San Diego housing market surges

San Diego County's housing market surged in March, seeing its biggest annual increase in sales in nearly two years.

Last month, 3,467 real-estate transactions closed in the county, a 13.4 percent jump from March 2014, real estate tracker CoreLogic reported Thursday. It was the biggest annual increase in sales since they rose more than 19 percent from July 2012 to July 2013. The housing market's momentum pushed the county's median sales price up 6.8 percent over the year to $456,000. 

"People are feeling good about the economy and interest rates are still relatively low, so buyers are willing to buy," said Michelle Silverman, a La Jolla-based real estate agent with Berkshire Hathaway. "Sellers are at the advantage because you have little inventory."

The real-estate market generally has its most active time of the year in the spring and summer, with March kicking off the peak season. In summer 2013, housing prices were up 24 percent annually, paced by investor led activity such as fix-and-flip foreclosure resales. The 2014 peak season never materialized. After the big jump in 2013, the local real estate market saw a streak of annual sales declines lasting from October 2013 to November 2014, when the pace of year-over-year appreciation bottomed out at 3.6 percent.

In March 2014, sales were down 18 percent over the year. Last month, however, momentum seemed to be returning to the housing market. While prices are up, the average rate for a 30-year fixed fell to 3.77 percent in March, down from 4.34 percent a year earlier, Freddie Mac reports. 

Michael Lea, a San Diego real estate consultant, said modest annual appreciation has given property owners enough equity to sell their homes. He said concerns that interest rates may be increasing later this year could also be a motivator for the increased activity. 

CoreLogic analyst Andrew LePage said inventory still remains an issue holding back the housing market. In March, there were 6,101 active listings in the county, the San Diego Association of Realtors reports. That represents fewer than two months of supply, which bodes well for sellers. 

LePage said as a general rule between three and six months of supply would render the market neutral, while any more would turn the tide in favor of buyers. In March, inventory fell about 2 percent over the year. 

"Housing demand has been stoked over the last year by job growth mainly, to some extent some income growth, and increased job security," LePage said. 

From February to March sales rose 35 percent in the county, while the median home sales price was up from $440,000. 

San Diego's annual sales increase was identical to what happened across Southern California, with sales up regionwide for the first time in three months. In Los Angeles County, sales rose 12.5 percent over the year to 6,653, pushing the median up 9.5 percent to $476,000. In Orange County, transactions rose 8.9 percent to 3,140, but the median sales price remained at $580,000.

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