Jumbo mortgage rates in the threes have helped to propel our higher-end market to new heights.  Of the 854 houses for sale between La Jolla and Carlsbad, 757 of them – or 89% – are listed over $1,000,000!

NSDCC Detached-Home Sales, Jan 1 – Aug 31

The housing market – and its higher prices – are completely dependent upon mortgage rates staying ultra-low. Thankfully, hardly anyone needs to sell!

Here’s an interesting comparison:

The fixed-rate monthly payment on a $710,000 mortgage back in 2007 was the same as the monthly payment on a $1,000,000 mortgage today.  Yet, in spite of inflation, the San Diego Case-Shiller Index is about the same as it was in 2007!

With our prices still well under SF/LA/OC prices, and the market being flush with boomers who are retiring, we could have plenty of upside here.  The Fed is going to have to keep rates low, so as long as that happens, another 10% to 20% increase in prices is very feasible over the next five years.   Or at least until an extreme event happens, like a major earthquake, or some kook pushing the nuke button.

Look at how consistent the number of sales have been – there has been hardly any variation over the last six years (avg 2,103 sales).

This is where the stagnation would come in – prices could keep going up for the next few years, but with fewer houses selling – mostly because they don’t deserve the extra premium.