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Home prices moving sideways in five local submarkets

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Anyone looking to San Diego submarkets to glean future countywide housing market performance is likely to come up empty.

In five parts of the county — Pacific Beach/Ocean Beach, Oceanside/Carlsbad, Escondido, Chula Vista and El Cajon — sales prices have stabilized, but aren’t showing a pronounced positive or negative trend.

Countywide, the median price of home sold in January fell 1.6 percent on a monthly basis to $368,750, according to data provided by the San Diego Association of Realtors. The next month, the median price fell 2.6 percent, before it jumped 7.2 percent in March. From March to April, it fell 2.5 percent, and in May rose 1.3 percent to $380,000.

The small monthly variance in median sales price, which captures only the value of the middle home out of the pool of transactions in a given period, shows prices have largely stabilized, according to Alan Nevin, director of research at MarketPointe Realty Advisors.

“I’d say that’s a symbol of health,” he said.

Though the median sales price has increased 3 percent from January to May, other measures suggest prices in the area are moving in the other direction. Echoing recent results in the S&P/Case-Shiller Home Price Indices, Clear Capital’s Home Price Index found San Diego prices at the end of the first quarter to have fallen 1.4 percent on a quarterly basis, and 4.1 percent on an annual basis.

In either case, the change is small in either direction, indicative of a market that’s bouncing along the bottom, according to Mark Goldman, lecturer on real estate at the Corky McMillin Center for Real Estate at San Diego State University.

Looking for an indication of what direction the market might be headed, observers often look to the high-end, coastal markets, thinking the top of the market will recover first.

In the zip codes located in Pacific Beach and Ocean Beach, the median sales price has fluctuated wildly from month-to-month this year —which isn’t surprising to-be-expected, given the small volume of transactions in any given period. At $655,000 in May, it’s in line with its December-2010 level of $663,750. In between, it’s been as high as $767,000 (March) and as low as $599,250 (January).

Carlsbad/Oceanside hasn’t been quite as volatile. In May, the median price in those zip codes was $475,000, down 6.9 percent from the end of 2010. The highest monthly total of the year was $498,750 in January, and the low was $391,250 in February.

Nevin said the lack of a clear upward trend in the market as a whole is a problem.

“It’s more of a problem when you recognize that even the traditional better quality markets, like Carlsbad/Oceanside and the beaches, aren’t going anywhere,” he said. “You’d think they’d recover first, but I don’t see any sign of recovery. It’s just sort of muddling through.”

Goldman said the low median sales prices — both in the county as a whole and in the high-end markets — simply demonstrate what types of sellers are in the market right now. Homeowners with financial flexibility are sitting out, waiting for improvement before opting to sell.

“It just means the median sales price is going down, not home values, because there are more sales at lower prices than at higher prices,” he said. “And indeed, people with the wherewithal to hold aren’t going to be inclined to sell if they can afford to hang on.”

The county’s entry-level markets were more affected by the foreclosure crisis than the high-end markets. Goldman says they’ve mostly stabilized.

“Chula Vista, Escondido, they’re stable, but they took the biggest hit,” he said. “First they were the most overpriced, then the most underpriced, and now they’re stabilizing.”

The median sales price in the zip codes in Chula Vista has been between $350,000 and $376,000 every month since the end of 2010. In May, it was $370,000.

El Cajon, similarly, has bounced near the $300,000 mark. It ended 2010 at $330,000, and was $297,000 in May. Escondido has been in the same area, ending 2010 at $300,750. It was $294,513 in May.

Goldman said consumer confidence issues are currently affecting all of the submarkets.

“Buyers become most active at the top of any market,” he said. “The best time to buy is right before a market hits bottom. If sellers perceive the market is going up, which seems to be where we are, they’re going to hold on. If sellers think prices are going down, they’ll also hold on, and it looks like we might be close to the bottom.”

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