Even though a rebound is foreseen, home prices are not expected to gain value for some time.
Forecasters at the Anderson group were leaders in the forecasting of a housing slowdown nearly 4 years ago. They are currently forecasting that prices will continue to decline by margins less than 2% through next summer then begin a rebound.
The one major wildcard that has entered into the picture is the foreclosure rate. There is concern that the current wave of foreclosures might bring down home prices and add fuel to the current housing slowdown.
Ryan Ratcliff, an economist with UCLA who has evaluated the San Diego County housing market states that we have only seen the tip of the iceberg regarding the recent surge in foreclosures.
Prices of homes in San Diego County have been on a roller coaster ride over the past 3 years. Between the 1st quarter of 2004 and the 1st quarter of 2006, average median home prices went up 23% from $417,398 to a high of $513,915. This was partly fueled by high risk mortgages and low interest rates that were offered.
Over the past year, median home prices have dropped 5.6% to $485,789. The price has been driven down by decreased demand and tougher lending standards. Ryan Ratcliff predicts that the average price will drop to $478,000 by the 2nd quarter of 2008 which would be a return to price levels of late 2004, and then prices are expected to gain value again.
Ratcliff says that the recent fluctuation of the median home price can be "spun" in different ways- Homeowners can become fearful by focusing on the 5% drop in the median home sales price. A more positive approach to calm fears would be to state that the current median home price is basically the same level as in 2004.
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