Prices Plunge, Foreclosures Spike, and 'We're Just Not Amazed Anymore'

Foreclosure filings in January were up 165 percent from the same month in 2007. Photo: Sam Hodgson

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Wednesday, Feb. 27, 2008 | San Diego County home prices posted the second-steepest monthly drop in the nation to close out 2007, according to the Standard & Poor's/Case-Shiller home price index.

The index for December, released Tuesday, showed prices plunging 15 percent from December 2006. That left home prices at a level not seen since spring 2004. From the peak of the housing boom, prices for resale detached homes fell by 19.1 percent.

On a national level, prices also posted a record 8.9 percent year-over-year drop.

Meanwhile, national foreclosure tracker RealtyTrac reported Tuesday that San Diego County foreclosure activity rose 20 percent between December and January. The foreclosure filings recorded in January numbered 5,428 last month, a 165 percent spike from January 2007. Filings count all records associated with a foreclosure -- default notices, auction sales notices and bank repossessions.

"Judging from memory and so on, it's way way way beyond what we saw before," said Ramsey Su, a retired real estate broker and investor who sold bank-owned properties in the 1980s and 1990s. "There still seems to be the complacency that we are in this position. Nobody seems to be concerned that this is going to hit home, hard, sooner or later. How do you handle so many foreclosures?"

While some employed in real estate-related professions find ways to paint cheer into local housing, many others join market observers who say the situation is bleaker than the region yet realizes.

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Yamila Ayad is the president and broker of Mission Home Loans in San Marcos and a board member for a local consortium of nonprofits that hosts events for distressed homeowners. She said San Diegans, even some of the professionals attempting to curtail the spread of distress, are growing used to new records being set every month in the data.

"I think that the sad thing is that we're just not amazed anymore," she said. "I hate to say this, but we end up feeling numb, anaesthetized by the issue."

Homes on the bottom end of the price spectrum recorded the sharpest drops in the December Case-Shiller index. Homes priced under $431,605 sold for 23.1 percent less than they did in December 2006. The middle tier, representing homes sold between $431,605 and $638,891, showed a 16 percent drop from December 2006. And the highest-priced tier, priced higher than $638,891, showed a smaller drop of 8.6 percent over the year.

In her specialty market, the corridor surrounding Interstate 15, real estate associate broker Kris Berg said she's noticed that trend among the lower-priced homes.

"Some communities are being hit more dramatically -- the lower end communities, like Mira Mesa," she said. "And certainly the condo markets, regardless of their location."

Mid-boom, those homes at the bottom of the price spectrum tempted first-time buyers to stretch with unconventional financing just to get into a property. With little equity to begin with, the lowest-priced properties were the first to fall when the market turned.

Berg said she is seeing buyer activity picking up, an interest level growing among people who are tired of waiting. That's not necessarily translating into a slew of closed transactions, though.

"No buyer wants to feel like they're going to buy a house today and it's going to be worth less tomorrow," Berg said.

The ease with which unqualified borrowers obtained hundreds of thousands of dollars for mortgages and the way that trend drove up home prices in the region left a market in desperate need of correction, Berg said. Such a long run-up in prices "put us in a lot different situation than we've ever been in," she said.

"It's not going to be as speedy-quick a recovery as it's been in the past," she said. "It's going to be slow, it's going to be cumbersome. I think all of those things will be good, in the end. But it's hard to convince somebody of that if they're losing their home."

Please contact Kelly Bennett directly with your thoughts, ideas, personal stories or tips. Or send a letter to the editor.