UNION-TRIBUNE STAFF WRITER
February 13, 2008
San Diego County median home prices fell last month to their lowest level in four years with nearly half of existing homes selling at a loss in the face of mounting foreclosures, DataQuick Information Systems reported yesterday.
With most buyers and sellers sitting on the sidelines, distressed properties dominated the market in sales and prices.
“Sales overall are ridiculously low,” said DataQuick analyst Andrew LePage. “A larger chunk of what's selling today is in the hardest-hit areas, with more foreclosure activity and depreciation.”
LePage said a record 34 percent of resale homes last month were previously in foreclosure and 9 percent were in default. Nearly half of all resale houses and condominiums were sold at a loss from when they were last purchased. The median loss was about 25 percent.
By comparison, 5.3 percent of resales in January 2007 had been in foreclosure. The December figure was 31.2 percent.
Things could get worse, LePage said, if San Diego slips into recession and homeowners who lose their jobs are forced to sell because they can't make their mortgage payments.
“There's an awful lot of uncertainty,” he said, and households are so financially strapped that many will have difficulty keeping above water.
Robert Brown, an economist at Cal State San Marcos, called the latest figures “staggering” and said they might feed on buyers' and sellers' expectations of worse conditions to come.
“I just don't think this has sorted itself out for sure,” Brown said. “So much of this is speculation, trying to predict what will happen in the future.”
The overall median price slipped $1,000 from December and $43,000 from a year ago to $429,000, the lowest since February 2004.
The median price for resale houses, making up about half of the market, fell faster, down $18,500 from December and $88,500 from January 2007 to $451,500.
The median for resale condos dropped to $300,000, the lowest since November 2003, from $311,000 in December and $380,000 in January 2007.
The only bright sign was in the category of new homes. Its $540,250 median was up from $445,000 in December and $395,000 a year ago, reflecting the absence of low-cost condo conversions and the continuing sales of new homes, albeit at low rates.
The sale of 1,826 houses last month, the second lowest since DataQuick began tracking San Diego housing in 1988, was 34.1 percent lower than year-ago levels. It was the 43rd straight month that sales dropped on a year-over-year basis. Active listings yesterday stood at 18,443, up from 17,882 in December and 16,689 in February 2007, the San Diego Association of Realtors said.
East County and South County neighborhoods have seen the most concentrations of foreclosures and defaults and their overall median price declines reflected that impact – down 20.3 percent and 15.8 percent, respectively. Central San Diego was up 6.4 percent, North County Inland was down 10.8 percent, and North County Coastal was down 9.4 percent.
Countering the gloom, area real estate agents and mortgage brokers said they were encouraged by Congress' approval of an economic stimulus package last week.
One of its provisions will temporarily raise the conforming loan limit from $417,000 to a projected $630,000 for the San Diego area. That means buyers and owners will be able to take advantage of lower interest rates and better terms not found in jumbo mortgage loans exceeding $417,000.
Lori Staehling, president of the San Diego Association of Realtors, said agents and lenders are reporting increasing interest from prospective buyers, as measured by prequalification loan applications and traffic at open houses and new-home subdivisions.
Gary West, 60, had applied to refinance his $450,000 loan on a 1,700-square-foot home he has owned in Scripps Ranch since 1972. But now West hopes to rewrite his application to take advantage of the higher loan limit. He also thinks he'll put his house on the market this summer, having failed to sell it in the past year.
“You have to wait for the golden goose to come around,” West said. “OK, now we can do it.”
Bruce Oberhand, 40, may just be the ideal buyer. Oberhand and his wife, Jenny, and two children live in Aliso Viejo in Orange County and want to relocate to Scripps Ranch, Poway or another San Diego community known for good schools and nice neighborhoods. They have been unable to sell their home, listed at $629,000 to $659,000.
“Hopefully, we're buying at a dip and can enjoy the appreciation,” he said.
Home builders, who have delayed or canceled new phases and projects, also plan to take advantage of the stimulus package.
John Laing Homes, with six subdivisions in San Diego, is launching a buy-now program today. It includes an interest buy-down program as well as better mortgage terms in anticipation of the higher loan limits that won't become effective until early next month.
“There's been very positive reaction,” said spokeswoman Linda Mamet. “Buyer traffic has increased 40 percent since the beginning of the year. A lot of that is because of discussions of the economic stimulus package and the anticipated loan limits.”
But optimism is not universal.
Ramsey Su, a veteran real estate agent who specialized in the foreclosure market starting in the early 1980s, said the market shows no sign of improving. Su said that in parts of Florida foreclosures are outnumbering regular sales.
“I've never experienced that before,” Su said. “How does it end? The end is coming in the future.”
Paul Leonard at the Center for Responsible Lending noted that the stimulus package may help owners worried about loans that will reset to higher rates but not those already in default or foreclosure.
“I suspect it will help some of them but it certainly is not going to be a panacea,” Leonard said.
Steve Blank, senior resident fellow in real estate finance at the Urban Land Institute, said 2008 promises to be a “tough year.”
“Clearly, we all agree housing got ahead of itself,” Blank said, adding that housing is likely to fall back 5 percent to 10 percent, depending on the market.
In San Diego County, the latest median is 17.1 percent off the peak of $517,500 set in November 2005. The single-family-resale median is 21.3 percent off the $574,000 peak set in May 2006.