The Morning Report
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Last spring, local home prices hit their lowest point in six years, down 42 percent from late 2005’s sizzling peak.
But new numbers released Tuesday reinforced that prices have made a remarkable rebound from that low point. Even as some other markets across the country showed weakness, San Diego County home prices have regained close to 11 percent, as measured by the closely watched Standard & Poor’s/Case-Shiller home price index.
San Diego prices rose 1.5 percent in March from the month before, the latest in a striking 11-month upward streak. They were up 10.8 percent compared to last March.
Housing is hot. And it’s not the only sector on a rising streak this year.
The county has gained jobs for the last four straight months through April, indicating a trend, not just a fluke. The unemployment rate last month was 10.4 percent, down from 11 percent in March. That rate is certainly still high, but encouraged some economists because it signals that more unemployed workers were getting past their discouragement and coming back into the market to look for jobs.
There are more signs of the rebounding economy: A key local economic index bounded up “sharply” in March, causing University of San Diego economics professor Alan Gin to declare that if the local economy didn’t hit bottom late last year, it “likely did in the first part of 2010.”
And in April, banks sent out fewer mortgage default notices, the first stage of foreclosure — a drop-off for the first time since the beginning of the year and a significant decline from April 2009, according to ForeclosureRadar, a California-based foreclosure data firm.
But the economy’s apparent gusto is still tempered by a few factors.
Though default notices fell compared to their record highs in 2009, the number of homeowners in the next stage of foreclosure — receiving notice that banks could sell their houses at auction — stayed about the same between April 2009 and this April, the ForeclosureRadar numbers show.
Close to a third of San Diego homeowners with a mortgage were underwater in March, owing more on their homes than they could sell for, according to CoreLogic. That puts limits on the pool of San Diegans who might consider buying homes or big-ticket items and could lead to more foreclosures.
And much of housing’s current strength is attributable to government intervention that has expired or could soon, not a return to sensible, deep-rooted growth, said Chris Thornberg, founding principal of California-based consulting firm Beacon Economics.
The current year promises to be stable, Thornberg told an economics forum Friday morning in La Jolla.
“After that? No one knows, but it’s not likely to be pretty,” Thornberg said. “At best, we’ll see a substantial slowing in the recovery we’re seeing right now.”
On the jobs front, that current recovery is made up of gains in leisure and hospitality and other tourism-related jobs, as well as government, professional and business services.
Brad Kemp, Beacon’s regional research director, told the group Friday that San Diegans “have every right to be more optimistic than most Californians.”
Kemp anticipates San Diego County will gain back all of the jobs it lost in the recession, reaching more than 1.3 million jobs by the end of 2014. This April, the county reached about 1.2 million jobs.
But the Beacon economists said not to count on construction jobs, which saw “explosive growth” during the boom and then a “big fall,” getting back to those peak levels for several more years. And the county could see an unemployment rate of at least 8 percent through 2013.
“It’s not going to be a quick job recovery,” Kemp said.
The tenets of the housing market’s recovery are a little trickier to anticipate because its drivers are largely current government policies like tax credits for homebuyers, prevalent government-backed FHA loans and foreclosure help programs.
“The problem is that the bounce is only as sustainable as those policies are,” Thornberg said, “and those policies are not sustainable.”
But the bounce seems here for now.
In the latest Case-Shiller index, the high tier (homes priced over $465,686) showed a hefty 2.9 percent increase over February.
The lowest tier, homes priced under $311,200, was up by the most year-over-year — 11.3 percent — it fell a slight 0.3 percent between February and March.
The middle tier rose half a percent over the month, and 7.2 percent from March last year.
Keep in mind, all three tiers are down more than 28 percent from their peaks. And the index’s overall prices in March were still down 36 percent from the November 2005 peak.
But, compared to a decade ago, prices in March were at a level 60 percent higher than what they registered in January 2000.
Please contact Kelly Bennett directly at kelly.bennett@voiceofsandiego.org. Follow her on Twitter: @kellyrbennett.