In San Diego, it seems that the opposite is happening. The market and the inventory in some of the better areas seem to be getting worse, and in the worst areas, that were hit very hard with sub-prime losses, it may be getting closer to the bottom.
The good towns have taken almost no hit in value here however during the booming markets of 2003-05 they only saw minor appreciation. Overall very little value change from 2003-2008.
In neighborhoods that I would consider "below average", where SFR and condo prices have dropped up to 40-50% from their peaks, there is a huge amount of foreclosure and REO activity, banks are pricing most of the REOs very competitively, and properties are selling, (at very low prices). But the number of pending sales and recent closed sales in these areas is definitely up. Prices are still trending down, but possibly the bottom is near, as more investors are buying. After an absence of 5± years rental investors are back and picking up low end attached housing in average towns so we may be hitting close to bottom. I don't expect prices to increase in these areas for years and years, because so many owners are underwater, and foreclosures will keep occurring for several years. I agree.
In the better areas, though, where prices haven't fallen as far, the market is still very slow, foreclosures are happening, inventory is expanding, and I think there will be another round of price declines over the next several years, as more of the 3 year and 5 year loans reset, and homeowners have little equity and can't refinance, (especially if they have a neg-am loan). Virtually all the foreclosure action here is attached housing and some modest detached homes. Almost no upper end foreclosures. Full price offers in the first week or so of exposure have not been that uncommon during the last two months for average to better homes in the better towns.
