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Tuesday, Aug. 25, 2009 | A hint came Tuesday that the local housing market is firming.

Local home prices rose in June, the first month-to-month increase in more than two-and-a-half years, according to the newest Standard & Poor’s/Case-Shiller index. San Diego home prices increased a slight 0.67 percent between May and June, according to a version of the index adjusted for seasonal patterns.

The mood has been lighter for La Jolla real estate agent Ed Mracek. What had been a slow market earlier this year in the multimillion-dollar levels there has been turning around, he said.

“I haven’t really had a day off since the 4th of July weekend,” he said. “The psychology of the market is definitely shifting.”

The price news came as a glimmer of stability even amid a confusing housing market that still shows very different characteristics depending on neighborhood and price. Even while homes priced less than $300,000 attract major interest and spark bidding wars, financing difficulties define the market at the higher levels.

Across the board, short sales and foreclosures impact private, regular sellers. Many foreclosures have not yet been relisted on the market. Some government programs are catalyzing current movement but are not scheduled to last indefinitely.

“It’s a seller’s market on the low end and a buyer’s market on the high end,” said Dan Cassidy, a real estate agent based in Hillcrest. “It’s just kind of intense right now.”

From the market peak in November 2005, Case-Shiller showed local prices were down 41.2 percent, an improvement from the last two months when prices had been down about 42 percent from the peak.

The year-over-year gaps have been shrinking. In June, prices were 16 percent below their year-ago level. That change is smaller than May’s 18.5 percent year-over-year decline and April’s 20 percent year-over-year drop.

Mark Goldman, a mortgage broker and real estate professor at San Diego State University, cautioned it is too early to string up banners celebrating the market’s bottom at this point.

“It’s not surprising — it’s some good news and that’s good,” Goldman said of the Case-Shiller price increase. “I expect it to continue next month, and then after that it’s anybody’s guess.”

Unemployment is rising and the foreclosure flood has not ebbed. More than 8,000 foreclosure filings were recorded in San Diego County in July, according to RealtyTrac. That was up 9.4 percent from June’s filing total, and up 32.2 percent from the filings recorded in the same month a year earlier.

And the number of defaults isn’t shrinking. Of the borrowers in San Diego County holding subprime loans, 38.31 percent were at least 60 days late on their mortgage payments as of the end of June, about the same as the delinquency level in March, according to First American CoreLogic.

But the category above subprime known as Alt-A — the higher-risk loans for good-credit borrowers — saw defaults increase between March and June. In that category, 27.18 percent of the borrowers were at least 60 days delinquent by the end of June, up from 25.41 percent in March.

And more prime borrowers are at least 60 days behind — 7.04 percent in June compared to 5.99 percent in March.

Real estate associate broker Kris Berg said bidding wars have erupted on homes priced under $300,000 in the Interstate 15 corridor. But she’s not convinced that the market has bottomed.

“It is a very dynamic, volatile market out there,” she said.

Berg worries that this spring and summer boost in activity might not last in the fall and winter, typically less popular home-buying seasons.

“I’m not ready to put on my party hat yet,” she said.

Attractive jumbo financing — the loans that buyers use for more expensive houses — is sparse. That whittles the buyer pool in neighborhoods like Scripps Ranch to people with large down payments. On her blog, Berg deduced that none of the 41 attached and detached properties sold in Scripps Ranch in the last month had been purchased with a jumbo loan.

A quarter of the sales were to buyers with at least a 40 percent down payment — and many of the homes in question were for more than $1 million, she said.

“When we fix the jumbo lending market we may fix the market as a whole,” she said.

North County broker Jim Klinge said home sellers are likely to read the new price numbers with hope. But they might not be ready to compete with distressed listings, he said.

“They’re thinking that all they’ve got to do is hold out and the market will come to them,” he said. “Not a chance, unless you’re selling for $165,000 in Oceanside. You get these numbers that are over the nation or over the county and you’re bound to read it wrong.”

The index does give some sense, in aggregate, how the local countywide market is faring. Broken out by price tiers, the June unadjusted numbers showed:

  • Low tier (homes priced under $269,406): down 21.2 percent year-over-year, down 52.6 percent from June 2006 peak.
  • Middle tier (homes priced between $269,406 and $406,565): down 13 percent year-over-year, down 40.2 percent from November 2005 peak.
  • High tier (homes priced higher than $406,565): down 14.7 percent year-over-year, down 31.2 percent from June 2006 peak.

Goldman said the market has a lot to work through.

“It’s not going to be a V-curve,” he said, referring to the graph of a decline that would hit bottom and then turn right back up. “I’m a W-curve guy, and I think we’re seeing a bump right now.”

Please contact Kelly Bennett directly at kelly.bennett@voiceofsandiego.org and follow her on Twitter: twitter.com/kellyrbennett. And set the tone of the debate with a letter to the editor.

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