House sales down again in San Diego
For 2nd month, county home prices drop from year ago
By Roger M. Showley
UNION-TRIBUNE STAFF WRITER
August 12, 2006
San Diego County's housing market weathered its second straight month of price declines in July, when overall prices dropped 1.8 percent from a year ago to $487,000, DataQuick Information Systems reported yesterday.
Coupled with a slide in sales activity, the decline in median prices followed a 1 percent year-over-year reduction recorded for June. Taken together, the two summer months showed the first back-to-back downturn in prices here since May and June of 1995.
Last month's figure put the county's median housing price 6 percent below the all-time peak of $518,000 set in November. Prices for newly built houses, resale condominiums and condo conversions all were down, as they had been in June.
And July was the first time in a decade that single-family resale homes, representing 52 percent of the market, saw no year-over-year price increase. The $560,000 median for the category was unchanged from July 2005 and was off $5,000 from the June figure.
Graphic:
In May, resale homes posted a record median price of $569,500.
Beyond the scaling back of prices, even more telling of the market's pronounced shift was the rapid slowdown in sales.
There were 3,370 closed escrows last month, down 29.3 percent from year-ago levels, and off 21.7 percent from June, the biggest retreat from any June to July since DataQuick began keeping records in 1988.
“We need to watch the sales pace closely because that was an unusually sharp decline between June and July,” said DataQuick analyst Andrew LePage. “Maybe it's a one-month deal or it's the beginning of a more forceful slowdown – we don't know. We try not to read too much into one month.”
Among cities in the state, San Diego is not alone. LePage said the market slowdown is evident in Sacramento and is spreading to other areas.
Weakening sales have heralded the start of a buyers' market in which the supply of unsold homes can reach six months or longer, he said.
“The sense of urgency is gone. The sense that buying a house is the fast road to riches is gone. . . . There are fewer people out there buying a house, and a good chunk of people who sense the cooling are going to wait for a deal,” LePage said.
Charles Jolly, president of the San Diego Association of Realtors, agreed that buyers are in the driver's seat.
“You can negotiate,” he said. “You don't have to pay full price or overpay any longer.”
The role reversal shocked some sellers.
Heidi and Wade Shields put their 1,410-square-foot San Diego townhouse in Murphy Canyon on the market five months ago. After dropping the price on the Stonecrest Village home once, they still have received no offers.
With many upgrades and a patriotic color scheme inside – Wade, 32, is a doctor at the Balboa Naval Hospital – the house on West Canyon Avenue hasn't interested buyers at its $619,000 price. They bought the home two years ago for $480,000.
“I've been really surprised at how dead it's gotten,” said Heidi Shields, 30. “We've hardly had any lookers at all.”
She said the couple, with two children, Tanner, 6, and Emilee, 3, may take the home off the market and wait to see where the Navy will station Wade in three years.
“It's not much fun to have the house on the market,” she said. “I'm looking forward to having our regular life back.”
The Shields are in a tough spot. With 18 homes listed, their street appears to have more single-family resale homes on the market than any other in the county, according to Sandicor's multiple listing service.
Their agent, Tim Skoglin, said he confronts a growing feeling of negativity toward home buying outside the realty community.
“It's kind of spread like fire,” he said. “All your buddies you work with are not feeling good. It creates a wave opposite from when people said, “Get out of the stock market and get into real estate.' ”
In San Marcos, Jason and Halé Richardson, both 32, have reserved a $1.2 million, 4,200-square-foot new home in San Elijo Hills while hoping they can sell their nearby home of 3,031 square feet for $799,000.
He's a professional BMX bike rider and she's a marketing director for a land-development firm. They have a 17-month-old son, Greyson, and her parents live with them.
“We're not contingent on the sale of this one, but we'd breathe easier if we did sell,” Jason said.
Their agent, Mary Maloney, has come up with a couple of gimmicks to boost interest. She organized an ice cream social for neighbors, hoping that one of them might tell a friend about the home, and she's prompted the Richardsons to offer a free GEM electric vehicle, worth about $9,000, to the buyer.
Competition to attract buyers in San Elijo Hills got so fierce earlier this year that the local homeowners association imposed a limit on signs pointing to open houses, which on weekends had begun to clutter street corners.
Agents and brokers have been flexing their marketing muscle, going far beyond the cookies-and-punch at open houses. They're beefing up their Web sites, offering higher commissions to each other and taking a personal interest in “staging” homes to look their best to potential buyers.
Cristine Clark, a Vista agent who has sold 55 homes so far this year, said her marketing costs have increased by about 20 percent as the market has slowed. She has hired an assistant to help spread the word about her many listings.
“You do have to spend more money now, and have to do more for clients in order to get their homes sold,” Clark said.
Sensing that some people may be waiting on the sidelines, Brian Yui, chief executive of HouseRebate.com, has posted online video tips for buyers on the San Diego page of his discount brokerage Web site.
“It's a great time for buyers and, in this way, it helps you make better-informed decisions,” Yui said.
Nick Keomahavong, 25, has been an agent for only 1½ years, but argued that his enthusiasm makes up for his relative lack of experience, which has not been tested by a market downturn. The motto on his Web site reads, “A young and powerful Realtor for a young and powerful generation.”
His drive apparently paid off for Noah and Elenita Fajota, who currently live at Camp Pendleton, where Noah, 24, is in the infantry.
Keomahavong, whose family emigrated from Laos about 25 years ago, had the couple improve their credit standing earlier this year and helped them get a 955-square-foot, $292,990 condo conversion at the 71-unit Sommerset Villas in Escondido. Escrow is due to close in about two weeks.
“We just want to move out to somewhere where we're comfortable as far as monthly payments are concerned, because we're preparing for my husband to get out of the Marines (in February),” said Elenita Fajota, 26, who is starting a new job Monday as an administrative assistant. The couple have a 17-month-old son, Solomon. “We're very, very excited.”
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Roger M. Showley: (619) 293-1286; roger.showley@uniontrib.com
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