Real Estate Market Predictions for San Diego in 2008

As the new year approaches, I'd like to wish all my readers a very happy new year.  I received quite a few e-mails from readers wanting to know my opinion for the real estate market in 2008.

It seems that the consensus of opinion on the San Diego real estate market is a continued decline into spring or summer, at which point the market will stabilize and start to improve.

Even though I'd like to say that I agree with the above opinion, I cannot.  With two more waves of mortgage adjustments due to hit in 2008, tighter mortgage qualifying rules in effect, and the high unsold inventory of homes, I feel the above consensus opinion of stabilization or recovery is way too optimistic.

Please keep in mind that I'm just a local real estate broker and not an economist.  My opinion is just that; an opinion from an opinionated guy.  I would suggest my readers not use my opinion to base any financial decisions on.  But rather consider it a call to action for both potential buyers and sellers to check with their trusted advisors and thereby form their own opinions.

With that said, I think the new year will continue to produce declines in San Diego(*See http://www.brokerforyou.com  for current San Diego MLS listings) residential real estate.  I see both the magnitude of the decline, and the number of properties affected, increasing substantially over 2007.  The only bright spot to my outlook would be the fact that 2009 may very well mark the real bottom for the San Diego real estate market.

For those who disagree with my comments, there are a number of economists who are predicting a similar scenario.  At Wells Fargo, economist Scott Anderson has said that Southern California home prices will decline over 10% in 2008, and additional half a percent in 2009, where he too believes the market will bottom.  Another Wells Fargo economist has said that he expects to see a housing decline to accelerate and that we are “entering a more dangerous phase.” The chief economist for the Los Angeles economic development Corp. also believes that it will be early or mid-2009 before the market starts any turnaround.  He said, that even when the market turns, what you're going to see is slow, slow growth.  An economist at Beacon Economist in Los Angeles feels that real estate prices in San Diego and Southern California will continue to decline through 2009 and will not show significant improvement until 2012.

So, as is customary at this time of year in a declining real estate market, there will be many who say they're beginning to see signs of life, business seems to be picking up slightly, or buyers have started nibbling at the many fantastic values in today's market.  Just to be politically correct here, I would say remarks such as these should be taken with a grain of salt, and considered as basically just wishful thinking.

Lastly, as far as all the talk of a possible national recession goes, I believe it will be a toss-up in 2008.  On the other hand, as far as San Diego is concerned, I believe a “housing-bust induced” regional recession is all but a certainty.  Keep in mind nobody can accurately predict the economy with any degree of success. I honestly hope that my above opinions are proven wrong.  But, at this time I would not bet against it. [tags] San Diego real estate,  San Diego housing, San Diego home values,  real estate,  real estate bust, housing bubble[/tags] downtown San Diego real estate

Standard & Poor’s Index Shows Home-Price Declines As The Largest on Record

Just released, Standard & Poor's/Case-Shiller Home Price Index declined in October at a record rate from year-ago levels. It showed an annual decline of 6.7% in it's 10-city composite. The previous largest decline on record was 6.3%, recorded in April 1991.

Robert J. Shiller, Chief Economist, said: "No matter how you look at these data, it is obvious that the current state of the single-family housing market remains grim. Not only did the 10-city composite post a record low in its annual growth rate, but 11 of the 20 metro areas did the same."

Six of the metro areas are now posting double-digit declines in their annual growth rates, according to the Case-Shiller data. Miami reported a double-digit annual decline of 12.4%. Tampa -11.8%, Detroit -11.2%, San Diego -11.1% and Las Vegas with -10.7%.

A number of real estate pros feel that actual price declines are far greater than this data indicates. One such 'insider' said: "Forget the Case-Schiller numbers — they do not reflect the real market conditions, Tampa, Fla., prices are down by 40%, Las Vegas are down by at least 50%." 

Another 'insider' said: "First-time buyers and savvy investors will build long-term wealth if they buy and hold at these prices with today's available financing. Potential buyers, especially those with a long-term view, should be getting prequalified right now with a mortgage professional."     [tags] home prices, home values, real estate bubble, real estate bust, housing bubble, San Diego real estate[/tags] San Diego California Realtors

Real Estate Listing Prices Fall

The listing prices on properties in 18 of 20 major markets across the U.S. fell during the month of November. San Diego experienced the steepest decline with listing prices falling 5.8 percent as the recent wildfires exacted a toll on demand. This information was presented in the newly-launched Real-Time National Housing Market Report*, published by Altos Research, the premier source for real-time, real-estate market research and Real IQ™, a market analysis consultancy.

