Annual appreciation rate under 10% for first time since December 1999San Diego County's proverbial housing-price bubble lost a little air last month as the annual appreciation rate slipped below the 10 percent level for the first time in nearly six years.
Locally based DataQuick Information Systems reported the overall median home price rose to $488,000, up 7.5 percent from May 2004. That was the lowest appreciation rate since December 1999, when the year-over-year increase stood at 4.4 percent and the median was $215,000.
snip..
A year ago, things were dramatically different.
Year-over-year medians were consistently running about 30 percent higher each month. Listings were going into escrow within a couple of weeks, if not a few days, and a low inventory of unsold homes prompted bidding wars among buyers.
Today it's taking 48 days on average for a single-family-resale listing to go into escrow, compared with 26 days last year, according to figures compiled by the San Diego Association of Realtors. Resale condos have slowed even more, selling within 16 days a year ago versus 44 days last month.
snip..
But University of San Diego economist Alan Gin said he was not ready to declare the housing bubble had burst or even that the bubble was deflating.
"Air continues to go into the bubble, but at a slower pace," he said. "We'd have to see some negative drops in housing prices before you could say the bubble is deflating."snip..
But signs of buyer remorse may be looming ahead, based on the type of mortgages buyers are choosing. DataQuick said 82.4 percent of San Diego County buyers in May chose adjustable-rate mortgages, about double the rate five years ago.
Economist Gin said adjustable-rate mortgage borrowers who bought five years ago should have no problem refinancing because of equity growth. But today's first-time buyers who have to stretch their personal finances to qualify for a loan for even the most modest house or condo invariably must settle for an adjustable loan.
"That's potentially a little bit dangerous if interest rates rise," he said, especially if the lowest-priced, one-year mortgage rates bounce upward after just 12 months. "Some people just barely got in, and they could be squeezed as a result."
http://www.signonsandiego.com/news/business/20050615-9999-1b15housing.html