Randolph Kinney
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S.D. real estate concerns Fannie Mae
S.D. real estate concerns Fannie Mae
'No question' about slowing, says official
By Emmet Pierce
UNION-TRIBUNE STAFF WRITER
July 20, 2006
Widely seen as a forerunner in national real estate trends, San Diego County is being viewed “with some trepidation” by lending giant Fannie Mae as its housing market cools.
“San Diego is one of the areas of the country that has had incredible . . . price gains,” Fannie Mae Chief Economist David Berson said yesterday during an economic and mortgage market report. “There is no question that the San Diego housing market has slowed.
“Inventories have surged in San Diego and the surrounding areas,” he continued. “Home price gains . . . are certainly down from their peak and perhaps will fall.”
San Diego is one region that is experiencing low affordability after a rapid and unsustainable rise in home prices, Berson said. Major metropolitan areas on both coasts are experiencing their lowest affordability levels “since the mid-1980s, when interest rates were considerably higher than they are now.”
While San Diego County's economy is basically sound, the strong presence of investors in the housing market makes it subject to price fluctuations, he added. “We view it with some trepidation. It is one of the areas we are concerned about.”
Berson said the condo market here is at risk “because the supply has gone up dramatically.” There have been “lots of condo conversions. The investor share probably has been far more active in the condo market.”
Investors favor condos over single-family homes because they're considered to be easier to sell quickly, he said. “Condos are far more commodity-like than single-family homes.”
Berson said the national housing market will continue to slow.
“We have had five years of record home sales,” he said. “That is unprecedented in the modern era. New home sales this year will fall by 9 to 10 percent. . . . Existing home sales, we think they will fall this year by about 7 to 9 percent.”
Across the country, home values, as measured by sales, rose last year by about 11 percent, Berson said. “This year, by the end of the year, it will have fallen to about 3 percent.”
In the fourth quarter of 2005, about 24 percent of condominium buyers here were investors, estimates John Karevoll, analyst for DataQuick Information Systems. That fell to about 21 percent in the second quarter of this year.
In June, San Diego County experienced its first year-over-year price decline in a decade. It was the 24th consecutive month of year-over-year declines in sales. DataQuick reported that the county's median home price slid to $488,000, off 1 percent from June 2005 and down 6 percent from last November's peak of $518,000.
Berson, based in Washington, D.C., yesterday delivered his economic and mortgage report to journalists during a telephone conference call. Nationally, single-family home starts were down about 4.5 percent over the first half of this year compared with the first half of 2005, he said. Mortgage originations, which reached almost $3 trillion last year, will drop this year to $2.3 trillion to $2.4 trillion, he predicted.
In a related report yesterday, there were new signs that the housing industry has lost steam. The Commerce Department reported that the home construction fell by 5.3 percent in June. Applications for building permits fell for a fifth consecutive month.
“Our reports from builders and census data on sales and reports from public builders all show the market is falling off,” said Michael Carliner, an economist with the National Association of Home Builders. “Builders don't want to build more than they are selling.”
In recent years, “housing has been one of the major forces in raising the economy,” he said. For the time being, economic growth “will have to come from other sectors, like business investment.”
S.D. real estate concerns Fannie Mae
'No question' about slowing, says official
By Emmet Pierce
UNION-TRIBUNE STAFF WRITER
July 20, 2006
Widely seen as a forerunner in national real estate trends, San Diego County is being viewed “with some trepidation” by lending giant Fannie Mae as its housing market cools.
“San Diego is one of the areas of the country that has had incredible . . . price gains,” Fannie Mae Chief Economist David Berson said yesterday during an economic and mortgage market report. “There is no question that the San Diego housing market has slowed.
“Inventories have surged in San Diego and the surrounding areas,” he continued. “Home price gains . . . are certainly down from their peak and perhaps will fall.”
San Diego is one region that is experiencing low affordability after a rapid and unsustainable rise in home prices, Berson said. Major metropolitan areas on both coasts are experiencing their lowest affordability levels “since the mid-1980s, when interest rates were considerably higher than they are now.”
While San Diego County's economy is basically sound, the strong presence of investors in the housing market makes it subject to price fluctuations, he added. “We view it with some trepidation. It is one of the areas we are concerned about.”
Berson said the condo market here is at risk “because the supply has gone up dramatically.” There have been “lots of condo conversions. The investor share probably has been far more active in the condo market.”
Investors favor condos over single-family homes because they're considered to be easier to sell quickly, he said. “Condos are far more commodity-like than single-family homes.”
Berson said the national housing market will continue to slow.
“We have had five years of record home sales,” he said. “That is unprecedented in the modern era. New home sales this year will fall by 9 to 10 percent. . . . Existing home sales, we think they will fall this year by about 7 to 9 percent.”
Across the country, home values, as measured by sales, rose last year by about 11 percent, Berson said. “This year, by the end of the year, it will have fallen to about 3 percent.”
In the fourth quarter of 2005, about 24 percent of condominium buyers here were investors, estimates John Karevoll, analyst for DataQuick Information Systems. That fell to about 21 percent in the second quarter of this year.
In June, San Diego County experienced its first year-over-year price decline in a decade. It was the 24th consecutive month of year-over-year declines in sales. DataQuick reported that the county's median home price slid to $488,000, off 1 percent from June 2005 and down 6 percent from last November's peak of $518,000.
Berson, based in Washington, D.C., yesterday delivered his economic and mortgage report to journalists during a telephone conference call. Nationally, single-family home starts were down about 4.5 percent over the first half of this year compared with the first half of 2005, he said. Mortgage originations, which reached almost $3 trillion last year, will drop this year to $2.3 trillion to $2.4 trillion, he predicted.
In a related report yesterday, there were new signs that the housing industry has lost steam. The Commerce Department reported that the home construction fell by 5.3 percent in June. Applications for building permits fell for a fifth consecutive month.
“Our reports from builders and census data on sales and reports from public builders all show the market is falling off,” said Michael Carliner, an economist with the National Association of Home Builders. “Builders don't want to build more than they are selling.”
In recent years, “housing has been one of the major forces in raising the economy,” he said. For the time being, economic growth “will have to come from other sectors, like business investment.”