The Pace Eases but Cost of Homes Is Still Rising

The average cost of San Diego housing is still heading ever-upward but the rate of increase has leveled off from last year’s frenzied pace, according to new market surveys released Monday.

The average sales price of an existing house in the San Diego metropolitan area was $217,228 in June, up 24% from the $175,416 average price in June 1988, according to the San Diego Board of Realtors. The June average was also up nearly $10,000 from the $207,478 average in May.

Costlier Homes Set Tone

But the overall average was skewed somewhat by the disproportionate increase in prices and unit sales of higher-priced homes, San Diego board president Chuck Hoffman said Monday. An indication of how the high-priced dwellings are leading the way was that homes priced over $200,000 accounted for 38% of all resales in June, up from 24% of all sales in June, 1988, he said.

Meanwhile, prices of lower-priced or so-called entry-level houses in San Diego remained relatively flat in June. Noting that less than 20% of San Diego families can afford the median-priced home in the county, brokers said that first-time buyers seemed to have stretched their budgets to the breaking point to qualify for home loans.

An indication of the flatness was that the median price of San Diego resales, or the price at which half of all houses sold for more and the rest for less, was $177,000, unchanged from the median price in April and May.

“We finally have priced property to the point where it will not sell instantaneously,” said Ray Baker, owner-broker of Century 21-Golden Circle, a brokerage that specializes in housing in the Mira Mesa area. “We’re coming back to reality. We are seeing houses languishing, not selling. We are now getting price reductions.”

A survey of new housing sold at county subdivisions also found a slowdown of the near-panic buying and price escalation that characterized last year’s market. According to a survey by Meyers Group, the average price of new single-family houses sold countywide during the three months ended in June was $230,000, up 40% from the $163,990 average a year ago but just $3,000 more than the average price during first quarter 1989.

Some Decreases Noted

According to Meyers Group vice president Peter Reeb, average prices of new houses in some areas of the county, notably the Carlsbad-Oceanside sub-market, decreased from this year’s first quarter. However, areas including Escondido and San Diego showed price increases.

Another sign of market cooling is that unit sales were down both in new and resold houses. Reeb of Meyers Group said total units sold at subdivisions over the quarter were 2,153, down from 3,190 units sold over the same three-month period a year ago.

The San Diego Board of Realtors, whose members handle transactions in San Diego, Chula Vista, El Cajon and La Mesa, reported sales transactions totaling 1,328 houses and condominiums in June, down 12% from the 1,494 units sold in June 1988.

Russell Valone, president of Market Profiles of San Diego, a firm that tracks subdivision sales, said the slowdown in activity shows that the San Diego housing market is “normalizing” after last year’s extraordinary pressures. Those pressures included the threat of slow-growth ballot measures that were defeated at the polls last November.

Enthusiasm Tempered

Keith Johnson, a principal at Fieldstone Co., a San Diego home builder with four projects in the county, said his staff has noticed a slowdown in buyer traffic and reduced buyer enthusiasm.

“My feeling is that there has been a substantial run-up in prices and that the market is having a hard time digesting that,” Johnson said. “It’s not that houses aren’t selling. It’s just that the market, from a builder’s point of view has gone from great to good.”