Leslie Appleton-Young, California Association of Realtors chief economist and Robert Kleinhenz, CAR deputy economist, delivered their pronouncements during a webcast Tuesday.
Appleton-Young said it is difficult if not impossible to have a strong housing market, when the statewide unemployment rate is higher than 12 percent as it has been for most of the past 18 months — especially since that doesn’t tell the whole story.
“If you include those who have given up and the underemployed, the figure climbs to 16 percent,” Appleton-Young stated.
The good news is “that housing affordability looks really great,” Appleton-Young said.
Appleton-Young noted that the median price of a resold home in the state is slightly less than $300,000 at present, and while that is still twice the national average, it is considerably more affordable than when it was closer to $500,000 at the peak of the market in the middle of the last decade.
San Diego is more affordable, as well. Whereas the percentage of those who could afford a median-priced home here was generally in the teens in the middle of the last decade, the CAR pegged the number at 41 percent at the end of June.
The median price of a resold home was $379,270 in San Diego County in June, after having been closer to $600,000 in the middle of the last decade.
While bank sales and short sales played a significant role here, particularly in eastern Chula Vista, both Appleton-Young and Kleinhenz said that San Diego will be much quicker to return to a normal market than the Inland Empire, which had enormous job losses during the recession.
“San Diego is way ahead of the curve in this regard,” Kleinhenz said.
The CAR reported about 8 percent of the resales in San Diego County were REO or bank-owned sales, and another 19 percent were short sales in August.
The distressed sales are much closer to 50 percent and higher in places, such as the Inland Empire, that are still in a much more painful recovery than here.
Still, there seems to be improvement just about everywhere in the state.
Statewide, Appleton-Young said last month traditional transactions accounted for 58 percent of the sales in August, 19 percent were REO and 22 percent of the state’s residential resale transactions were short sales.
“We’ve seen good improvements in these numbers,” Kleinhenz said, adding there still could be room for a few more REO sales added to the mix in the state, to help bring inventories back up higher than the 2.6-month level at present.
Despite all that has happened during the past three to four years, homes are still in such short supply that the CAR says multiple bids are becoming the rule rather than the exception, regardless of whether the transaction is a traditional, bank-owned or short sale transfer.
Inventory levels may be low, but Kleinhenz said there are plenty of causes for concern at the state level.
For one thing, while default notices were headed downward, there was a bump up in California last month. He worries this may be more than a blip lasting the rest of the year.
As for what all this means for San Diego, Kleinhenz said he expects sales will be modestly higher for the remainder of the year, sales will increase by about 1 percent next year and prices will increase by something less than 2 percent in 2012.
Other issues are expected to be part of the mix. These include the upcoming lowering of Federal Housing Administration loan limits in the beginning of October from $697,500 to $625,500.
While that amount may not seem like a huge reduction, given that it is still more than $600,000, Appleton-Young noted that San Diego remains relatively expensive compared to other areas.
What’s more, much depends on where in the community a person feels he/she needs to live.
“This impact of this reduction will be felt in San Diego,” Appleton-Young said, “but it will be more pronounced along the coast.”