The Real-Time National Housing Market Report is based on an analysis of data from over one million properties currently listed for sale in 20 metropolitan markets across the country and represents the most timely source of housing market data on current market activity.

“Real estate information tends to be highly latent and subject to a lot of revisions,” said Michael Simonsen CEO and co-founder of Altos Research. “It takes several months before the S&P/Case Shiller Index or the

OFHEO data is released for a given month. When you're making investment decisions or trading derivatives these lag times are simply killers.”

Another key trend noted in the new report was an increase in the time-on-market duration for homes on sale in virtually all markets. Miami experienced the longest time-on-market span with an average days-on-market of 137 in November. Minneapolis had the second highest average days-on-market at 125.

Listed property inventory levels displayed seasonal declines in many markets with the exception of Las Vegas where for-sale property listings increased 6.6% over the past three month. “While inventory levels declined in most major markets, the decline in supply could not keep pace with the rapid fall in demand,” said Stephen Bedikian, partner and research director for Real IQ. “We expect time-on-market will continue to lengthen and apply pressure on homeowner pricing decisions until buyers regain confidence and demand levels off. So far that point is not in sight.”

*The first report was published December 7, 2007 and will be released every month. Report downloads are available from Altos Research.[tags] San Diego real estate market, San Diego real estate, San Diego County real estate[/tags] San Diego California real estate agents

San Diego Home Values … Take Largest Drop on Record

According to DataQuick Information Systems of La Jolla California, the median price of a home in the county for November fell 10% vs. November 2006. This marks the largest one-year drop recorded by DataQuick since it began keeping local records in 1988.

It was also reported that home sales were off 26% for the same one year period. Home sales in Los Angeles, Orange, Riverside, San Bernardino, Ventura and San Diego counties have averaged 22,749 units for the last 20 years. But, last month, just 13,173 houses and condominiums were sold in the region.

Riverside had a 16.5% November price decline and San Bernardino showed a 13% drop.

Even in light of this news, one local media personality when reporting these facts, called this a 'market correction'. Please, give me a brake from the correct PC terms. With drops like this, the only correct description is a bust! [tags] San Diego home values, San Diego CA, San Diego real estate, California home values, real estate bust, real estate bubble [/tags] San Diego County real estate 

San Diego California Home Values – High End Homes

San Diego California resale single family home appreciation

In the table below, www.brokerforyou.com looked at selected high value ($750,000 & up) home areas in San Diego that had 15 or more closed resales in 2007.

It seems that the San Diego upper value single family home resale market is doing quite well. This is especially true when compared to the huge value drops experienced in the San Diego condominium market as well as the sizable double digit losses in value seen in the median San Diego single family homes.  See our prior post on condominium values at:

San Diego California condominium values  Also, our prior chart on single family homes can be viewed at: San Diego California real estate values

October 2007 – *Percent Change is for the median price from the same month last year.

San Diego homes $750,000 and up. 

 © www.brokerforyou.com

Data source: www.dqnews.com as of November 15th, 2007 [tags] San Diego real estate, San Diego homes, San Diego California, real estate bubble, housing bubble[/tags] San Diego California Realtors

Home Values Decline … Largest in 25 Years

Freddie Mac announced recently that its Conventional Mortgage Home Price Index (CMHPI) Classic Series registered a 1.3 percent drop in U.S. home values during the third quarter of 2007 on an annualized basis, down from a revised second quarter 2007 annualized rate of 0.5 percent and the largest decline in 25 years.  

Over the year ending with the third quarter, home values appreciated 1.9 percent on average, down from the 7.8 percent growth over the same period a year earlier.[tags]home values, real estate market, real estate bubble, housing bubble, San Diego real estate[/tags] San Diego California real estate agents

San Diego home values over a one year period

San Diego California resale single family home appreciation

In the table below, www.brokerforyou.com only looked at selected San Diego areas that

had 15 or more closed resales in 2007.

