San Diego Home Prices Jump 25 Percent

San Diego Home Prices

Today DataQuick a research firm reported that the San Diego California median price for new and existing houses and condominiums reached $368,000 in May, up almost 25 percent from the same period last year!

This marks 14th straight months of annual gains for Southern California median home prices.

Home sales were up in Orange and San Diego counties, but San Bernardino and Riverside counties posted home sale declines.

It seems to me that the combination of today’s low interest rates forcing many investor groups as well as individual investors into the Southern California real estate market in order to generate a decent return on their investments. Usually, these groups look for condos and homes at the lower end of the price range and buy them for all cash, when they believe they’ll be able to rent them out and generate a much higher return on their investment capital than if that cash was just sitting in CDs.

I see a red flag here, with the fact that double-digit home appreciation in our general lack luster economy seems to indicate a ‘feeding frenzy’ occurring just when interest rates seem to be firming up. Increasing interest rates are a double-edged sword here, because they offer investors other alternatives while at the same time, decreasing potential home buyers purchasing power.

 San Diego California investment property