by Steve Lines on July 19, 2010
A recent article in the San Diego Union-Tribune reported that San Diego home prices will begin to taper off at the tail end of the summer buying season.
San Diego homes saw rapid increases in the past few months, but are now slowing after the tax credit expiration.
The median price of a San Diego County home was $335, 500 in June. It had been $340,000 in May. Compared to a year ago though, San Diego County homes are still showing increases.
Additinally, 2010 marked the highest number of June home and condo sales in 4 years.
“I don’t see a big sales drop. There will be a small dip in the median price but nothing to worry about,” said Mark Marquez, president of the San Diego Association of Realtors. “We still have a solid base of buyer activity, but it won’t be at May and June levels. It’s not as brisk because there are no deadlines to rush to meet. We are seeing a rise in inventory, and people will probably negotiate harder, and they have time to do so.”
The median price for single-family resale’s increased last month. It rose to the highest price since July 2008 reaching $380.000.
New home median prices also rose, going from $399,000 in May to $431,000 in June. New homes accounted for 44% of home sales in June.
Most analysts expect the housing market to remain somewhat stagnant while the effects of the tax credit stimulus continue to trickle through it.
“Right now, I don’t see any reason to see a big surge in sales, just a very slow recovery based on the economic signals we have now,” said Norm Miller, a University of San Diego economist and Co-star Group vice president. “But if you can jump into the single family market now, you can’t do any better. Prices are not likely to go down, and interest rates are so low.”
The housing market is no doubt still affected by the sale of distressed homes, but the number of foreclosures on the market is slowly declining. Foreclosures currently make up 28.4% of the housing inventory, down from 38,6% this time last year.
“Home values going forward will depend on how lenders handle the remaining distress out there,” said DataQuick analyst Andrew LePage. “My sense is if there are not a lot changes in the economy and the level of foreclosures sales doesn’t rise, prices will be pretty flat through the end of the year. It looks like we’re in a period of stagnation that normally follows a large decline.”
Like Norm Miller noted earlier, home prices are quite low right now and interest rates are lower than ever. Now is the best time for buyers to get their hands on their dream house at a price unseen in ages.
by Steve Lines on July 16, 2010
So what’s all this talk of a double-dip recession? And how does that affect San Diego County? Well, end of June projections nationwide raised fears that we would see a double-dip recession. With an increase in lay-offs, unemployment, declining home sales, a dip in the stock market, and other various factors, Nobel Prize-winning economist Paul Krugman stated that “the world might be on the verge of depression.”
However, last week’s projections lightened the mood a bit. Retail sales rose and unemployment claims declined. The stock market also rebounded, raising 5%–its biggest rebound in a year.
The San Diego Union-Tribune talked to local economist Alan Gin of the University of San Diego, asking him to give his thoughts on how San Diego County fares in the recession. He along with others are more optimistic than Krugman, but Gin does think only minimal growth will be present for some time, saying that California may possibly perform worse on a national level if state budget issues are not remedied.
Gin says that presently, things are positive for San Diego County. “The economy’s not spectacular, but it does seem that the most likely scenario is that we’ll keep chugging ahead with slow or moderate growth, gradually pulling out of the recession.”
Currently, while unemployment remains high, there are also positive trends in job growth. In fact, job growth has been on the rise for four consecutive months with 9,000 new jobs added in May. San Diego home prices are also on the rise.
Additionally, San Diego County hiring numbers were the strongest seen since May 2007, before the recession even began. Construction and manufacturing were also up.
“There are some mixed signals in the economy, which is what has been troubling people during the past couple of weeks. Although most of the negative signals are at the national level, they could carry over to San Diego.”
On a national level, unemployment is still high, home sales are declining, and job growth is relatively low. These factors contribute to consumer concerns which in turn keeps people from buying, further weighing down the economy.
Gin says, “The worst-case scenario is that San Diego County will get dragged down by the national economy. I think we have enough strength that if the national economy doesn’t go down, we’d continue to grow. But a national downturn affects the number of people who would be coming here on vacation as well as the amount of sales that San Diego-based companies do throughout the nation. Conceivably, that could lead to a downturn here.”
Realistically, Gin doesn’t think San Diego County will see a dip nationally that would be severe enough to drag San Diego into a double-dip recession.
