In a valiant but largely unsuccessful effort to raise the morale of San Diegans, the Union Tribune published an article last week announcing that median home prices in San Diego rose for the first time in a year. As it states in the article, “MDA DataQuick reported yesterday (March 16th) that the overall median price rose $5,000 to $285,000 the first monthly increase since last April, while active listings fell to their lowest level in three years.” Wooohoooo! We’ve finally hit the BOTTOM!……right? Well let me ask you…does it feel like we’ve hit bottom? Exactly. We’ve got a ways to go yet. But the glint of stability that the Union Tribune refers to lies in the fact that while we haven’t hit bottom, an increase in median prices does provide signs that the decline is slowing.
Norm Miller, a real estate professor at the University of San Diego, was interviewed by Union Tribune writer Roger Showley, and made clear his thoughts on the matter: “In 2009 we’re not going to have the kind of disaster we had in 2007 or ’08. The softening will slow and better markets are going to stabilize sooner. Those with a lot of foreclosures–they’ll continue to decline.” Thank you Mr. Miller, this makes perfect sense. After-all, foreclosures greatly affect the values of the homes in the surrounding neighborhood. A neighborhood with a lot of foreclosures will continue to decline in value until those properties are bought up and lived in once again. Areas like La Jolla, Del Mar, and Pacific Beach, where active foreclosure listings are in the teens will stabilize much sooner than say, El Cajon, which currently has over 100 active foreclosure listings and this does not count properties that have filed for foreclosure.
So while a rise in median prices does indicate a slight glimmer of hope for the future, we must keep everything in perspective. Each town and neighborhood is being affected differently. Here’s another thought to chew on: A great deal of the foreclosures in San Diego have occurred as a result of a 2 or 3 year adjustable loan coming up for adjustment. Argent, the last bank who was offering 2 or 3 year adjustable Subprime loans, went under in August of 2007. Therefore, in this next year, the last of those loans will come up for adjustment and we’ll at least finally be rid of a root cause for so many foreclosed homes. My glimmer of hope is that the absolute bottom can’t be too far behind that.
By Andrew Brentan