Pulte Homes’ The Pines at 4S Ranch development. — Charlie Neuman / Union-Tribune staff
Experts in the Southern California market say the drop could be attributed to buyers still on the fence, consumers struggling to secure financing, and the absence of tax incentives that heavily drove sales last year.
“It’s going to take a couple of years before people will buy homes again,” said Gary Painter, director of research at University of Southern California‘s Lusk Center for Real Estate.
The ebbs and flows in home values are normal “given the depth of the recession,” Painter added. “We’re not going to see a quick recovery in the owner-occupied market.”
All of the major metro areas in the Case Shiller price index saw decreases in prices, except for Washington D.C., which saw a 4.3 percent increase year-over-year. Twelve of the 20 cities in the index — including Las Vegas, Phoenix and Tampa — posted new lows in the current housing cycle, prompting Case Shiller analysts to confirm the presence of a “double-dip” on a national level.
“Home prices continue on their downward spiral with no relief in sight,” said David M. Blitzer, chairman of the S&P index committee, in a statement.
San Diego has not reached its cyclical low, which was an index of 144.43 in April 2009. March’s index was 153.88. On the other hand, the national index, which includes 20 major metro areas, has hit “a new recession low,” falling 5.1 percent from a year ago, the report stated.
Painter, with USC’s real estate center, hesitated in using the term double-dip, and instead gives this assessment: The national market saw a blip in home sales the same time last year when the federal government was offering its first-time homebuyers’ credit. Without it, there’s now a “flatness in the market,” almost like “we never had a recovery.”
“The tax incentives spurred some demand,” Painter said. “Now there’s nothing to spur the demand.”
Bob Kevane, president of the San Diego Association of Realtors, says March’s numbers are disappointing as he at the start of the year predicted prices would stay flat. The biggest struggle for those wanting to buy are stringent lending guidelines, such as higher down payments and credit scores.
He said this year’s May and June numbers will be telling because they will be compared with months last year that were not influenced by the first-time homebuyers’ tax credit. Buyers who wanted to qualify for the credit had to enter a contract to buy by April 30, 2010. Homebuyers had until Sept. 30 to close. (That was changed from the previous June 30 deadline.)
“We could be down for a few more months,” Kevane said.
Painter, the real estate researcher, said the recovery will start with people re-entering the rental market as they get jobs. Then rents will go up, likely at the end of the year. Once that happens, he said, the housing market should begin recovering.
11:28 a.m., May 31, 2011