Home prices are always changing. While they usually go up, sometimes they go down. Sometimes they rise extremely fast, while other times prices grow at a snail’s pace, so slow that inflation can, at times, be faster than upward home pricing trends.
If you are looking to purchase a home or buy an investment property, it’s important to stay up-to-date on current home prices.
Home Pricing Trends: The U.S., California, and San Diego
When it comes to a numbers-obsessed industry like real estate, there is a lot of information to sort through. In fact, you could easily make the argument that there is too much data available. So to keep things simple and consistent, we’ll look at data only from Zillow, one of the leading real-estate-listing sites in the world. Because they are so large, their information pool is deep, making them extremely reliable. Also, this company has the resources to gather, sort, and cleanly present the information, making them one of the leading sources for real estate data.
Note: Numbers cited in this article are constantly changing on Zillow’s site and are likely different than the currently-listed information.
Home Pricing Trends in the United States
In the United States as a whole, home pricing continues to climb higher and higher. According to Zillow’s data, as of writing this article, the median home value in the United States was $244,054, which represents a 3.7% increase over the past year. The experts at Zillow predict that this rise will continue, although they say it will cool to roughly 2.8% increase.
Last year (January of 2019), the median value was $236,000, so we’ve seen a national increase in home values of over $8,000.
Average listing price (not value) is even higher, with the median homes on Zillow being listed for $282,000, while the median sale price is much less: $236,900. Per square foot, the median cost in the United States is $153.
An increase of 3.7% is actually quite cool compared to what we saw in 2018 when we last took a close look at these numbers. In November of 2018, we noted that home prices had risen 7.1% between November of 2017 and 2018.
Overall, Zillow’s real estate experts classify the United States as a “Very Hot” market, heavy leaning towards being a “Seller’s Market,” not a “Buyer’s Market.
But real estate is a localized industry, with pricing and trends vastly different between states, counties, cities, and even neighborhoods. To narrow our focus, let’s next turn to our state of California…
Home Pricing in California
Most people who live in California realize that the state is generally higher in costs than many other areas. Regions differ (For example, San Diego and Riverside counties are very different housing markets), but when you look at the median home value, listing price, and sale price for California, you see that this reputation is founded in reality.
The median home value in California is, according to Zillow, $556,815, well over double the national median. Growth in value, however, is lower than the national growth, as home values have only increased by 1.8% over the past year.
The median asking price for a California home listed on Zillow is less than the median value: $535,000, and the median price for homes sold is $506,000.
Overall, Zillow’s team classifies California as a “warm” market, leaning towards the seller but not as much as the nation as a whole.
Now, let’s take our focus even tighter and look at home pricing trends in the San Diego market…
Home Pricing in San Diego
In San Diego (we are looking at the city, not the county), the median value is $647,187, significantly higher than California as a whole. Homes have steadily risen in the area, with a 2.4% increase over the past year. For a variety of reasons, Zillow’s analysts expect home prices to rise even more in the coming year, with an expected growth of 3.6% over 2020.
The median asking price for San Diego homes listed on Zillow is nearly $700,000, while the median sale price is currently $612,700.
Like all of California, San Diego is listed as a “Warm Market,” leaning towards sellers but not overwhelmingly in their favor.
What’s Behind the Home Pricing Trends?
There are many reasons for this general upward trend in prices across the country. Usually when you see prices rising, it means that more people are buying; in other words, there is greater competition for housing, as more people are ready to purchase.
As the economy continues its upward climb, more people are getting jobs. Likewise, people who have jobs are seeing wage growth. So with more people entering the housing market, and home inventory not rising as quickly (it does, after all, take longer to build a home than to hire an employee or give a promotion), buyers are bidding higher and sellers are selling for more. But that is a simple (albeit true) explanation. Is there something deeper going on?
Possibly.
One reason for an increase in pricing is the fact that homes are becoming more expensive to build. (A fact that is, of course, tied to the economic increases.) The cost of materials and labor are increasing, which means builders have to spend more to erect a new home. This means that when the brand-new house comes to market, they have to charge more for the purchase.
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