San Diego’s median home price dropped for the second month in a row in August to $725,000 as competition slowed — but experts said not to expect a crash, or big slowdown, anytime soon.

Prices are still up 13.3 percent in a year in San Diego County, said CoreLogic/DQNews, but down from a peak of $749,750 in June. San Diego wasn’t alone, with price gains slowing across Southern California.

A large factor appeared to be more homes going on the market and fewer competing offers as summer came to a close. However, housing analysts mostly shrugged off the reduction as temporary, with the same factors in place that should continue to push prices up: Lack of homes for sale, low mortgage rates and improved finances of professional workers

Mark Goldman, a real estate analyst, said annual double-digit price gains during the pandemic were not sustainable long-term. Yet he said wages are up in San Diego County, inventory is still tight and mortgage rates remain low, making any reduction probably short-lived.

“The market had been going up 25 percent. That’s just not sustainable,” Goldman said. “But, are prices going to back off? I don’t think so. The worst-case scenario is prices would be stable but the more likely scenario is they will continue to increase.”

Competition for homes might have been affected by slightly more homes for sale in August. There were around 3,500 homes on the market to start 2021, which led to strong competition and offers over asking price. Home inventory has been climbing recently with 4,429 homes listed for sale from Aug. 2 to Aug 29. That’s still down from 5,723 around the same time last year and 8,407 in 2019.

Though things may have slowed down a little, the number of listings is still low and many homes still receive multiple offers. Low interest rates continue to be a major motivator.

The interest rate for a 30-year, fixed-rate mortgage was 2.84 percent in August, reports Freddie Mac, down from 2.94 percent the year before. The rate is up from December’s average of 2.68 percent, which was the lowest in records going back to 1971.

Not all home types showed signs of cooling in August. The median price for a resale condo hit an all-time high of $565,000, up from its previous peak of $561,000 in June.

The median for a resale single-family house was $820,000, down from its peak of $840,000 in July. Newly built homes, which include new single-family and condos, hit a median of $734,000.

Source: SDuniontribune by Phillip Molnar