The conventional wisdom is that the housing market is cooling off, but that’s not true. The Southern California real estate market is still hot!
Demand is strong and home prices are on the rise in Southern California. In fact, the median sales price increased by 7 percent from the year prior. The median home value is $535,000 and just a few thousand dollars short of the record high.
Read on for a comprehensive guide to the Southern California real estate market. Explore the state of housing near San Diego and see if it is a good time to invest.
What Is the State of the Southern California Economy?
In many ways, the housing market is a byproduct of the economy at large. This is good news for real estate as the Southern Californian economy is still growing.
Take San Diego for example. The San Diego jobless rate dropped from 3.4 to 3.2 percent in September.
This is half of a percentage point lower than the national average of 3.7 percent. Employers in and around the city added 27,000 new jobs over the past year. This means that people are employed and more likely to shop for houses.
Are Homes Overpriced?
The median home value in San Diego is $535,000. While this value is near record highs, homes are still not overpriced.
To gauge prices, real estate experts draw a comparison to income levels. The gold standard is when home prices are 15 percent of the income price. When this ratio exceeds 30 percent, it indicates that prices are high.
Some prominent areas of California are showing signs of distress. For instance, Anaheim’s ratio is currently at 31 percent.
Happy Family near new home. Residential construction background.
On the other hand, San Diego remains in stable condition. San Diego’s price to income ratio is just 18 percent. This means that homes are not overpriced and still have room to grow.
What Is the Average Interest Rate on a Mortgage?
Another thing for investors to keep an eye out for is interest rates. Due to action by the Federal Reserve, interest rates are on the rise.
This gives home buyers an added incentive to invest sooner. By waiting, you risk losing purchasing power and paying more in interest.
The average interest rate on a 30-year mortgage is up to 4.86 percent. This is a significant increase from 3.94 percent the year prior.
For a 15-year mortgage, the interest rate is 4.29 percent. The 15-year rate increased 0.03 percentage points in just one week. This rapid growth should encourage all potential buyers to jump in now before rates go even higher.
Final Thoughts on the California Real Estate Market
The state of Southern California real estate is healthy. Despite some negative news on the national front, home prices still have room to grow near San Diego.
In addition, the San Diego job market is below the national average. People are working and looking to settle down and purchase a home.
Before interest rates rise even further, now is the time to invest in real estate. If you are interested in the California real estate market, please contact us today to schedule an appointment!
For more on this subject read our recent blog, “Which is Best For You? Rent vs. Mortgage”
Thinking of buying or selling a home in the La Jolla area? As consistent top producers in real estate, Linda Daniels and The Daniels Group are your La Jolla housing specialists. Our team of local experts will ensure that you have a successful real estate transaction. Call us today at (858) 361-5561 or email us anytime by clicking here.