“Meltdown” Headed toward a “Cool down”?

With all the talk about San Diego’s housing “meltdown” the signs that may point towards a future “cool down” may be easily missed. Below are a few points that have been made recently that provide some hope that a potential “cool down” may be arriving by the end of next year.

• Anderson Forecast at UCLA predicted last week that California home prices will finally hit “bottom” around summertime next year.
• The Anderson Center at Chapman University estimated that California’s home prices next year will see a reduction of 6.7% in median price. Compared to the current year’s decline of 34.2%, those numbers sound pretty good.
• Federal Deposit Insurance Corporations head Sheila Bair commented on the market to the Associated Press last week. Her estimate is that the “light at the end of the tunnel” will arrive in 2010.
• Affordability is already beginning to be seen in San Diego County. Right now monthly home payments make up 33 percent of San Diego homeowner’s monthly income. This means that the San Diego median price is back to 2002 price/income ratios.
• Not only are San Diego home prices becoming affordable, they are being slashed in many areas of the county. Take downtown for instance, where a condo can be purchased for 50% less than it sold at its peak price!
• Fannie Mae released a survey that stated mortgage rates dropped to their lowest point in four years at 5.47%. James Lockhart who manages both Fannie Mae and Freddie Mac stated that we may see rates “below 4%” in the near future.
• This is important: According to the California Association of Realtors inventory levels are decreasing. Last year this time we had a 16-month supply of San Diego homes for sale; currently we are at a 4.5 month supply. Homes are selling faster as well, this time last year it took an average of 67 days to sell whereas we are now seeing 40-50 days for a San Diego home to sell.