As of July, prices rose 0.5 percent in San Diego on a rolling quarterly basis and fell 3.7 percent on a year-over-year basis, according to Clear Capital’s monthly Home Data Index Market Report.
The report ranked San Diego as the ninth lowest-performing major metro market.
CoreLogic released its monthly Home Price Index this week, which found prices in San Diego to have fallen 6.9 percent in June compared to the year-ago month, after falling 6.5 percent in May on an annual basis.
San Diego has a critical housing shortage, but there’s still very little incentive to buy, according to Mark Goldman, lecturer at the Corky McMillin Center for Real Estate at San Diego State University.
With rents coming into alignment with ownership costs, the market is beginning to provide incentive to credit-worthy would-be buyers, Goldman said.
“I’m starting to think we’ll see low interest rates for some time, because there’s just no demand,” he said.
CoreLogic reported a 0.7 percent price increase in June from the previous month, the third consecutive month-over-month increase. However, prices declined 6.8 percent from June 2010 after declining 6.7 percent on an annual basis in May.
“While there is a consistent and sustained seasonal improvement in prices over the last three months, prices are lower than a year ago due to the decline in prices after the expiration of the tax credit last year,” said Mark Fleming, chief economist for CoreLogic in a release accompanying the report.
The Clear Capital report found U.S. home price gains of 4.1 percent from the most recent rolling quarter to the previous one. Those gains from the index’s record lows of this past winter have brought current prices to 7.9 percent below their June 2010 level, and 1.8 percent below their June 2009 level.
REO saturation continues to represent a significant proportion of all sales and is keeping many markets near their record lows, according to Alex Villacorta, director of research and analytics at Clear Capital.
Twenty-nine percent of all San Diego sales in the rolling quarter ended in July were distressed, according to Clear Capital. (19% in NSDCC)
Excluding distressed sales, prices in San Diego declined 1.9 percent in June on an annual basis, compared to 6.9 percent including distressed sales, CoreLogic found.
Fleming said the discrepancies between the broad HPI declines and those excluding distressed sales show slacking prices are largely attributable to distressed sales.
According to Goldman, the market is soft, and there’s a general downward trend. Though later it was noted that Goldman doesn’t sell real estate, and doesn’t know jack about what’s happening on the street.
“What are we seeing to turn it around?” he asked. “Job growth? Increasing household income? Prevailing sentiment that the market is strengthening or will strengthen? Confidence that our leaders are on the right track, handling large problems correctly?”
These results, he reiterated, reflect data that’s a few months old. The debt ceiling negotiations and a tumbling stock market of recent days are harbingers of a market that will continue to soften, he said.
“With the exception of cheaper financing, there’s no stimulus that’s going to turn housing prices around,” he said.
The only thing that can improve the market is improved expectations and consumer sentiment, and nothing currently in the news suggests that should happen anytime soon.
Bold italics = pyscho babble with rebuttals below.
1. There are plenty of incentives to buy. Multitudes of prudent buyers have postponed home-buying until prices get more in line with historic norms, and are waiting patiently for the killer deal. Others who think that we’ll end up higher than historic norms, are finding the best fit they can now, and securing ultra-low mortgage rates. People and their kids are getting older – families want to build roots, and settle down. Leases are coming due, rents are going up and landlords get foreclosed. There are plenty of incentives to buy, just to end the insanity!
2. The thought of there being “no demand” is crazy speculation with no matching evidence on the street. There are lots of buyers, they just don’t want to pay inflated prices….but they’ll pay a fair price. Evidence? Every time a good buy hits the market, it gets bid up, usually 5-10% higher than list. If there was no demand, that wouldn’t happen.
3. REO sales aren’t keeping prices down; they all SELL FOR WHAT THEY ARE WORTH. Yes, many sell for less because of their inferior condition, but whether they are REO or not isn’t a factor – banks aren’t giving them away. Of those REOs selling, many are flipped, and others are improved for occupancy for first-timers or tenants. Having them occupied and fixed is better than vacant and ugly. Buyers prefer a bank deal – we need more well-priced inventory to create comps and build momentum.
4. “There’s no stimulus that is going to turn housing prices around”??? I can think of several. We already believe that a tax credit supports pricing. A number of other things could be done to increase sales, which in turn would eventually boost pricing: 1. Media blitz of how to sell in this market. 2. A major auction company takes over. 3. Realtors video every home. 4. Open house every day. 5. Flood market with well-priced foreclosures. 6. Enforce strict rules for short-selling. 7. Banks/servicers publish foreclosure guidelines that include short 4-month foreclosure timeline and $5,000 cash-for-keys whenever you vacate.
The media isn’t working too hard these days, just pushing the same ol’ story.