No sign of relief in San Diego housing slump
Long View Drive in southern San Diego County is bad news for anyone sniffing around for signs that the housing market downturn is about over.
The two-story stucco house at 1308 is an eyesore among the other well-tended homes in this Chula Vista neighborhood. It’s vacant, and the small patch of lawn is overrun with weeds. The entryway is littered with junk mail and old fliers, and stuck to the door is the piece of paper that explains it all: Notice of Trustee Sale.
With more than a half-dozen “for sale” signs on the same block, others seem sure to follow.
Long View Drive sits among the sprawling communities known collectively as Eastlake and Otay Ranch that have been hit particularly hard in the slump. Real estate analysts, who view San Diego as a bellwether for other real estate markets, often cite those neighborhoods when they discuss the fallout from collapsing home prices and disastrously loose mortgage lending practices.
And these neighborhoods, thus far, show no signs of change.
“Have we turned the corner? The answer is no,” said real estate agent Richard Tapia, who lives in Eastlake and sells homes in the area. A home now in escrow was listed at $455,000, but Tapia said he sold a similar home about a block away for $100,000 more than that last summer.
Peter Dennehy, who analyzes markets for Sullivan Group Real Estate Advisors, is not optimistic either.
“It’s pretty bad, and I don’t see a whole lot of improvement,” Dennehy said of the San Diego housing market. “Month after month, sales have just continued to go down. Foreclosure rates are through the roof. . . . We won’t see improvement until 2009 and beyond.”
San Diego builders, stuck with homes in a market with few buyers, have been slashing new-home prices and adding incentives to draw in customers. D.H. Horton Inc., one of the biggest developers of condos in San Diego for the last several years, has turned to the auction block to sell the remaining units at two of its San Diego communities in the North Park and Encanto neighborhoods.
Southern California developers have been selectively using auctions to unload inventory quickly for the last several months, but the Fort Worth, Texas-based company’s auction -- to be held today -- is believed to be the first by a major builder in San Diego since the downturn started nearly two years ago.
“If you’re a builder, you have the choice of continuing to sell or to do something like this,” Dennehy said of the planned auction. “Auctions sometimes don’t work, but if this does, I think you’ll see more of them.”
The auction of 35 condo units and 21 town homes, to be held at the Doubletree Hotel in Mission Valley, will open with minimum bids of between $139,000 and $249,000 -- about 50% less than the most recent asking prices.
In San Diego’s hip downtown neighborhood of Little Italy, the sidewalks on a recent afternoon were alive with residents walking dogs, heading to the grocery store and browsing in shops along India Street. But above the vibrant street scene, foreclosures lurk in some of the relatively new condominium high-rises close by.
Mary Friedman, out walking her dog, lives on the 20th floor of La Vida, one of the many condo buildings that sprang up during Little Italy’s building boom. She and her husband are renting a one-bedroom unit that the owner is trying to sell for $450,000.
At that price, Friedman said, “I think she’s losing money.” If so, she wouldn’t be the only one. Many of the condo buildings have had units repossessed and sold by banks at steep discounts.
Real estate agent Jose Saborio, who lives in the nearby 350 West Ash condo building, has seen the fallout firsthand. “I just sold two units in my building that originally cost $500,000 for about $350,000,” he said.
Yet some experts see hopeful signs in San Diego because the sharp declines in median home prices that have hit the region for several years running have started to ease.
In August, the median home price in San Diego County was down 4%, to $475,000, compared with $495,000 in August 2006, according to DataQuick Information Systems.
The number of home sales in August fell 19.4% compared with the year-ago period and marked the 38th straight month of declines. Yet the decline for Southern California as a whole -- 36.6% -- was much larger, said DataQuick analyst John Karevoll.
“San Diego does show a clear trend that the market is going to level off in Southern California, or at least the declines will get smaller,” Karevoll said.
But with key economic indicators in flux and talk of a possible recession, he added, “it’s impossible to forecast beyond three to six months -- you might as well be throwing a dart at a dart board.”
elizabeth.douglass@latimes.com
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Times staff writer Annette Haddad contributed to this report.
