Inquiring minds are reading about the scary numbers coming out on California:
…after staging a very modest, government-goosed recovery from the worst downturn since the Great Depression. It’s possible that any double-dip will only affect housing. But in the worst-case scenario, another housing crash could lead the entire economy into the tank again.
Warning: San Diego is not immune. It’s true that home prices in San Francisco, San Diego, San Jose, and Los Angeles, although coming back only moderately, have done better than prices in most of the rest of the country. However, as we will see below, part of that is a statistical mirage. Also, there are some suggestions that home values in the California coastal metro areas are dropping again, an indication that the country could fall into that housing double-dip.
First, the stage is set:
First, the backdrop. Nationally, new and existing home sales are plunging, even though mortgage rates have been pushed to record lows. However, Standard & Poor’s/Case-Shiller numbers indicate that home values in the 20 largest markets rose 1 percent in June from May and 4.2 percent from a year earlier. San Francisco and San Diego recorded the best annual gains, and Los Angeles came in fourth, although their June growth rates were down sharply from their May advances.
Then the attention getter:
San Diego’s home-price recovery isn’t quite what it seems, say economists. “The mix of sales has changed dramatically,” says Alan Nevin, director of economic research of MarketPointe Realty Advisors. “When we had our first big round of sales, they tended to be the cheapest homes — say, foreclosures for $100,000. But now we’re not getting as many foreclosures,” and higher-priced homes are a larger percentage of sales, lifting the average prices.
San Diego home sales plunged 19.4 percent in July compared with a year ago, according to data from MDA DataQuick, but prices went up 5.6 percent. Says Nevin, “I suspect that resales this year won’t be as ebullient as last year because of the falloff in foreclosures.”
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