California City Sees Home Prices Soar

Aerial view of typical Southern California Spanish style residential condo, surrounded by nice garden with palm trees. San Diego, California, USA. Home prices in the city have soared.

San Diego, California, saw home prices jump more than 10 percent in April, according to S&P CoreLogic Case-Shiller data, in what was the largest yearly increase of the 20 cities under analysis.

Prices of homes across the different segments jumped at a time when overall prices were hitting all-time highs. April, which is the latest data revealed by S&P CoreLogic Case-Shiller, saw a 6.3 price increase compared to the same time a year ago. The 20-city index registered a 7.2 percent jump from a year ago, while the 10-city group saw an 8 percent gain.

Along with San Diego, New York was also one of the largest gains for the month at 9.4 percent followed by Chicago at 8.7 percent.

"Thirteen markets are currently at all-time highs and San Diego reigns supreme once again, topping annual returns for the last six months," Brian D. Luke, Head of Commodities, Real & Digital Assets at S&P Dow Jones Indices, said in a statement.

At the national level, the index continued to show high price gains.

"[This year] is closely tracking the strong start observed last year, where March and April posted the largest rise seen prior to a slowdown in the summer and fall. Heading into summer, the market is at an all-time high, once again testing its resilience against the historically more active time of the year," Luke noted.

While prices are still elevated, there were signs that the pace of price increases was cooling.

"Last month's all-time high came with all 20 markets accelerating price gains. This month, just over half of our markets are seeing prices accelerate on a monthly basis," Luke said. "At 6.3 [percent] annual gains, the index has decelerated from the start of the year, with only two markets rising on an annual basis."

California has seen housing prices jump to record levels amid low supply and elevated demand. Borrowing costs have also been expensive following the Federal Reserve's tightening of monetary policy to battle soaring inflation.

Economists suggest home prices are correlating with how much buyers have been earning.

"After a surge between 2020 and mid-2022, and then a brief drop, house prices are rising at around the same pace as cash buyers' purchasing power. Personal incomes rose 4.5 [percent] on the year in April, and household net worth rose 9.2 [percent] on the year in the first quarter," Bill Adams, the chief economist at Comerica, said in a note shared with Newsweek.

Adams suggested that the outlook suggests that price increases may slow for the year.

"Comerica forecasts for house price index increases to further moderate in the second half of 2024, with the Case Shiller index slowing to a 3-4 [percent] year-over-year increase by the fourth quarter," he said.

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