Wednesday, December 15, 2010

Jobs, not housing dominate real estate conference

2011 looks like a slight improvement over 2010

TUESDAY, DECEMBER 14, 2010 AT 4:51 P.M.

The University of San Diego’s 11th annual residential real estate conference was supposed to be about housing, but jobs dominated the panelists’ view of how to end the five-year gloom.

Leslie Appleton-Young, chief economist at the California Association of Realtors, acknowledged that her original 2010 statewide projection did not pan out: Sales dropped 10 percent, not 2.3 percent, and prices rose 11.5 percent, not 3 percent. For next year she expects double 2’s: 2 percent jump in both sales and prices.

“Jobs are really the key,” she said. “That’s where the focus needs to be.”

Echoing other judgments, she declared “the worst is over” but that the economy offers no forward momentum to producing more jobs, more spending and more housing demand.

“We are in for a very slow recovery,” she said. “I don’t think there will be a double dip. We never got out of the first one.”

While real estate typically operates at the local, even micro, block-by-block level, Appleton-Young said today’s market is behaving sector by sector. For example, the $1 million-plus home market suffers from a 17.7-month inventory of unsold homes, largely because owners do not want to drop their prices to meet buyers’ expectations.

“The top end is very nostalgic for 2004-’05-’06,” she said.

The low end, below $300,000, is running at twice the unsold inventory as last year — 7.1 months compared with 4.1 months.

In a report issued Tuesday on San Diego home prices and sales, MDA DataQuick confirmed some of the economists’ observations:

•Prices rose just $500 from October to November to a median price of $335,000. But on a year-over-year basis, the median was up 3.1 percent, the 14th straight month of such improvement. Still the median was far below the November 2005 peak of $517,500.

•Sales were down 6.7 percent from October to 2,566 in the usual season slowdown, but were 18.5 percent below November 2009’s 3,148 count — the fifth straight year-over-year decline.

USD economist Alan Gin’s said companies and the real estate industry are poised to act, but not alone. “They’re waiting for signs that the economy is firming before jumping in,” Gin said.

Panelists at the all-morning conference did not expect a return to recession, mainly because the recovery has been so anemic since the recession was declared officially over in mid-2009.

“Right now, there’s just a lot of uncertainty,” Gin said. “I could see it going either direction.”

Still, he forecast 10,000 more jobs in 2011 in the county, almost making up for the 11,000-job loss of the past 12 months.

“It’s not good by historical standards, but at least we’ll break the three-year string of negative job growth,” he said.

Without a firmer economy in 2010, he downgraded his San Diego housing permit total for 2010 from 4,000 to 3,500, the second lowest on record after 2009, but predicted a rise to 5,000 next year.

Still, said Alan Nevin, economist at MarketPointe Realty Advisors, that figure is far below the 10,000-unit count needed to meet an annual 30,000-person population growth the region expects for the next 10 years.

“We’re not even remotely beginning to satisfy the market,” Nevin said. He predicts prices will skyrocket in two years if construction doesn’t pick up.

Roger Showley, (619) 293-1286,, Twitter: @rmshowley