Smart growth, lending practices and economic conditions were the focus of North County’s real estate forum, Conversations ’09, which drew nearly 200 real estate professionals to California State University, San Marcos on Friday. The event was hosted by the North San Diego County Association of Realtors in partnership with CSUSM.
Economists discussed reasons behind the housing market crash while elected officials and industry members weighed in on North County’s shifting development patterns.
North County’s housing market began its decline during the last quarter of 2007. Though sales are down, they are slightly greater than in the rest of the nation, said Robert Brown, professor of economics at CSUSM.
The median home price sold in North County fell from $632,000 in 2007 to $454,000 in 2008, Brown said. Such reduced prices have put homeownership in reach for more people; the current median home price of approximately $300,000 is affordable to 30 percent of the population, Brown said.
“Homeownership is still one piece of the American dream and I think it will continue to be,” said John Tuccillo, former chief economist for the National Association of Realtors.
While lower home prices may be good news for first-time buyers, it is a bust to homeowners with reduced equity and those interested in selling their homes.
Both Brown and Tuccillo, cannot predict when home prices will begin to rebound. Federal aid to failing banks and tax credits for homebuyers have created a situation of unprecedented uncertainty.
While on the subject of falling home prices, real estate professionals sounded off about predatory lending practices that spurred the foreclosure crisis. John Murphey, vice president of mortgage and lending for San Diego National Bank agreed with Realtors that the overextension of lending practices was the impetus for the recession.
“It all comes down to greed,” Murphey said. “It was a wonderful, wonderful Ponzi scheme that was making everyone all kinds of money.”
While such lending practices resulted in widespread foreclosures, they also forced homebuilders such as Barratt-American into bankruptcy, said panelist Mick Pattinson, chief executive officer and principal of Barratt-American. The company was forced into foreclosure after its lender canceled a loan for homes under construction.
“They don’t practice what they preach,” Pattinson said of U.S. banks. “They insisted I be leveraged one-to-one. They (Bank of America) were leveraged 30-to-1, Lehman Brothers was leveraged 60-to-1.”
Though many have lost a great deal, some insist there is no time like the present to invest in real estate.
“In times like these, great wealth is made,” said panelist and executive editor of The Daily Transcript, George Chamberlin.
The recession is likely to preserve North County’s landscape, staving off smart growth development until conditions improve. “Smart growth” is anti-sprawl, transportation-oriented development, said Ivan Holler, director of planning for the Rancho Santa Fe Association of Realtors. The term is likely to shape future housing development in California, accelerated by AB 375, which mandates cities draft strategies for creating sustainable communities and reduce miles driven on roads.
Vacant big-box stores left behind by now-defunct retailers must be sold before new shopping centers can be built, just as foreclosures must clear the market before homebuilding can begin, said Virginia Felker, chairwoman of the Encinitas Planning Commission. Such structures, which dot North County’s landscape are likely to remain at least through the coming decade.
While the city of Carlsbad is resistant to the higher density housing encouraged by the smart growth concept, looking forward, the city hopes to provide living space for its share of the “green” jobs President Obama talks of creating, said Councilman Matt Hall.
With policy issues such as these facing the industry, Conversations '09 served as an educational and consensus-building forum for members of the North County real estate industry.
“We need to alert people in real estate that their interests are much broader,” Tuccillo said. “If real estate is your business, politics is your business.”
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