Lenders take wait-and-see stance on foreclosures
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A silver lining to San Diego County's falling home prices emerged yesterday as an index showed housing affordability approaching the 50 percent mark for the first time in 15 years. A report from the National Association of Home Builders showed that 44.6 percent of homes sold in the fourth quarter of 2008 were affordable to households earning the county's median income of $72,100. » More
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Home prices rise, local builders optimistic
By Roger Showley
UT STAFFWRITER
The median home price in San Diego County rose slightly to $290,000 last
month, MDA DataQuick reported yesterday, offering the latest indication
that prices might have bottomed out.
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It was the third consecutive month that the median has remained unchanged
or risen, after falling for 18 of the 19 previous months. The median was
up from $285,000 in both February and March and a recent low of $280,000
in January.
Borre Winckel, chief executive at the San Diego County Building Industry
Association, said builders believe the local market has reached the
bottom. They report more visitors to sales offices and expect to sell out
of virtually all standing inventory of completed single-family homes next
month.
"The optimism is justified in that we don't believe it's going to get
worse from here," Winckel said. "The big question for our industry is how
long will we be looking at virtually no change in the situation we find
ourselves in today."
Even with the upturn, the median is 44 percent below the peak of $517,500
in November 2005 and is back to where it was in early 2002. The April
median was down 27.5 percent from a year earlier.
Many observers are reluctant to declare an end to the slump because
economic factors could send prices down again. DataQuick analyst Andrew
LePage pointed to rising unemployment, continuing foreclosures and a
difficult climate for getting loans.
"I think the data will be choppy for a while because of all the counter
currents," LePage said.
Sales volume was up 11.8 percent from March -- a reflection of the usual
April upswing. Year-over-year, the increase was 20.1 percent, the 10th
consecutive month of year-over-year sales increases.
Winckel said builders are hoping the market will get a further boost from
a proposal to increase a fund for the state's $10,000 new-home tax credit
from $100 million to $300 million. But they worry that such an increase
would be unlikely if the voters reject the budget-related measures on
today's special election ballot.
Peter Dennehy, senior vice president at Sullivan Group Real Estate
Advisors, said he reads all the factors as "signs of life" in the
home-buying business and not a "false bottom."
"It's not a one-month fluke," Dennehy said. "It's consistent from what
we're hearing from the field."
DataQuick also reported that the proportion of former foreclosures being
sold dropped to 47.3 percent of all resales, compared with the record 55
percent in January.
Analysts said this would be a positive sign of an improving market except
for the concern about a backlog of foreclosures that banks did not begin
moving on until the recent end of an informal moratorium.
"The number of foreclosures slowed down and will pick up again because of
the record number of notices of default," said Rick Winkler, broker and
owner of Market Realty.
Active listings down
Another significant figure is the number of active listings, reported at
13,354 yesterday by the San Diego Association of Realtors. That was down
about 500 homes from the same time in April and off 27.1 percent from
year-ago levels.
If homes continue selling at the current rate, the inventory would be gone
in about four months. An inventory of three to four months is considered
indicative of a normal market, in which supply and demand are roughly in
balance.
But with so many distressed homes for sale and few move-up and high-end
properties available, many analysts wonder if sellers might move to list
their properties at the first sign of stability and push the inventory up
once again.
"We haven't seen a huge increase in listing activity as we would normally
see by May," said David Cabot, executive vice president of Prudential
California Realty.
When he attended a midyear review of the housing market last week in
Washington, Cabot said, Southern California was singled out as the most
likely region to bottom out and recover first because it was the first to
enter the housing slump.
"If we haven't hit bottom, we will be there next week," he said,
paraphrasing the prognosticators.
Winkler, the broker, said next spring rather than next week is when he
expects an upturn.
"I'd be out there buying if I didn't think there were too many other shoes
to drop," Winkler said.
That was also the concern expressed by DataQuick's LePage in cautioning
against any premature jubilation that the housing slump is over.
"The key is it's stability we're looking for, not a rebound," he said, and
that is most likely in neighborhoods such as eastern Chula Vista that have
been hit hardest by foreclosures and plummeting prices.
Rising confidence
In another sign of optimism, the National Association of Home Builders
yesterday reported rising confidence among members that sales will improve
in the next six months.
Builder confidence rose 2 points to 16 on the 100-point Housing Market
Index, issued by the homebuilders group and Wells Fargo Bank. For Western
states, the index rose from 8 to 12.
But both index levels are far below the 50-point mark, the dividing line
between optimism and pessimism.
Ross Starr, an economist at the University of California San Diego, said
even if housing seems to be stabilizing, real estate and construction are
not likely to pull the local economy out of recession.
"The construction industry will not be the leading sector bringing us out
of the recession because of the immense excess inventory out there," he
said, citing downtown condominiums in particular.
What is happening, he said, is that "strong" ownership is taking over from
the "weak" in the sense that distressed property is getting into the hands
of owners with solid incomes and healthy financial balance sheets.
"This is a great time to be a buyer, especially a well-financed buyer," he
said.
Online: For more on San Diego County home prices and sales for April, go
to uniontrib.com/more/homesales
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