According to the latest data, the rate at which median home prices increase in San Diego seems to be slowing. In April, the rate was 10.3 percent vs. the 21 percent average rate of increases last year.
Ironically, just as we thought the insanity was being extricated from the market, the Wall Street Journal featured a $24.5 million home in its House of the Week section last week in none other than La Jolla.
Not pocket change by any stretch of the imagination.
So, perhaps home sellers’ expectations are not tapering off at a similar pace as median prices.
But consider that this three-story oceanfront estate with seven bedrooms on nearly six acres of oceanfront property at 9776 La Jolla Farms Road was on the market last year for $29 million, according to the office of the listing agent, Bonnie Adams at the La Jolla office of Coldwell Banker Residential Real Estate. In fact, it has been on and off the market since 2002.
The La Jolla residential real estate market is super hot and oceanfront property is in demand, yet according to the San Diego Association of Realtors, the year-to-date median home price in the 92037 La Jolla ZIP code in April is down 10.5 percent vs. the same period in 2004 , from $950,000 to $850,250 for combined attached and detached homes.
It’s unlikely that this signifies a problematic cooling in the local real estate market, but it is a trend that is increasingly evident.
La Jolla-based DataQuick Information Services, a real estate data provider, reported last week that the median price paid for a home in the San Diego region in April was $484,000, a roughly 10 percent increase from the same month a year ago.
According to Peter Dennehy, senior vice president and industry consultant at San Diego-based Sullivan Group Real Estate Advisors, the recent “much anticipated slowing in the rate of appreciation” is a necessary consequence of a return to a “more realistic market , by no means a seller’s market.”
In April, the volume of homes sold in San Diego decreased, according to DataQuick.
Sales of new and resale homes were down a whopping 12 percent compared with the same month last year. A total of 5,345 homes were sold in San Diego County in April. In Southern California, the volume of home sales also declined last month, but at a much less noticeable pace of 4.5 percent.
Dennehy said, “Inventories are somewhat higher and market times longer , but not to any degree that is troubling.”
According to Jill Morrow, the president of Coldwell Banker Residential Brokerage, San Diego, the slower pace of home sales is no cause for concern that the bubble will quickly deflate.
“We’re not going to always have that kind of (20 percent) increase, so a 10 percent increase is very healthy and certainly consistent with the lack of inventory in the market today,” said Morrow.
“I see these numbers as representing a good sign of the robust market,” she added. She said the steady demand and relative shortage of supply are trends that will continue to dominate the market here. Interest rates are holding steady too, she added, at about 5.7 percent.
Dennehy said slower appreciation is beneficial, and should cool the speculative fervor that had crept into the market in 2004.
But maybe it’s less a matter of price bubbles and more a matter of irrational expectations on the part of home sellers. After all, the opening bid, or the estimate of the reasonable starting point for negotiations to buy the La Jolla Farms property, based on the Wall Street Journal’s research, is closer to $21.9 million than the $29 million for which it was listed last year.
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Where It’s Really Affordable:
Need affordable housing? Head to Las Vegas. Escondido-based homebuilder Innovative Communities announced the construction of two affordable communities in Las Vegas: Mesa Verde and La Paloma.
In northwest Las Vegas, Mesa Verde will offer two-story town houses ranging from 1,490 to 1,810 square feet with prices starting in the mid-$200,000s.
La Paloma will include a community of condominiums with one to three bedrooms, starting in the mid-$160,000s.
The communities are still in the construction phase. Pre-sales have begun, and sales trailers on site are set to open June 4.
Innovative Communities has developed homes in Southern California, including High Point in Escondido and Buena Vista in El Centro.
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Mortgage Merge:
American Mortgage Express Financial, a full-service mortgage lender based in San Diego, merged with its sister company, Millennium Funding Group, a national wholesale mortgage lender based in Vancouver, British Columbia. As a result of the January merger and business alignment, American Mortgage Express Financial appointed a new corporate board of directors. Spencer Richardson and Dan King, co-founders of Millennium Funding Group, have transitioned to the roles of chief executive officer and chief operating officer, respectively, of American Mortgage Express.
The new corporate board of directors also includes Judith Dunham, the chairwoman of the board; Linda Dunham, secretary; and Dianne Johnson, managing director.
American Mortgage Express Financial ranked 19th out of 100 in the San Diego Business Journal’s Fastest-Growing Private Companies List in 2004. Its retail mortgage loan production exceeded $3 billion last year.
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Red Cross Moving:
The American Red Cross, San Diego and Imperial Counties chapter, is set to move in late July from its headquarters in Hillcrest to a new 34,500-square-foot facility in Kearny Mesa. The chapter has occupied the Hillcrest location, at 3650 Fifth Ave., since 1950.
The organization purchased its new headquarters at 3950 Calle Fortunada from BRI Cowan LLC for $6.9 million. Chris Stai of San Diego-based Westcore Properties represented the seller. Chuck Wasker of La Jolla-based GVA IPC represented the Red Cross.
The new facility offers substantial parking and will allow the Red Cross to consolidate its operations and warehouse.
Wasker recently represented the Red Cross in six separate transactions valued at more than $15 million, to help the organization maximize its real estate assets. He facilitated the sale of four vacant lots in Kearny Mesa on the corner of Ruffin Road and Ruffin Park for a total of nearly $6.4 million.
Finally, Wasker managed the sale of five acres of vacant land in Lancaster, which had been donated to the organization, for $425,000.
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Another Move:
After nearly 45 years in National City, the Corky McMillin Cos. has officially relocated. Its new corporate headquarters is within a 63,000-square-foot space at the new Liberty Station mixed-use community, developed by McMillin Commercial, in the Point Loma area of San Diego. The move took place in early May over two weekends.
Send residential and commercial real estate news to Heather Bergman via e-mail at hbergman@sdbj.com or via fax at (858) 571-3628. Call her at (858) 277-6359, Ext. 3114.
