2008 will go down in history as one of the greatest housing crashes ever in North County. And some analysts think 2009 will bring even more pain.

Home prices tumbled last year at a rate never before seen -- not even during the Great Depression.

After adjusting for inflation, the average price of a local house fell 34 percent from 1930 to 1934, according to a 1934 government report. Since 2006, average home values in the county have tumbled 40 percent, according to the Standard & Poor's Case-Shiller Home Price Index.

And with job losses mounting and delinquent mortgages growing, there is reason to believe North County's housing market will deteriorate further in 2009.

At the same time, low prices have encouraged many first-time home buyers to jump back into the market -- it is cheaper, in terms of monthly payments, to buy than rent in areas such as parts of Oceanside and Escondido. Meanwhile, the federal government has committed hundreds of billions of dollars in efforts to slow foreclosures.

Year of confusion

The glut of conflicting forces has led some local analysts to call 2009 the year of confusion for North County's housing market.

For example, Fallbrook real estate agent Mark Fabela said he sent two deals into escrow in the same week after not seeing two deals in a month for a year.

"Because it's so strange and because it's such uncharted waters, no one knows where we're going," Fabela said. "If you told me last week I would have two deals in escrow this week, I would have bet everything I had to say you're wrong."

The increased activity has sent house sales up 100 percent across North County from a year ago.

Yet as buyers become more active, foreclosures seem to pile up just as fast.

Foreclosures in 2008 through November surpassed 18,000 across the county -- more than triple the number from any other year since 1974, when such record-keeping began, according to data from InnoVest Resource Management, a foreclosure investment firm based in San Diego.

'I don't see anything bright'

Some analysts think even more families will lose their homes in 2009.

When future historians look back at the housing collapse, "I think what we're going to remember is still to come," said Ramsey Su of San Diego, a former real estate broker who analyzes foreclosure and real estate data.

Su said foreclosures could triple in 2009 from last year's record-setting numbers.

Ward Hanigan, founder of InnoVest in San Diego, said he agrees foreclosures will increase over the next year.

"I don't see anything bright on the horizon," Hanigan said. "I'm positive you're going to see more" foreclosures this year.

Several indicators point to more foreclosures:

- Job losses have accelerated lately, with county employers shedding jobs for the past seven months and more layoffs expected in the immediate future, according to the state's Employment Development Department.

- Falling prices, considered by several economists to be a key driver of foreclosures, have not abated. In October, the latest month available, real estate prices in San Diego County tumbled 3 percent in just one month, one of the largest single-month declines on record, according to the Case-Shiller report.

- In California, 190,000 "Alt-A" mortgages still have not adjusted their monthly payments upward, known as a reset, according to data from the Federal Reserve Bank of New York. The loans were typically given to borrowers with average or above-average credit scores but who provided little documentation of income. For perspective, there have been 185,000 resets across the state of subprime loans, which were given to less credit-worthy borrowers.

Hanigan said the looming payment adjustments on Alt-As will usher in another wave of foreclosures. A primary reason for the dire outlook is that many of the mortgages were "option-ARMs," meaning that borrowers could pay less than the interest added to the loan each month, and the loan balance increased each month.

Combined with declining prices, the products could mean that most borrowers who purchased in 2004 or later owe more than the value of their homes.

Also, the number of delinquent loans has towered over the number of foreclosures, creating what Su calls "pent-up foreclosures." In November, there were 2.6 million delinquent mortgages across the country but just 238,000 foreclosures, according to data from Hope Now, a government and lender nonprofit.

Essentially, that means even if job losses do not increase, the housing market will have a large number of empty houses to sell if those delinquent mortgages become foreclosures.

Some positive indicators

Yet at the same time, there are some indicators that point to recovery. The government has passed several multibillion-dollar bailout packages aimed directly at housing to make sure people late on payments don't lose their homes.

Therefore, if the government could successfully stem foreclosures and buyers remain active, North County's housing market might have as many buyers as sellers, the first step on the road to stable prices and eventually appreciation.

"You find recovery when there's a happy medium that matches what buyers and sellers want to pay for a property -- where that median (home price) is, is tough to tell," said Len Baron, a real estate professor at San Diego State University. "But prices are lowering and interest rates are going lower, which makes it a much more appealing place to buy than it has been in years."

However, prices across the county are still too high by some historical measures:

- Over the course of 20 years, from 1977 through 1997, San Diego County home prices outpaced inflation by 0.5 percentage point before going haywire in 2000. To return to that norm, prices would need to fall about 20 percent from November's median price.

- For the average family to afford the average house, prices would need to fall about 15 percent from current levels, using the standard recommendation of housing advocates and financial planners that no more than one-third of household income should go to a mortgage.

On the other hand, prices are almost in line with rents, meaning the average mortgage payment costs about as much as the average rent. That has made buying a first-time home more attractive and has attracted investors who buy houses as rental properties.

Considering the contradictory data points, even analysts who foresaw the housing bubble say they are uncertain of what 2009 will bring.

"The theme I have been expounding is there are just so many negative crosscurrents and then some serious positive crosscurrents," said Rich Toscano, a San Diego financial adviser who gained widespread Internet fame by predicting in 2005 that the county's housing prices would tumble.

"It's pretty murky," he said. "It used to be a lot easier to make predictions."

Contact staff writer Zach Fox at (760) 740-5412 or zfox@nctimes.com. Read his blog, "On the Realside," at bizblogs.nctimes.com.