The San Diego County economy's slump will likely last until the beginning of 2009 due to the depressed housing market, weak job market, and high utility and food prices, according to a report released by Metrostudy.
Median home prices continue to fall. However, competition for homes is increasing. While some fear the housing market is severely injured, investors and first time homebuyers are entering the market looking for bargains.
"The market remains oversupplied," said Josh Seime, manager of Metrostudy's San Diego County division. "However, real estate agents report an increase in interest and activity, which gives some home for improvement."
The inventory for both detached and attached homes has declined 24.8 and 29.7 percent, respectively in the 12 months ending in June 2008 compared to July 2006 to June 2007.
The dominant price segments for detached housing are the $400,000 to $549,000 and $550,000 to $699,000 segments.
"Homebuilders are focused on delivering more affordable detached product to the market, and price segments under $700,000 are dominant," Seime said. "All price segments within the detached market are beyond equilibrium levels, indicating weak demand."
The dominant price segments for attached housing are the $250,000 and $400,000 to $549,000 segments. Like those in detached housing, all of the price segments in the attached market are outside the equilibrium for supply and demand with the exception of the $1.2 million segment, Seime said.
"Prices have adjusted considerably in both the new and resale housing markets, and greater affordability has reinvigorated buyer interest," said Seime. "Nevertheless, the San Diego County housing market will remain high competitive through 2008 and into 2009. It is likely that prices will continue to be pressured downward through at least the third quarter of 2008."