America’s Finest City is among the hottest real estate markets in the nation.

Home prices in the San Diego metropolitan area were up 24.7 percent in a year as of May, the S&P CoreLogic Case-Shiller Indices reported. Phoenix was the only metro to have a faster gain at 25.9 percent.

May was the highest annual increase in the index’s national average, 16.6 percent, in its more than 30-year history. While the month marked San Diego’s biggest increase of the pandemic — it is still not a record. In July 2004, prices increased 33.4 percent in a 12-month period.

Experts continue to point to a perfect storm of reasons for the increases: National housing inventories not keeping up with demand, increasing fortunes of stay-at-home workers, millennials aging into homeownership and record low mortgage rates.

The interest rate for a 30-year, fixed-rate mortgage was 2.96 percent in May, said Freddie Mac, down from 3.23 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.

All 20 cities in the index had faster increases in May than they did the previous month, which was already one of the biggest record-breaking months in the index’s history.

San Diego’s 24.7 percent increase marks the 22nd month as California’s top market for the fastest home appreciation. In May, prices increased 18.2 percent annually in San Francisco and 17 percent in Los Angeles.

Though the number of homes increased slightly in May, it did little to slow demand. The upward pressure on prices continues and is likely to stay that way for the coming months. Sharply rising prices do appear to have priced out some home shoppers, particularly those looking to enter the market for the first time, and causing fatigue among would-be buyers.

If home inventory continues to increase it will eventually slow price appreciation, but it probably will be a while before that shows up in the market.

The Case-Shiller indices take into consideration repeat sales of identical single-family houses — and are seasonally adjusted — as they turn over through the years. The San Diego County median home price for a resale single-family home in May was $825,000, according to CoreLogic data.

Selma Hepp, CoreLogic deputy chief economist, said stricter lending standards and significant accumulated savings make the market much different than the factors that led to the housing crash. She said the market is buttressed by an underlying consumer strength.

Competition for homes appears to be mainly local, according to another housing report released this week. The National Association of Realtors said the number of purchases by foreign buyers decreased 27 percent from April 2020 through March 2021, expected because of the COVID-19 pandemic. The top places for foreign buyers were Florida (21 percent) California (16 percent) and Texas (9 percent).

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S&P CoreLogic Case-Shiller Indices
Yearly increase by metropolitan area

Phoenix 25.9 percent
San Diego 24.7 percent
Seattle 23.4 percent
Dallas 18.5 percent
San Francisco 18.2 percent
Tampa 18.0 percent
Portland 17.5 percent
Boston 17.4 percent
Denver 17.4 percent
Los Angeles 17.0 percent
Charlotte 16.9 percent
Miami 16.6 percent
Las Vegas 15.5 percent
New York 15.2 percent
Detroit 15.1 percent
Washington 14.8 percent
Atlanta 14.3 percent
Cleveland 13.6 percent
Minneapolis 12.8 percent
Chicago 11.1 percent
NATIONAL: 16.6 percent

Source: SDuniontribune by Phillip Molnar