San Diego County's median home price fell to $725,000 for the second month in a row.

saurav sarkar

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The median home price in San Diego County dropped to $725,000 for a second consecutive month in August as the competition slows down, but experts said they were not expecting a crash or a large slowdown anytime soon.

The median is where half the homes were sold over and half for less.

Despite the recent decline, prices in San Diego County rose 13.3 percent during the year, according to CoreLogic/DQNews, but the median dropped by 749,750 dollars in June. The area of San Diego is not alone, with price gains throughout southern California slowing.

More homes seemed to be a major factor and fewer competing offers came to an end in summer. Home analysts largely denied the reduction as temporary, with the same factors that might push up prices: housing shortages, low mortgage rates, and better professional employees’ finances.

Other factors at stake may not reflect the market in August. For one, a slowdown is typical around August when children go back to school. Increased condominium sales this month could also have influenced the median price as they cost less for homes for single families.

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FACTORS AFFECTING THE HOME PRICES.

(1)Unemployment.

Unemployment is linked to economic growth. Fewer Individuals will be able to afford a house when unemployment increases. But even the fear of unemployment can deter people from entering the real estate market.

(2)Rates of interest.

The rates of interest affect the cost of mortgage repayments. A period of high-interest rates will increase mortgage costs, resulting in lower demand for the purchase of a house. In comparison with buying, high-interest rates make renting relatively more attractive. If homeowners have large variable mortgages, interest rates have a larger effect. The sharp rise in interest rates, for example, in 1990-92 caused a steep drop in UK domestic prices, because many homeowners could not afford to raise interest rates.

(3)Consumer trust.

Confidence is important to determine whether people want to take a mortgage risk. Especially house market expectations are important; if you fear that house prices might fall, you delay buying.

(4)Availability of mortgages.

Many banks were quite keen to lend mortgages during the boom years from 1996 to 2006. They allowed people to borrow large amounts of income ( 5 times income). Banks also needed very low deposits (e.g. 100 percent mortgages). This ease of receiving a mortgage resulted in an increase in demand for housing as more people could buy.

(5)Supply.

supply shortage would be pushing up prices. Excess supply will lead to a fall in prices. For example, an estimated 7 lakh new houses were built in the Irish property boom in 1996-2006. The market remained with a fundamental over-supply when the property market collapsed.

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