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