After 2 years of month-over-month home price increases we may be starting to see things turn, or at least slow down. According to a report published by Zillow, nationwide home prices rose 8.3% over the last 12 months but appreciation is expected to slow to 6.6% by this time next year.
This projection is based in part on the fact that we are seeing list prices dropping in some of the hottest markets, especially among more expensive properties. Nationwide, approximately 14% of all listings in June had a price reduction compared to only 11.7% at the end of 2016. And notably, San Diego had the highest percentage of price reductions in the country, with prices being reduced in 20% of all listings in June. That is up from 12% a year ago.
The report also noted that homes priced in the top third of the market are seeing more price reductions than those in the bottom third, perhaps indicating that we are hitting an affordability ceiling. In the last 12 months, the number of homes that sold for more than $1 million in San Diego County increased by 8.7%, from 3694 to 4053. Based on Zillow’s findings we could expect to see fewer homes selling in this bracket over the next year.
So what does this mean to San Diego buyers and sellers? If you are selling, look carefully at the comparable sales in your neighborhood and price your home realistically based on a more modest increase in value. If you are buying you will be facing competition as inventory is still low but you might find some price relief, especially in the higher-end homes and as we head toward the holiday season.
Ready to buy or sell your San Diego County home? Just give me a call or text at 619-846-9249.