| The good news is that San Diego home prices | | | | future months into the current program. The |
| have increased for the past eleven months in a | | | | result was an increase in the actual housing |
| row. A positive outlook would suggest that the | | | | demand and values for people trying to get in |
| real estate decline bottomed in April 2009 and | | | | before the credit expired. When the cash for |
| that housing prices will continue with, at least, | | | | clunkers program ended, auto sales took a nose |
| modest appreciation. | | | | dive for a number of months before finally |
| Recently a local news headline noted San Diego | | | | stabilizing. |
| home price appreciation outpaced the rest of the | | | | The federal $8000 credit ended on April 30, 2010. |
| nation. Another headline stated that San Diego | | | | If you had a property in escrow on or before |
| County house prices rose 11.7% in April 2010, as | | | | April 30, and closed it before the end of June |
| compared to April 2009. This was said to be the | | | | (now extended through September) you would |
| fastest rate of annual appreciation increase in the | | | | be eligible for the credit if you qualified. The |
| nation. Plus, San Diego County home prices have | | | | housing figures now being reported reflect this |
| been rebounding for the past year after their | | | | activity created by the $8000 credit. As long as |
| 40% decline from the top of the market in 2005. | | | | the property went into escrow by April 30, sales |
| In light of the above news, one would be | | | | could close in May and June which still affects |
| hard-pressed not to agree with the consensus | | | | housing numbers. Housing sales reports are usually |
| opinion that the bottom has been reached in the | | | | closed sales and unlike the stock market, it takes |
| San Diego real estate market; the current | | | | some time for a property to go through escrow. |
| recovery seems to be outpacing the national | | | | The first housing numbers to be reported, that |
| averages. | | | | don't reflect as much of the effect of the |
| In 2005, I wrote an article entitled "A trend to go | | | | government's $8000 tax credit will be sales for |
| national" where I predicted that the trends I saw | | | | July, reported during August. California instituted its |
| occurring in our local housing market, which | | | | own tax credit which went into effect on May 1, |
| defined classic irrational exuberance, were not only | | | | 2010. Only 100 million was allocated for this and |
| about to take down the local market, but I | | | | the California franchise tax Board reported that as |
| believed, would affect the entire nation. I was not | | | | of June 15, 80% of this amount had been |
| alone in raising the caution flags about the real | | | | allocated. |
| estate market, and those who were caught up in | | | | One could speculate that the current slowdown |
| the exuberance of the market as well as many | | | | I've seen in San Diego neighborhoods would not |
| media outlets, coined the term bubblehead to | | | | be reflected in reports for closed sales until |
| myself and others, to imply a certain foolishness | | | | August. On July 1, the national Association of |
| to those who would speak out against such a | | | | Realtors reported that sales of existing homes |
| powerful and (certain to be) continued annual | | | | dropped 30% in May from April. For the Western |
| double-digit home appreciation. | | | | states this drop was reported as 20.9%. Though |
| It was difficult to raise the caution flags in 2005. | | | | the West obviously was doing better than the |
| The San Diego real estate market from 2000 to | | | | rest of the country, the huge double-digit declines |
| 2005 appreciated on average approximately 20% | | | | are a major red flag that cannot be ignored. |
| per year. Until the summer of 2005, when the | | | | Don't be fooled by the media talking heads' |
| sales volume started to fall but the prices were | | | | effervescent housing recovery rhetoric. Keep in |
| still appreciating, there weren't obvious signs of | | | | mind that many of their sponsors and advertisers |
| pending trouble, especially to the layperson. Most | | | | are from real estate related industries. Plus, many |
| did not foresee a market collapse. Even in the | | | | of the same media talking heads were the same |
| latter part of 2005, while the slowing market | | | | folks who stated there was no real estate bubble |
| became quite evident, the conventional consensus | | | | and any slowdown was an opportunity to jump |
| of opinion was that it was just a normal pullback. | | | | into the market in the summer of 2005. |
| Most optimistic outlooks touted a strong market | | | | As an active San Diego California real estate |
| and a great opportunity for many to purchase | | | | broker I could see a marked decline in real estate |
| real estate in San Diego before the upswing | | | | activity, in many local areas, right after the April |
| resumed. | | | | 30 federal tax credit expiration. Homes listed for |
| Now it is July of 2010. Similar though different, | | | | sale that just a few weeks earlier would've |
| market conditions make it again difficult to go | | | | gotten multiple showings in one week, are now |
| against the conventional trend which is stating that | | | | lucky to be shown once a week. Indications from |
| a bottom has been put in place and we are on an | | | | local escrow companies and from a major San |
| upward rebound. I recently attended a seminar by | | | | Diego mortgage company indicate that this |
| a prominent real estate economist who forecast | | | | slowing trend is significant and widespread |
| a slow but steady rise in local home values. His | | | | throughout San Diego County. |
| charts and facts presented at the seminar were | | | | What's really troubling, is that the government tax |
| quite impressive. Not being a real estate agent or | | | | credit was not enough to jumpstart our local |
| broker "in the trenches," I believe his data was | | | | housing market. Plus, the fact that this new |
| not reflecting the most current conditions, | | | | downturn has started in the seasonally adjusted |
| especially after the expiration of the federal tax | | | | hottest marketing timeframe, coupled with |
| credits. | | | | historically low home mortgage interest rates, |
| It's hard to say exactly what effect the $8000 | | | | would indicate that as we approach Fall and |
| federal tax credit for home buyers had on the | | | | Winter, this trend could easily accelerate and in a |
| real estate market. Personally I believe it to be | | | | real real estate market bottom in late 2011 or |
| very similar to the government's cash for | | | | 2012. |
| clunkers program, whereby, it pulled buyers from | | | | |