63% Say SD Home Prices Higher By Dec, 2011

San Diego Home Prices Higher by years end? 5 of 8 say YES

San Diego County’s overall median home price rose from $330,000 in December 2009 to $333,000 last month. We asked our panelists where they think the median will stand in December 2011 – will it be up, down or unchanged – and the number they think it will hit at year’s end. They also offer their explanations.

Q: Will San Diego home prices be higher in December 2011 than they were in December 2010? If the overall median was $333,000 last month, what will it be at year’s end?

Marney Cox, San Diego Association of Governments

No - $345,000

Recent house price data have spawned concerns of a “double dip” decline in the housing sector, particularly following the expiration of the government stimulus. While not all recent trends in the housing market point to continued weakness, there are several trends that pose obvious risks that could pressure prices lower, namely, huge shadow inventory, tight credit standards, rising interest rates, and incentives for some households to default strategically. In addition, the large shadow inventory is likely to continue to drive a wedge between distressed sale prices and non-distressed sale prices. These factors taken together will push the median home price in San Diego down by 5 to 10 percent during 2011, ending the year around $300,000.

Kelly Cunningham, National University System

Yes - $345,000

Prices will be higher by December 2011. The problem with averages and/or medians is they represent the middle most range and not necessarily every home price. As always, there will be considerable variance among specific markets. Many foreclosed properties are still to be released keeping prices subdued. On the other hand, perceived bargain prices and continued low interest rates encourage buyers, although more stringent mortgage guidelines limit activity. Slowly improving job numbers and slightly better economic outlook contribute to higher sales prospects. Hazarding a guesstimate, the overall median will slightly rise 3.6 percent to $345,000 by year end.

Alan Gin, University of San Diego

Yes - $350,000

Prices will be higher in December 2011 than in December 2010, with a forecast of a median price of roughly $350,000. Helping boost the market will be gains in the job market, with the local economy expected to add 10,000 to 15,000 jobs in 2011. Interest rates are expected to rise from current levels, which could dampen the demand for housing, but will remain at relatively low levels by historical standards. Foreclosures will remain a problem and contribute to added supply, but supply conditions will be mitigated somewhat by two years of record low construction activity.

James Hamilton, University of California San Diego

No. - $333,000

I expect a return to growth in income and employment, which you’d think would lead to a resumption of house price appreciation. But there is still a significant inventory of unsold homes, shadow inventory of real-estate owned properties that must come back on the market, and more homes yet to go through the foreclosure process. One possibility is that these factors will balance each other out, and by the end of the year we’ll be back pretty much where we are right now in terms of San Diego house prices.

Gary London, The London Group

Yes - $350,000

There are a lot of moving parts to the answer to this question, but my sense is that housing prices will rise this year, albeit not by much. Housing recovery will be fueled by economic recovery (however modest), low and relatively stable interest rates and declining inventory of distressed homes. The key to me being right is the behavior of lenders: will they begin to loan again under reasonable guidelines? I have no doubt that we will see quite significant bid up in home prices over the next 24-36 months.

Norm Miller, CoStar Group

No - $325,966

The reason this is so hard is because of the mix changes, and this alone can affect the median so we need to factor in (1) rising interest rates starting by June when the Treasury stops buying government bonds and artificially maintaining these low rates, as well as (2) the level of distress that banks will be foreclosing upon and (3) the probability that jobs will be coming back which they seem to be albeit slowly. My bet is that prices do not change much from where they are right now. They may actually go up the next few months and then dip again when interest rates rise or when banks push out some more REO [real-estate-owned, foreclosed] property. So this is essentially a flat forecast along a rocky bottom.

Lynn Reaser, Point Loma Nazarene University

Yes - $336,000

Look for home prices to show a modest rise of about 1% this year, which would take the median to about $336,000. Several forces will restrain prices, including the steady release of foreclosed homes into the marketplace, tighter standards for buyers to qualify for home mortgages, and a greater share of sales accounted for by first time-buyers at the lower end of the price spectrum. This year’s expected slight firming would only repeat last year’s 1 percent gain but should be based on a better showing for the overall economy, more jobs, further gains in the stock market, and efforts of potential homebuyers to head off higher interest rates. On balance, 2011 stands to be another year for San Diego housing to stabilize and rebuild its foundation.

Dan Seiver, San Diego State University

Yes - $350,000

San Diego home prices will be higher in December 2011 than they were in December 2010. My guesstimate is that the median price will reach $350,000 by the end of the year. This optimistic assessment is based on my belief that the U.S. economy will grow fairly strongly in 2011, which will help California's economy, and my belief that housing in San Diego is now reasonably priced, while the housing market itself is now in the process of bottoming out. Since I am an underwater San Diegan, I may be looking at housing with rose-colored goggles. I am due for an eye exam soon.

via signonsandiego.com

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