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I think it’s funny that the folks at the North County Times have created a “Bottom calling” tag in their new business blog.

The titular bottom-calling in their inaugural post for the new category was made by longtime DataQuick pundit John Karevoll. In addition to opining that sales volume had already hit bottom, Karevoll said:

“I’m pretty sure we’re at or very close to the bottom here in true values. The only thing that could throw things out of whack is if there is a nasty recession or a year or two of nasty inflation that would push interest rates up and prices would have to come down. But I don’t see either one of those happening, so I think we’re very close to the bottom.”

Karevoll was pretty circumspect — in addition to the disclaimers above, he noted that the market is likely to “drag along the bottom for a while.”

Nonetheless, this is a fairly bold call. We already appear to be in a recession here in San Diego, to address Karevoll’s first disclaimer. And to address the second, inflation is already at a level that certainly seems to me to qualify as nasty (although I admit that the mortgage market seems not to have noticed).

In addition to job loss and inflation problems, foreclosures keep piling up every month, the mortgage industry has utterly fallen apart, and San Diego homes remain overpriced based on their historical relationship with rents and incomes.

So I’m going to go out on a limb here and offer the opinion that we are not at or very close to the bottom for San Diego home prices.

I will qualify this by saying that some areas are a lot closer to the bottom than others, and that I am referring here to countywide prices in aggregate.

Incidentally, the “true values” bit in Karevoll’s quote alludes to the oft-discussed (here, anyway) shortcomings of the median price as an indicator of actual home price changes. Fortunately, the Case-Shiller index will be able to tell us who ends up being right on this call.

— RICH TOSCANO

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