San Diego County home resales, median prices up for December

Fri Jan 9, 8:59 PM ET San Diego Daily Transcript

San Diego home sales were up more than 10 percent in December from November, while prices were up slightly from November in the attached and detached markets, according to figures from the San Diego Association of Realtors (SDAR).

Sales were up for attached homes by 59.9 percent from 2007 during the same period last year while detached home sales were up 64.3

Sold listings for attached and detached homes combined were up 15.3 percent for the year — a net gain of 3,792.

Month-to-month median prices improved by 2.6 percent and 2.8 percent for attached and detached homes, respectively.

Erik Weichelt, 2009 SDAR president, said he hopes the month-to-month increases in sales and median prices are the beginnings of an upward trend.

“We have more people getting involved with the purchaser process,” he said. “So we’re really hopeful that ’09 is going to have a positive outlook. It sure seems that way.”

Prices were still down about 30 percent from Dec. 2007, while the housing supply was down to 6.7 months in Dec. 2008 after having more than a years’ worth of housing on the market during the same month last year, according to MarketPointe Realty Advisors.

While a six- to seven-month supply is considered “normal” in most markets, it still higher than what is custom for the San Diego County.

The county had a 1.9 months’ average supply of homes from 1999 to 2004. Alan Nevin, MarketPointe’s director of economic research, said having such few homes on the market drove home prices up, inflating the housing bubble.

However, the supply jumped to 5.2 months’ supply in Dec. 2005 due to what Nevin described as people believing they could “make a killing” selling properties.

That figure rose until it reached 12.2 months’ supply by the end of 2007.

Rick Hoffman, COO and president of Coldwell Banker’s San Diego County and Inland Empire regions, described the current market as suffering from a “hangover” from the high prices of the earlier part of the decade.

In June 2008, the supply dropped to 7.5 months’ worth and went down to its current level.

Nevin said the ratio of supply to homes sold is now at a healthy level.

“We’d been under-supplied with listings from 1999 all the way up until the end of 2005,” he said. “To have listings two-to-one to sales indicates the market was short of listings.”

To determine a month’s supply, one divides the number of houses listed by the number of homes sold in a given month.

He said foreclosures have played a large role in the supply of housing, but noted there have been fewer foreclosures over the last few months.

November saw foreclosure filings down nearly 50 percent from their peak in July 2008.

As the foreclosure market dries up, the supply of homes on the market will shrink, especially since there are relatively few new home projects, Nevin said.

Last month Mark Reidy, executive director of the Burnham-Moores Center for Real Estate at the University of San Diego, said banks have been trying to work out loans with borrowers while forestalling filing notices of defaults, which is the first step in the foreclosure process.

Though there are a wave of Alt-A loans scheduled to reset in 2009 and 2010 that could affect millions of mortgages across the country, Nevin and Weichelt said they do not think those will have a big impact on the market.

Alt-A loans are in the area between subprime and prime loans.

“We’re thinking that’s not going to be a major issue,” Weichelt said on behalf of SDAR, “but we won’t know until we get there.”

Nevin said he thinks homeowners whose interest rates are scheduled to reset will be able to work out or refinance before they default, citing that keeping people in their homes is a high priority for both the government and private lenders.

However, he said working out the loans would be a “bureaucratic nightmare” considering loans have been repackaged to where three different entities would have control of a loan.

Hoffman suggested borrowers with adjustable-rate mortgages contact their lenders to find out what their rate will reset at to determine whether they will be able to make the new payments, but said he was unsure of how many would actually do it.

Hoffman said he predicts an increase in inventory during the first quarter of 2009, but was hesitant to talk about what the long-term future of the housing market holds.

“It’s really going to depend on a number of factors that are really outside of the housing industry,” he said about when he thinks housing prices will return to pre-bust levels. “First of all, we have to get down to the end of the supply — not having a whole lot of new houses being built in the market will help that start that process. But the rest of the economy has to recover and the jury’s out on that.”