The air is finally coming out of San Diego County’s housing bubble.
Last month, for the first time in seven years, the median home price in San Diego County was essentially flat from the year before, the most dramatic sign yet of Southern California’s softening housing market.
The median price in May of all new and existing homes was $490,000, a 0.4% change from $488,000 of May 2005 and down 3% from April, according to DataQuick Information Systems.
What’s more, May’s figure was down 5% from San Diego County’s record level of $518,000 set in November.
The median is the price at which half of all homes sold for more and half for less.
Meanwhile, sales were lower for the 23rd month in a row. In all, 4,217 transactions closed last month, an 18% decline from the year before. May’s sales were the fewest of any May in 10 years, DataQuick said.
For months, all eyes have been on San Diego County’s housing market, once the hottest in the nation and considered a bellwether for other markets. It was among the first regions to see rapidly rising prices and in recent months was one of the first to experience an obvious simmering down. Whether the county’s leveling prices portend an economic “soft landing” or a more serious downturn has been a subject of debate.
Local housing industry executives view the slowdown as a return to normal conditions after a prolonged period of extraordinary growth.
The cooling off “is a natural occurrence of an overheated market that lasted far too many years,” said Rick Hoffman, president and chief operating officer of brokerage Coldwell Banker in San Diego.
Other indicators underlined the softening: Homes are sitting on the market an average of 66 days, and the inventory of unsold existing homes equals a seven-month supply at the current sales pace, Hoffman said.
The biggest price adjustments last month were evident in the new-home category, which includes condominiums and condos converted from apartment units. An explosion of condo construction, especially in San Diego, has resulted in an overabundance of choices for buyers. As a result, builders have offered price discounts and other incentives to induce buyers.
In May, the county’s new-home median price fell 4.5% from the year before to $424,000, down 17% from April.