Monday, Nov. 17, 2008 | The town of Julian, an hour east of San Diego, is a destination for harried city-dwellers who escape on weekends to kick colored leaves along the ground in autumn, play in the snow in winter, hike in the hills and the desert, pick fruit and eat apple pies on the town’s quaint Main Street.

Sometimes, they decide to stay.

Named a couple of years ago by Sunset Magazine as one of 10 places in the western states to buy a cabin, the mountain town attracts second home buyers, many of them middle-aged workers who imagine a quieter retirement or a place to gather their grown children for holidays.

Along with the second-home buyers, Julian is home to the teachers and firefighters and sheriffs and bankers and restaurant workers that keep the town running, plus a contingent of artists, writers, and telecommuting entrepreneurs. A few make a daily commute into the city. They grow fruit trees, keep animals and own four-wheel-drive vehicles. Many Julian residents moved there seeking privacy, now cherishing the space and trees between them and their neighbors.

“These are the opposite of condo buyers,” said Dennis Frieden, the broker and owner of Julian Realty, a storefront on Main Street adjacent to Town Hall and a few doors down from Mom’s Pies.

But three years after the San Diego County housing market reached its price peak, the number of second-home buyers — and buyers in general — has ceased to be buoyed by housing frenzy. Julian’s market closely tracks the county’s housing macro-trends of falling prices, increased foreclosures and weak sales compared to the boom.

Twenty-seven homes sold in the first nine months of 2008 in Julian’s 92036 ZIP code. That was half as many as sold in the same period in 2007. The decline in sales is even starker compared to the same nine months in 2005, when 78 homes sold, and 2004, with 89 sales, according to MDA DataQuick.

There are about 75 homes and lots on the market in Julian, of about 1,650 total homes in the 92036 ZIP code. Fifteen of those listings are bank-owned. Another 11 are in an earlier stage of foreclosure, according to public records. Many others are short sales — properties listed for less than is owed to the bank. And the rest, if they want to sell, must price their homes close to the distressed property prices to compete.

That means homes that were selling in the high $300,000s now sell for about $250,000, Frieden said. One house that was originally listed for about $1 million a couple of years ago has now dropped in price to about $600,000. The median price in a small place like Julian is a nearly useless measure — because only a handful of homes sell each month, a high-end or low-end home sold can drastically affect the median. Frieden’s rule of thumb for sellers is that prices have reverted to their 2003 levels, a similar drop to the rest of the county.

Properties on the market currently show a wide range of Julian living. On the low end, there’s a bank-owned home measuring 840 square feet with two bedroom house on an acre of land, with a reduced price of $90,000. At the opposite end of the spectrum, $2.4 million would buy you a 67-acre ranch with a 2,100-square-foot, four-bedroom house, a rental or guest house, a barn, pond, creek and a tennis court.

To view it from a county level, a housing market is nebulous, difficult to analyze with much precision. A condo sale at the beach has little bearing on the sale of acreage in a town like Julian — yet because of their San Diego County identity, those sales are counted as part of the monthly data released to help the region understand the shifts in its housing market.

When choosing to purchase a home, buyers cite a litany of wants and preferences. Schools and road conditions and noise and demographics attract or repel them. Julian is a place where buyers find a single-family home with some land for less than they’d find it in metropolitan San Diego. And a look at how this little town is doing, in the far reaches of San Diego County, yields a look at the performance of a sort of microcosm of the county’s housing market.

You have to be pretty tough to live in Julian, or in any place in the backcountry. It often snows in the winter, an hour east of the coast where surfers are out in the waves. It gets blazing hot in the summer and autumn, drying out the vegetation already crispy from drought. Dozens of homes burned in the 2003 wildfires, though the town was saved. Some rebuilt. Others left town. Julian was evacuated again in 2007, though it wasn’t hit as hard by those wildfires.

On a few of the lots where homes burned in 2003, buyers tried their hand at building homes in order to sell them. But by the time they obtained the permits, and built and finished the houses, the market had peaked and fallen. Now there are four or five listed for less than the owners owe on their construction loans.

On a drive through Julian’s winding roads with a visitor, Frieden stops to point through the trees at a 3,000 square foot house that fits that description. Its builders bought the lot and built a house that they hoped and expected to sell for $1 million. Now Frieden estimates they could get $550,000.

He points out another, a large brown farm-style house that was foreclosed on in this downturn. Its previous owners had mortgages up $600,000 and contacted Frieden to sell it for $700,000. It ultimately went to foreclosure, and the buyer who lives there now paid $489,000.

The views are different than they once were. In places, all that remains of what was once thick pine forest are burned out stumps around the oak trees that withstood the fire. New buyers move in without the vivid memory of the town in flames. Views stretch further for them than they did for the previous owners of the house.

Many of the houses in Julian were built by some of San Diego’s recognizable names — Marston, Fletcher, Jessop. The original subdivision was built in the late 1860s. Another wave of building came in the 1920s. Properties in the 10 neighborhoods Frieden counts around town range from ranches of hundreds of acres, to Pine Hills, where lots are about an acre or 1.5 acres, to Kentwood in the Pines, with its quarter-acre lots. That Kentwood neighborhood is one of Julian’s largest and is home to most of the town’s teachers and middle-class workers. The houses cost about $250,000 for something that might cost more like $500,000 in metropolitan San Diego. The houses are different from each other, custom-built. New development in Julian usually consists of buying a lot and building houses one-by-one.

Based on conversations he’s had with his clients and window-shoppers peeking in his office’s screen door on Main Street, Frieden theorizes about the motivations of some buyers who would still buy in Julian despite the slumping economy. He thinks some are moving to Julian to ride out the recession. They’re seeking a safe haven and some detachment from urban life — what a cynic might consider a bomb-shelter mentality.

Frieden’s own journey to Julian matches some common reasons for moving there. He ran a real estate agency and employed 65 agents in Mission Hills for a couple of decades before selling his office to Prudential and moving east.

“Everything was getting redundant,” Frieden said of his former metropolitan life. “I sold the same houses three or four times.”

He moved to Julian, thinking he’d instill a bunch of his networking savvy into the local planning group. At a meeting, one homeowner said he had to live there for a decade first. Knocked off his metropolitan horse, Frieden turned to studying Julian history, understanding its neighborhoods — tidbits he can’t seem to help discharging over the course of conversations about the neighborhood’s real estate. Now, nearly a decade after moving to town, he said he finally feels like he’s home.

Frieden said most of the people who live here aren’t fazed by nature’s challenges. Even the snowstorm knocking the power out for a few days just serves to augment a homeowner’s story to share the next time he sees his neighbor.

“To me it’s part of the fun, this is part of it,” Frieden said. “You come into town the next day and compare notes.”

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