Growth in home prices slackens
With 6.3% rise, median still hits record $493,000
By Roger M. Showley
UNION-TRIBUNE STAFF WRITER
July 19, 2005
San Diego County's housing market continued to cool last month, with prices rising 6.3 percent from a year earlier to a median of $493,000, DataQuick Information Systems reported yesterday.
While the median price was a record for the region, surpassing December's level of $491,000, the rate of appreciation was one-third what it was a year ago.
Graphic: San Diego County
home prices
The rest of Southern California also experienced a slower pace of price appreciation. But analyst John Karevoll of locally based DataQuick said a "soft landing" rather than bursting bubble is in store for the months ahead.
"It's very likely or very possible that by the end of the year, we'll have price increases between zero and 5 percent," Karevoll said in an interview from his summer home in Norway, where he continues to crunch numbers for DataQuick.
The June figures include a record median for single-family resale homes of $555,000, up $5,000 from May and up $35,000 from a year ago. But the condo resale median declined $2,250 from May's record $397,250 to $395,000.
Meanwhile, the new-housing category, which includes condo conversions, rose from $443,500 in May to $458,750 last month but still remained well below the $530,000 record set in November. Real estate experts have attributed this trend to the growing sales of lower-priced condo conversions that offset high-priced, newly built single-family homes.
The median represents the halfway point of all sales, with half above and half below that figure. Individual property appreciation fluctuates with size, age, location and other factors, and various neighborhoods varied widely from the norm in June.
For example, Encinitas saw a 20.5 percent year-over-year increase to a median price of $910,000 on 51 sales of single-family resale homes, while the 92127 ZIP code of western Rancho Bernardo was down 11.9 percent over the same period to $695,000 on 51 sales.
The pace of sales also continued slowing with June's 5,663 transactions representing an 8.8 percent decline from a year earlier. It was the 12th month in a row of a year-over-year decline. On the other hand, the June figure was the highest since June 2004's sales count of 6,208. June and August are traditionally the busiest sales months of the year.
For all of Southern California, DataQuick said the median price increased 14.5 percent from a year earlier to $465,000, with San Bernardino County having the biggest increase, 30.9 percent to $322,000, and San Diego the smallest.
Orange County was up 11.7 percent to $603,000, and Riverside rose 23.2 percent to $393,000. Los Angeles County, which has lagged the rest of the region in recent years, saw a 14.7 percent increase to $475,000.
The San Diego Association of Realtors also weighed in with a separate set of local figures, reporting a median of $522,000, up 6.1 percent from June 2004. The average days on the market stood at 45 last month, double the 22 days of a year ago, and the number of listings has soared to 12,605 as of yesterday, compared with an average of 5,995 last July.
Various agents explained the slowdown of sales and upsurge in listings as a sign that sellers want to cash in on their built-up equity of the last seven years, while buyers are mulling their options and taking time to decide what they will buy.
Alan Gin, an economist at the University of San Diego, said the numbers confirm his belief that the local market is slowing but not "tanking" or facing a bursting bubble.
"To get a big drop or a crash in housing prices, you need what I call a triggering event," Gin said.
In the early 1990s, several such events took place, he said, including a recessionary economy, overbuilding and relatively high mortgage rates. The only gloom in today's market is high gas prices, but he said they represent more of an "annoyance" than an impediment to housing purchases or economic growth.
"For every 10 cents that the price of a gallon of gas goes up, that takes $7 million a month out of the local economy," Gin said – a mere trifle in an gross regional economy exceeding $100 billion a year.
Gin said he understands that condo conversions may be flooding the market, but he said he doesn't think that oversupply will prompt a major readjustment of prices in general.
"People feel they need to get into something, and the condo is probably the only affordable way right now to do that," he said.
For the first six months of the year, there were only five ZIP code areas whose median prices for single-family resale houses were lower than in the first half of 2004.
Solana Beach and the 92029 ZIP code in western Escondido were the only urban areas on that short list, and their decline was minimal.
Noah Cutter of Distinctive Properties Re/Max Associates said the western Escondido area's wide variety of home types may explain the lack of continued high appreciation.
"I would say Escondido's reputation has gotten better, especially on the west side of Interstate 15, because houses tend to be rural," he said.
Some neighborhoods continue to register double-digit percentage increases, with Descanso in East County reporting the highest – up 29.3 percent to $485,000 on 17 sales this year.
Mark Lister, a Mission Hills agent with Prudential California representing a seller in Descanso for the first time, said interest has been moderate and produced no offers in nearly three months. He guessed that potential buyers are reticent about the long commute to work.
But John Elliott of Descanso Realty said the area appeals to many people, but many seek land on which to build their dream home. Such properties are scarce.
"There's a huge demand here – Descanso is a wonderful place to live," he said. He said the commuting distance to El Cajon is 21 miles and he can be at the beach in 40 minutes – albeit at midnight and other off-peak times.
Graphic: San Diego County home prices
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Roger M. Showley: (619) 293-1286; roger.showley@uniontrib.com
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