Report says S.D. prices are 21% below norms
By Roger Showley, Union-Tribune Staff Writer
2:00 a.m. June 4, 2009
San Diego County used to be one of the nation’s most overpriced real estate markets, as much as 40 percent above historic norms, according to the IHS Global Insight financial analysis company.
Yesterday, in a dramatic turnaround, Global Insight said housing prices in San Diego are 21.2 percent undervalued.
“It’s definitely coming back from the boom,” said Global Insight economist Jeannine Cataldi.
The median price for a single-family home was $327,300 in the first quarter, the company said. Based on historic trends for household income, affordability and appreciation, the “normal” value should have been $415,300.
That contrasts with the peak of the boom market, in the third quarter of 2005, when Global Insight found the median price of $506,500 was above the norm by $144,100, or 40 percent.
From the peak, local housing prices have fallen 35.4 percent, back to a level last seen in the fourth quarter of 2002, the company said.
This was the fourth consecutive quarter that San Diego housing prices were below what the company considers to be the normal price. It was the biggest gap since the second quarter of 1999, when the median price of $190,400 was $53,400, or 21.9 percent, below the theoretical norm.
And as economists well know, San Diego wasn’t alone as the housing bubble inflated and then deflated in many markets.
As for San Diego, whose normalized median price since 1985 has risen without pause, according to Global Insight’s model, Miller said environmental and zoning rules will probably remain in place to constrain supply and thus push up prices.
“So it does make sense in the long run that we will adjust back on the other (upward) direction,” he said.
