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CA: County's housing prices slip (San Diego)
San Diego Union-Tribune ^ | 3/16/05 | Roger M. Showley

Posted on 03/16/2005 12:27:41 PM PST by BurbankKarl

San Diego County housing prices dropped back a notch last month as buyers snapped up lower-priced condominiums and apartments that have been converted to condos, locally based DataQuick Information Systems reported yesterday.

The overall median price for February dropped $6,000 from January to $472,000, a number not seen since July. It was the second month in a row to see a decline.

However, the drop was entirely due to the category of newly built houses, condos and condo conversions, whose combined median was $435,750, down from $457,000 in January.

Downtown San Diego saw a 62 percent drop in the newly built category, made up almost entirely of new condos and condo conversions. The latest median stood at $290,250 on 34 sales, compared with $764,500 on six sales a year ago.

Downtown broker Jim Abbot attributed the trend to apartment developers feeling the end is near for the current housing boom and choosing to convert sooner rather than later.

"I don't think there's any question that the tempo of this market has slowed and sellers who are successful in it recognized it early," he said. "They're responding to a lack of offers on their properties and lowering the prices."

He said he counsels sellers to lower prices 5 to 12 percent after six weeks on the market.

While condos and conversions were depressing the new-home category, resale houses, the bulk of the market, remained unchanged at the record $530,000 set in January, and resale condos rose $10,000 to a record $390,000.

As further evidence of continued upward price pressures, DataQuick analyst John Karevoll said the price per square foot of single-family resale homes reached a record $334.50 last month, compared with $276.73 a year ago.

"The numbers today, especially for San Diego, are well above what anybody in any forecast anywhere would have anticipated," Karevoll said. "Everybody, not just in the state but the nation, is watching San Diego as to how far into uncharted territory we go before a new equilibrium is reached."

The overall county median was up 16.3 percent from February 2004, the lowest year-over-year appreciation rate of any of the seven Southern California counties monitored by DataQuick. Orange County had the next lowest increase, 16.8 percent to $555,000, and San Bernardino County had the highest, 41.1 percent to $292,000.

The median represents the halfway point for all sales, with half above and half below that figure. Individual properties and neighborhoods can vary widely from the median, depending on size, location and other conditions.

As for sales, San Diego County also registered the biggest decline in closed transactions among Southern California counties, down 12.4 percent to 3,442 sales. San Bernardino was the only county with an increase, up 1.7 percent to 3,040 sales.

DataQuick President Marshall Prentice said rainy weather might have slowed activity since the new year.

"If that happened and some sales activity was put off, we could be in for a fairly strong March," he said.

Earlier this week, UCLA's Anderson Forecast issued an economic report for California in which a real estate downturn figured prominently in the prediction of a recession in the not-too-distant future.

"Price appreciation is already slowing after a record run-up in prices over the last three years," wrote senior economist Christopher Thornberg.

But the National Association of Home Builders countered by saying gloom is not in the cards among its membership, especially those in the West. The 220,000-member trade organization, based in Washington, D.C., said its confidence index for western builders rose four points to 83, compared with declines among South and Midwest builders and a six-point rise to 74 in the Northeast.

On the other hand, the California Association of Realtors said affordability dropped one percentage point from December to 18 percent in January for the state and remained at 11 percent for San Diego County. The number represents the percentage of households able to buy a median-priced home at prevailing 30-year, fixed-rate mortgage rates.

Asked to explain the shift in San Diego to condos and conversions, Russ Valone, president of MarketPointe Realty Advisors, said suburban builders are shifting to the attached market because of a shortage in buildable lots.

Valone said there were 9,674 sales of new condos and conversions last year, compared with 6,182 newly built single-family homes. In the fourth quarter of 2004, conversions represented about 40 percent of the attached market – condos, town homes and row homes.

Although the number of sales is less than a year ago, Roni Telmosse, president of the San Diego Association of Realtors, did not see that as a sign of a bursting housing bubble.

"A year ago we were in more of a frenzy," she said. "The inventory today is greater than it was a year ago, but it is actually more what I would say is back to normal."

In fact, the rise in the number of homes on the market that occurred late last year has reversed course and now stands at a figure not much higher than last winter, according to Sandicor Inc., the real estate community's multiple listing service.

As of yesterday morning, the number of homes on the market was 8,529, compared with the daily average of 6,811 for March 2004 and the peak 10,785 in October.

Sandicor reported the county's median price at $495,000, up 17.2 percent from February 2004, based on 2,144 sales, about a third fewer than DataQuick tracked.

Gene Clingman, who with his wife, Fran, just opened an Assist2Sell real estate office in Poway, said he has noticed a better balance between buyers and sellers.

"The market time has increased to 45 days or so," he said. "There is not the lopsided demand for houses that there was (a year ago)."

Market conditions vary widely from neighborhood to neighborhood, and Poway stood out in February as one of the few places where single-family resale houses were selling for a lower median than a year ago. The median price of $570,000 was down 6.4 percent from $609,750 in February 2004.

The Kensington, Normal Heights and University Heights area, which makes up the 92116 ZIP code in San Diego just east of state Route 163 and south of Interstate 8, was another popular area that saw a year-over-year decline last month, down 2.5 percent to $494,500.


TOPICS: News/Current Events; US: California
KEYWORDS: realestate

1 posted on 03/16/2005 12:27:42 PM PST by BurbankKarl
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To: BurbankKarl

just wait until interest rates bump up a notch or two...


2 posted on 03/16/2005 12:33:14 PM PST by 2banana (My common ground with terrorists - They want to die for Islam, and we want to kill them.)
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To: 2banana

to the contrary, wait until it stops raining! ROFLMAO


3 posted on 03/16/2005 12:57:37 PM PST by Steven W.
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To: BurbankKarl
"Asked to explain the shift in San Diego to condos and conversions, Russ Valone, president of MarketPointe Realty Advisors, said suburban builders are shifting to the attached market because of a shortage in buildable lots."

It's no secret why San Diego apartments are being converted to condos. The price of housing has skyrocketed in San Diego, while rental pricing has remained essentially flat over the last couple years.

I live in an apartment in Mission Valley in a complex that is converting to condos, and I've been offered the chance to renew my lease for one years at essentially the same rent I'm paying now (after which the apartment will be converted to a condo) or to have the apartment converted to a condo now and buy it with a mortgage payment that's more than 1/3 higher than the rental rate.

Of course the divergence between the rental prices and the sales prices of housing indicates that there isn't really an issue of underlying increase in demand, or shortage in supply, but that low interest rates and the wealth effect of increasing prices on current homeowners is allowing buyers to afford more expensive houses. When interest rates go up, this real-estate market is going to crash and burn.
4 posted on 03/16/2005 1:19:43 PM PST by Moral Hazard (I call the big one Bitey)
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To: Moral Hazard

Look at craigslist for phoenix and LA Rentals.....there are hundreds of houses for rent...at huge rates....

more speculators that are going to get clobbered


5 posted on 03/16/2005 2:09:00 PM PST by BurbankKarl
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To: Steven W.

San Diego has only had about .02" of rain since March 6--maybe the rains have already stopped.


6 posted on 03/16/2005 8:46:34 PM PST by Verginius Rufus
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To: BurbankKarl

I wait with anticipation to see the real esate speculators looking out the other end of their collective a$$es.


7 posted on 03/16/2005 8:52:00 PM PST by stboz
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