It seems that the single family home resale market is holding up much better than San Diego condominiums –see our prior post on condominium values at:

http://www.brokerforyou.com/brokerforyou/?p=268 

and the higher end San Diego homes are doing the best.

October 2007 – *Percent Change is for the median price from the same month last year.

 © www.brokerforyou.com

Data source: www.dqnews.com as of November 15th, 2007

[tags]San Diego, San Diego California, San Diego California real estate, San Diego home values, real estate bubble[/tags] San Diego Realtors 

Real Estate Woes Cause Fed to Cut Interest Rates For Third Time In Three Months

The Fed’s quarter-point cut in the federal funds rate to 4.25 percent was announced shortly after 2:15 p.m. ET and was the third straight rate cut from the Fed. The cut disappointed investors who had hoped for a more aggressive rate reduction of a half-percentage point. So, The market is currently down over 200 points on the Dow Index.  San Diego California real estate [tags] interest rates, real estate, mortgage rates, real estate bubble[/tags]

CALIFORNIA LEAST AFFORDABLE HOUSING IN NATION

Despite falling home prices in many regions of the state, California remains the nation's least affordable market for homeowners according to the latest California Building Industry Association NAHB/Wells Fargo Housing Opportunity Index."Despite market corrections that have made some areas more affordable, the fact remains that the cost of housing in California is out of reach for many hard-working families who want to be able to buy their first home," said CBIA president and CEO Robert Rivinius.
During the third quarter, nine of the nation's 10 least-affordable communities were located in California, according to the index.[tags] real estate, California real estate, real estate bubble[/tags] California real estate broker

Real Estate Subprime Mortgage Five-Year ARM Freeze Announced

President Bush announced a plan today that will help homeowners struggling with adjustable-rate mortgages hold onto their homes. Interest rates on 1.5 million mortgages are expected to "reset" upward over the next year. "We have got to do something drastic, and we have to do something quickly," said Rep. Elton Gallegly (R-CA). "I don't like the government getting involved in the private sector, but we have potential problems we are already seeing come to pass." The plan, which is the product of an agreement between loan servicers and investors holding mortgage debt, will freeze the introductory "teaser" rate for certain borrowers for five years. It is geared toward borrowers who are current on their payments but would be unable to pay a higher rate following reset It is designed to assist homeowners, not lenders or speculators (recipients will have to live in their homes), but is already stirring dissent among homeowners who will not be eligible. Borrowers who would be able to pay reset rates might also benefit if the White House succeeds in swaying Congress to alter tax law to permit state and local governments to use more tax-exempt bond programs to fund refinancings.

Some of our prior post on the subprime mortgage bust were: New York Attorney General Looking Into Subprime Mortgages, 3 Things You Should Know if Facing Foreclose, Fed Cuts .25% From Interest Rates To Help Housing Market, Home Mortgage Rates Actually HIGHER After Fed Rate Cut!, Worst Conditions Ever Seen by the Modern Mortgage Industry, #1 Cause of San Diego Housing Value Decline, Mortgage Delinquencies Spreading Beyond Subprime, U.S. Top 10 Lender, American Home Mortgage Enters Bankruptcy, Mortgage Bubble Meltdown, Stock Market tumbles 146 points . . . The Perfect Bull Trap on Sub-Prime Woes, San Diego Real Estate … the Worst is Yet to Come, Largest US mortgage lender Takes a Big Foreclosure Hit, Quarter-million Homes Forclosed in 1st. Half of 2007, Housing Bubble … Investors Opinion, Bond Interest Rates Move Up On Subprime Loan Problems, Housing Drop = Increasing Financial Distress, B of A — Current Foreclosures, Just Tip of Iceberg, Drop in Housing Values Could be the Factor that Leads Us Into Recession, Study Says 2.2 Million Borrowers Face Foreclosure on Subprime Loans, Subprime Home Mortgage Lenders in Big Trouble, Home foreclosures surge, WaMu Commits up to $2 Billion in Assistance to Help Subprime Borrowers, One to Two Million to Loose Homes to Foreclosure, Subprime Loan Implosion, Home Mortgage Trouble Ahead?, Real Estate Home Value Troubles Ahead!, Home Mortgage Late Payments Increase, 2.2 million American households will lose their homes [tags]subprime mortgage, real estate bust, housing market bubble, San Diego California real estate[/tags] San Diego California real estate broker