Housing sales fall again

By: DAVE DOWNEY - Staff Writer | Wednesday, April 12, 2006 10:16 PM PDT ∞

North County's once red-hot housing market continued to chill out last month as sales fell sharply from March 2005, but detached homes still showed slight price appreciation over the year before, according to a report released Wednesday by the North San Diego County Association of Realtors.

North County's inventory of unsold homes continued to swell, reaching 7,078 at the end of March, said Dennis Smith, a Realtor with Taylor Place Real Estate in Carlsbad who has been tracking inventory countywide for several years.

Based on the March sale total of 1,160 units for both detached single-family houses and condominiums, the North County market effectively has a six-month supply, Smith said, meaning that at the current rate, it would take half a year for all homes with for-sale signs out front to sell.

"Buyers and sellers are having a stare down," Smith said, offering a reason for the growing supply. "We've got as many properties right now in North County as we had in the whole county at this time in 2005."

Despite the increasing supply, prices are holding steady.

"There's a lot of downward pressure on the market, but not a lot of downward movement," Smith said.

The median-priced single-family home fetched $625,000, up 2.9 percent from the $607,000 median recorded in March 2005, according to the North San Diego County Association of Realtors. Meanwhile, the median condominium price slid slightly, by 1.2 percent, from $405,000 to $400,000.

Smith said the condo slide stems from the recent flurry of conversions of apartments to condos.

The association report showed that real estate activity picked up, as expected, going into the typically busy spring season. After selling 563 single-family homes and 224 condominiums in February, North County property owners sold 865 houses and 295 condos in March.

However, for the third month in a row, the pace of sales trailed the strong trend of 2005.

According to the San Diego Association of Realtors, which defines North County in a slightly broader way than does the North County group, March sales plunged 44 percent year over year for condos, and 20 percent for single-family houses.

For the first three months of the year, single-family sales declined 19 percent and condo sales declined 33 percent, the San Diego association reported.

"Does this high number of inventory concern me? Absolutely," he said, noting the countywide record high was 19,250 in July 1995, at the bottom of the last down cycle. But Smith said the region's economy is far stronger today than a decade ago, and he sees no cause for alarm.

Neither does a real estate economist in Los Angeles.

Nicole McAllister, executive director of development for the University of Southern California's Lusk Center for Real Estate, said, "What is happening is, the increased (housing) production that's taken place over the last 12 to 18 months is now catching up with demand."

On the other hand, Robert Campbell, an independent San Diego economist who tracks real estate trends and who believes that homes are priced beyond what the economy can sustain, said there is plenty of reason for concern. And San Francisco-based PMI Mortgage Insurance Co., which periodically evaluates the sustainability of housing markets, rates San Diego County No. 1 in the nation, in risk of price decline.

"Real estate is a highly cyclical market," Campbell said. "From this point in time, it's only going to get worse. The good times are behind us. The money's been made. The market only gives so much before it starts taking away."

Campbell suggests the San Diego County market is out of whack because median family income is roughly half the pay it takes to buy the median-priced home, and today's prices trigger mortgage payments generally twice what properties can command in the way of rent.

"Eventually, all markets will come back to equilibrium," he said.

Contact staff writer Dave Downey at (760) 740-5442 or ddowney@nctimes.com.

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