S.D. Housing Market Remains in Deep Slump : Economy: Lowest fixed-rate mortgage rates in 19 years fail to spark sales of new homes.
Battered by the stubborn recession and the gloomy outlook for defense-related jobs, the San Diego County housing market continues to weaken with little prospect in sight for near-term improvement.
And, despite the lowest fixed-rate mortgage rates in 19 years, the local market for new-unit sales is looking at its worst year in a decade.
The median cost of a new single-family house sold in San Diego County’s subdivisions over the three months ended June 30 fell to $229,500, down 10% from the $254,990 median cost of units sold over the same quarter in 1991. The median cost is the price at which half of all transactions were at lower prices and the rest at higher prices.
Market activity continued to slump. Total sales of new units--single-family houses as well as condominiums and town homes--was 1,634 units sold, a 29% drop from the market volume over the same period last year, according to Peter Reeb, partner at Meyers Group, a San Diego-based real estate market research firm.
The market for existing houses isn’t much better. According to monthly figures released by the San Diego Assn. of Realtors, June resales in the county totaled 1,280, a 1% drop from the June, 1991, total. Year-to-date unit sales are lagging 4% behind the total over the first six months of 1991, which was hardly a banner year.
The average sale price of existing homes sold in the county during June was $236,210, a 1% drop from last year, board figures show.
The laggard performance of the real estate market “has to do with economic trends,” said Russ Valone, president of Market Profiles of San Diego, a real estate consulting and research firm.
“There’s a lack of confidence in the economy and the fear that you aren’t going to have a job,” Valone said. “Those general trends are sort of holding the market back. Interest rates are down to 8%, the lowest rate since 1973. Everything is sort of there waiting to happen for the market to swing. But it won’t until there is a clear signal that the economy is back.”
At the current rate, only about 6,000 new units will be sold in San Diego County subdivisions in 1992, the lowest total in a decade, Reeb said.
“You look at the San Diego economy and you see that we have lost 20,000 jobs in the last 18 months and you understand why it’s pretty hard to sustain a strong housing market,” Reeb said.
Reeb said that condominiums now account for about 40% of all new units being sold, above the 25% share of new-unit sales during the go-go years of the 1980s.
