Union Tribune- Home prices continue downward spiral

[hipmatt]

http://www.signonsandiego.com/news/business/20080617-9999-1b17real.html

Median value in May falls 23% from a year earlier
By Mike Freeman
UNION-TRIBUNE STAFF WRITER

June 17, 2008

Home prices continued to tumble in San Diego County last month, with the median reaching its lowest level – $380,000 – since September 2003.

Graphic: May housing prices
for San Diego County
A trio of factors – surging foreclosures, tougher lending standards and a weak economy – further pressured prices and demand for housing, according to La Jolla-based DataQuick Information Systems. May’s median price was down nearly 23 percent from a year earlier.

It’s no secret that the county’s housing market has been sliding for a several years. Experts have been combing data trying to predict when it might end, but so far there’s little evidence of a rebound.

Online: For May housing data by ZIP code, go to uniontrib.com/more/homesales
“Most people – experts who know a lot more than me – see the bottom at end of this year,” said Mark Goldman, a mortgage broker who teaches real estate classes at San Diego State University. “I’m not so sure. I don’t see anything that would push values back up in the next 12 to 18 months.”

San Diego’s median home price peaked in November 2005 at $517,500. Since then, the median has fallen 26.5 percent.

“There are three big clouds – still-rising foreclosures, the economic slowdown/possible recession and the credit crunch – that are unresolved,” said Andrew LePage, an analyst with DataQuick. “We’ve got to get over one of these hurdles for things to start to turn around.”

Biocom
In April, some real estate experts were cautiously optimistic that a bottom was approaching. Entering the spring selling season, median home prices ticked up, with the April median price at $400,000 compared with $395,000 in March.

But any momentum was short-lived. Demand remains soft, with 2,979 sales last month, representing a 12 percent decline from May 2007. Moreover, overall sales volume last month was lower than any May since 1995, when San Diego County was considerably smaller in terms of population and employment.

New homes and condos showed the most dramatic sales declines as builders mothball operations and offer incentives to slash their inventories.

May’s new home and condominium sales fell 51 percent year over year. By contrast, resale home sales fell 3 percent, according to DataQuick.

Foreclosure sales continue to cast a widening shadow over the housing market. “There’s no turnaround in sight for foreclosures, no sign of a peak there yet,” LePage said.

Sales of bank-owned homes made up 36 percent of all resale purchases last month, according to DataQuick. That compares with 8 percent in May 2007 and 0.2 percent during the peak of the housing boom.

“What horsepower this market can generate right now is mainly fueled by bargain shopping, especially by first-time buyers and investors in inland areas,” LePage said. “During the housing boom, we came to expect discounts on everything we buy except housing. Now we’ve re-shattered the notion that home prices can’t fall. The expectation is everybody is going to get a deal.”

DataQuick reported that resales of single-family homes were down 3 percent from a year earlier, coming in at 1,782. But prices of resale homes fell hard from $557,000 in May 2007 to $420,000 this May.

LePage said the median might be skewed by the mix of properties on the market. Sales are occurring mainly in less-expensive neighborhoods, with South Bay and East County – both hit hard by foreclosures – posting increases in year-over-year sales in May.

There have been relatively few sales in higher-priced, mostly coastal neighborhoods, so there are fewer high-priced sales included when calculating the median.

It remains to be seen whether sellers in higher-priced neighborhoods are just slow to respond to the weak market or will be able to hold out over the long haul, especially if the foreclosure crisis spreads.

Tighter credit also could be hurting sales of more-expensive homes. As banks look for bigger down payments from buyers seeking large loans, it makes purchasing more difficult. That’s particularly true for self-employed or other nontraditional borrowers, real estate experts said.

In the first six months of last year, about 36 percent of San Diego home buyers got so-called jumbo loans – mortgages above $417,000. In May, just 17 percent of buyers got loans above $417,000, according to DataQuick.

While most buyers are hunting for bargains, some are finding that great deals aren’t as plentiful as they might appear, real estate agents said.

