Lately, the headlines have been filled with news about a drop in the median prices of homes compared to last year, leading to widespread confusion. As a buyer or seller, it’s understandable to think this signals a decline in home prices. However, that assumption doesn’t quite capture what’s really going on.
Despite the dip in median prices, home values are actually on the rise, both nationally and in key markets like San Diego. The median price alone doesn’t reflect the entire picture, and focusing on it can sometimes be misleading. So, let’s break down the current market situation to give you a clearer understanding, avoiding the unnecessary fear these headlines often create.
Homes on the Market Now Are Getting Smaller
The current drop in median home prices is primarily due to the size of homes being sold. The median price is simply the middle point of all the homes for sale at any moment, which means it’s influenced by the types of homes on the market. In San Diego, where a variety of property sizes exists, this fluctuation is common.
To break this down, let’s consider a simple example. Imagine you have three coins in your pocket and line them up from lowest to highest value. If you have one nickel and two dimes, the median (the middle coin) is 10 cents. But if you have two nickels and one dime, the median now shifts to five cents. The key takeaway is that the actual value of each coin remains the same; the shift happens because of the different mix of coins.
The same principle applies to the housing market. Right now, there are more smaller, more affordable homes available, which pulls the overall median price down. However, this doesn’t mean that the value of homes is declining. The current listings simply reflect the types of properties available.
In San Diego, where smaller homes often come with perks like proximity to beaches, restaurants, and active neighborhoods, this trend can be seen more clearly.
Danielle Hale, Chief Economist at Realtor.com, sums it up:
“The share of inventory of smaller and more affordable homes has grown, which helps hold down the median price even as per-square-foot prices grow further.”
So, while the median price might be lower, the value of homes, especially in desirable areas like San Diego, continues to hold strong.
Price Per Square Foot Continues to Climb Nationwide
When measuring home values, the price per square foot offers one of the clearest indicators. It highlights exactly how much you’re paying for the space inside a home, providing a more accurate picture than just looking at the overall asking price. In San Diego, this metric has proven particularly insightful, given the city’s diverse range of home sizes and styles.
The median asking price often overlooks the size differences between homes. This can sometimes skew the true value of properties on the market. Recent national data reveals that the price per square foot is still on the rise, even though the median asking price appears to be falling.
Ralph McLaughlin, Senior Economist at Realtor.com, explains:
“When a change in the mix of inventory toward smaller homes is accounted for, the typical home listed this year has increased in asking price compared with last year.”
In other words, the presence of smaller homes is impacting the median price, but it doesn’t mean that overall home values are declining. The average home’s value is still going up.
The Federal Housing Finance Agency (FHFA) further supports this trend by noting
“Nationally, the U.S. housing market has experienced positive annual appreciation each quarter since the start of 2012.”
This means that despite what some headlines suggest, prices are not crashing—they are, in fact, continuing to climb.
However, it’s crucial to remember that real estate markets vary from region to region. While national trends provide valuable context, local conditions in San Diego may differ. This is where working with a knowledgeable agent becomes essential. A trusted local expert can help you understand what’s happening in the San Diego market so you have a clear picture when selling your house quickly.
Bottom Line on San Diego Home Prices Climbing Despite Falling Median Prices
A drop in the median price doesn’t necessarily mean home values are declining. In San Diego, the dip in the median asking price is mainly due to an influx of smaller, more affordable homes hitting the market. This shift in the types of properties for sale is influencing the overall numbers.
However, the key metric to keep an eye on is the price per square foot. It’s a much clearer indicator of the true market value, and in many San Diego neighborhoods, this price is still on the rise. If you’re curious about how home prices are trending in your specific area, especially if you’re thinking of selling your house, don’t hesitate to reach out. The McT Real Estate Group is here to help you navigate the market with confidence.