Real Estate Report said about San Diego County:
1. Sales will be stable or decline slightly
2. The median home price will gain 15%
3. Mortgage rates will go over 7 %
Home sales declined 7.7% and the median home price gained 7.5%, mortgage rates? Frankly, we're
dumbfounded about that one. I believe the reason long-term mortgage rates haven't been rising faster, even
in the face of numerous short-term increases by the Fed is printing way too much money. This will, eventually, increase inflation.
So let's see what everyone is predicting for this year.
First, the National Association of Realtors:
1. National sales to drop 3.7%, 2006 to be second best year ever
2. Median home price to increase by 6.1%
3. mortgage rates to increase, will be 6.6% at the end of 2006
Next, the California Association of Realtors:
1. California sales to decline by 2% in 2006
2. Median home price to increase by 10%
3. Mortgage rates to be in the low to mid 7%
Now, what do we think is going to happen in San Diego County:
1. Sales will be stable or decline slightly
2. The median home price will gain 5%
3. Mortgage rates will go over 6.5%
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