From Mercury News:
San Diego median home price drops
HOUSING BOOM STARTER FIRST TO SEE MARKET BEGIN TO FALL
San Diego County kicked off California’s housing boom six years ago with dramatic price rises and became one of the nation’s hottest real estate markets.
Now it has attained a more dubious distinction: It’s the first major California real estate market to see its median home price fall below year-ago levels, according to data released Wednesday.
Another once-sizzling market, Los Angeles County, saw home prices in June rise at their slowest year-over-year rate since 2001.
San Diego County’s median price for new and existing homes in June was 1 percent lower than a year ago, a stark contrast to the 20 percent-plus annual gains it was posting during the peak of the boom two years ago, according to data released by DataQuick Information Systems, a San Diego-based real estate research firm.
It was the first time the county had suffered a decline in year-over-year prices since July 1996, and means that many people who bought homes since June 2005 have no equity increases.
The question now is whether the county’s slump is a harbinger of a deeper decline in prices, or part of a “soft landing,” in which prices merely level off in the near future.
…
In many ways, San Diego has been ground zero for a nationwide debate about whether the housing market is in a speculative bubble. It was one of the first regions to see price appreciation soar by double digits beginning in 2000, helping to double values in less than five years.But over the past year, San Diego has exhibited many classic signs of a topping market: rising inventories of unsold homes, slower sales turnover, a leveling of prices and an exodus of hard-core speculators.
I have family in San Diego and have witnessed the decline every time I go back to visit.
The neighborhood I visit is made of 50 year old ranch houses, all built the same. Three neighbors have sold in the last two years, each for less than the last.
Summer ’04 – 565K
Spring ’06 – 500K
Summer ’06 – 475K
These houses went for around 190K in 1996 so I think they still have plenty of room to fall.
We’ve been seeing this coming for a long time now. I moved to San Diego 25 years ago, and married a native San Diegan from Poway. We’re in our third new home in 7 years, so we’ve rolled over the equity and now have a fantastic place at a good rate here in Carlsbad that we’re more than willing to hold onto, regardless of what the market does in the short term. We’ve witnessed this before, about 15 years ago. Property values not only came back, but shot back up well beyond what almost anyone could have imagined. Bubble schmubble.