“What you see right now is the deals that everybody wants are on bad property in a poor location or in poor condition,” said Phil Morris Jr., an agent with Prudential in San Diego. “For good property in a good location and in good condition, you’re still paying a good price. So you have two different kinds of markets going on out there.”

William Eierman, a retired banker living in Temecula, began looking for a downtown San Diego condo this week. He and his wife are in no hurry. They don’t plan on moving from their 2.5-acre home until their daughter graduates from school in about four years.

Although they’re not necessarily looking to steal a property, the Eiermans think their timing is good. “If we can buy it at today’s price and four years from now it’s worth what it was two years ago, how in the world could we go wrong?” Eierman said.

What they found, though, was that they may have to pay more to get what they want – a condo up to 1,800 square feet with a big deck, so they don’t feel like they’re living in a hotel.

“I hoped to spend $500,000,” Eierman said. “It looks like I may have to spend $700,000 or $750,000 to get what I want. That’s OK, because that $750,000 condo was probably a $1 million condo a couple of years ago.”

[DWCAP]

Although they’re not necessarily looking to steal a property, the Eiermans think their timing is good. “If we can buy it at today’s price and four years from now it’s worth what it was two years ago, how in the world could we go wrong?” Eierman said.

I wonder how many other of todays buyers are thinking the same way? Theyll get in while the getting is good since it obviously is gonna be a V shaped recovery and everyone who missed the boom last time can get in this time. Apparently 2012 will have 2006 pricing in downtown condo’s.

[DWCAP]

Although they’re not necessarily looking to steal a property, the Eiermans think their timing is good. “If we can buy it at today’s price and four years from now it’s worth what it was two years ago, how in the world could we go wrong?” Eierman said.

I wonder how many other of todays buyers are thinking the same way? Theyll get in while the getting is good since it obviously is gonna be a V shaped recovery and everyone who missed the boom last time can get in this time. Apparently 2012 will have 2006 pricing in downtown condo’s.

[DWCAP]

Although they’re not necessarily looking to steal a property, the Eiermans think their timing is good. “If we can buy it at today’s price and four years from now it’s worth what it was two years ago, how in the world could we go wrong?” Eierman said.

I wonder how many other of todays buyers are thinking the same way? Theyll get in while the getting is good since it obviously is gonna be a V shaped recovery and everyone who missed the boom last time can get in this time. Apparently 2012 will have 2006 pricing in downtown condo’s.

[DWCAP]

Although they’re not necessarily looking to steal a property, the Eiermans think their timing is good. “If we can buy it at today’s price and four years from now it’s worth what it was two years ago, how in the world could we go wrong?” Eierman said.

I wonder how many other of todays buyers are thinking the same way? Theyll get in while the getting is good since it obviously is gonna be a V shaped recovery and everyone who missed the boom last time can get in this time. Apparently 2012 will have 2006 pricing in downtown condo’s.

[DWCAP]

Although they’re not necessarily looking to steal a property, the Eiermans think their timing is good. “If we can buy it at today’s price and four years from now it’s worth what it was two years ago, how in the world could we go wrong?” Eierman said.

I wonder how many other of todays buyers are thinking the same way? Theyll get in while the getting is good since it obviously is gonna be a V shaped recovery and everyone who missed the boom last time can get in this time. Apparently 2012 will have 2006 pricing in downtown condo’s.

[MisterMark123]

The mental acrobatics are incredible. Some people will contort reality to an extreme level to convince themselves that now is “a great time to buy”.

[MisterMark123]

The mental acrobatics are incredible. Some people will contort reality to an extreme level to convince themselves that now is “a great time to buy”.

[MisterMark123]

The mental acrobatics are incredible. Some people will contort reality to an extreme level to convince themselves that now is “a great time to buy”.

[MisterMark123]

The mental acrobatics are incredible. Some people will contort reality to an extreme level to convince themselves that now is “a great time to buy”.

[MisterMark123]

The mental acrobatics are incredible. Some people will contort reality to an extreme level to convince themselves that now is “a great time to buy”.

[Author]

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