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When it comes to indicators for the local housing market, welcome to another month of the mixed bag.
There is some news to cheer if you’re looking for rising prices: Home prices in the county ended the year 2.7 percent higher than the end of 2008. This, announced Tuesday in the Standard & Poor’s/Case-Shiller index, marked just the second time prices have risen year-over-year since 2006. (When the year-over-year price changes shift from negative to positive or the other way around, that often signals a turning point for the long-term price trend, as Rich Toscano pointed out last month.)
December’s index also marked the eighth straight time that prices went up from month to month. S&P analysts even tagged San Diego and some other cities in the Southwest as a “bright spot” for the national housing picture.
And some of the region’s homebuilders seem to see that glow. Eight new projects opened or re-opened in the county in the last three months of 2009. Though the number of new homes sold dropped 28 percent at the same time, there aren’t very many homes for sale right now. The county had 121 new developments with homes for sale in late 2009, one-fourth as many as in 2006.
“Maybe there’s a little optimism about the market,” said Robert Martinez, research director for Marketpointe Realty Advisors, a local real estate firm.
Though there’s a lot of activity and bustle, the market is still frustrating to the average homebuyer on the ground. Investors and some regular buyers are bidding up prices, boxing out more conservative buyers or those using loans that forbid lavish offers. Financing is still cumbersome for higher-priced homes.
And the brightness of the rising prices hasn’t been enough to burn off some lingering clouds. A large number of homeowners are underwater — sitting in homes that couldn’t sell for more than the amount of their mortgages. Distressed homeowners are still frustrated by trying to get their loan payments lowered. Banks are sluggish to process distressed properties, leaving questions about when a host of homes may actually be foreclosed and relisted.
The underwater issue still looms. One-third of San Diego County homeowners with a mortgage — nearly 200,000 properties — were underwater at the end of 2009, First American CoreLogic reported on Tuesday.
Some of those people could wind up trying to sell their homes in short sales — where they must persuade the bank to let them sell for less than is owed.
“They look at that underwater-ness and they say, ‘How am I ever going to dig out from this big burden that’s overtaking my entire life?’” said Jim Klinge, real estate broker in North County.
Klinge called 2009 the year of recalibration — for homeowners realizing that loan modifications aren’t going to save them from their ultimate debt, for banks realizing that they needed to respond to massive numbers of distressed properties, for buyers realizing they were in for a wait and a fight.
That recalibration brings us to 2010, where the federal government is proposing new programs for banks to process short sales more quickly and efficiently. The decision to sell short, though, doesn’t rid a homeowner of other consequences like lousy credit or having to rent for several years.
“I think that’s why a lot of people are going to stick it out,” Klinge said. “It would take some extra oomph to make it worth it for people,” like an annoying neighbor or a poor location.
Other underwater homeowners who are asking their banks to adjust their payments have found the process tough. Homeowners wade through red tape and months-long fights with banks and loan companies just to find out if they qualify.
“It’s the same ol’, same ol’ kind of thing really — still faxes being lost and all of that,” said Gabe del Rio, homeownership director for Community HousingWorks, a local nonprofit housing counseling agency.
But del Rio said he’s hopeful a new nationwide computer system will help by tracking homeowners’ paperwork when it’s submitted.
The number of homes for sale is down significantly from a couple of years ago. But a significant number of active foreclosures remain that haven’t yet been repossessed by the banks — the elusive shadow inventory.
There were 9,243 active homes and condos for sale on the Multiple Listing Service on Tuesday, according to Klinge. That number pales next to the number of distressed properties that have yet to be repossessed: 7,260 homes that have received at least one default notice and 10,221 that are headed for auction, according to Klinge. None of those nearly 17,500 properties have gone back to the bank yet.
But the threat of a flood of distressed properties hitting the market and driving prices down in one fell swoop has been just that — a threat — for years now. Klinge’s been monitoring the homes that hit the courthouse steps, and nearly as many auctions have been cancelled as have actually gone forward.
“It’s one mixed-up bag that’s really hard to make very specific decisions about,” Klinge said. “How do you know which way it’s gonna go?”
On a countywide basis, prices headed steadily up for the last several months of the year.
December’s index showed San Diego County home prices rose 0.1 percent from the month before — the eighth straight month for which gains have been recorded.
December’s usually a weak month for home prices. In a version of the index that takes seasonal trends like that into account, the price gain looked even bigger — 1.1 percent.
Here’s a look at how each third of the market fared, according to that seasonally adjusted version:
- Low tier (Under $304,465): Prices rose 2.06 percent from November.
- Middle tier (Between $304,465 and $460,650): Prices rose 1.06 percent from November.
- High tier (Over $460,650): Prices rose 0.80 percent from November.