While traffic has slowed for local builders and real estate agents after the Sept. 11 attacks on the United States, they are reporting increases in the number of calls and visits to their new-home sites and offices.
Russ Valone, president of San Diego-based MarketPoint Realty Advisors, which tracks the new housing market on a quarterly basis, said sales were down about 35 to 37 percent in the third quarter of this year compared to the previous two quarters. The third quarter MarketPoint studied ended around Sept. 11.
“The third quarter of this year was still one of the strongest quarters of the last 11 years,” Valone said. He said it is common for the third quarter to be less active than the previous two.
“Obviously, there’s been some slowing in the marketplace. The impact to some of our industries may show up in the October numbers,” Valone said. “San Diego and Southern California have an immense housing shortage. Sept. 11 has not changed that.”
Bob Schwartz, a broker associate and certified residential specialist for Century 21 Award in San Diego, said, “In the local market, I assume people were nervous and afraid (after Sept. 11). But the week after, I saw things pick up a bit.”
Schwartz sells homes in San Diego County from East County to Mission Valley. He said anything under $400,000 is still selling quickly, but is taking longer than it did in the summer. Buyers are taking advantage of the low mortgage rates, he said.
Baxter Scruggs, managing partner at the San Diego Mortgage Network, said mortgage rates are currently in the mid-6 percent range for a 30-year fixed loan on a home priced at or below $275,000. Interest rates are at a 37-year low.
“The market in general is definitely slower than the spring and summer,” Scruggs said. “It’s hard to say whether Sept. 11 is affecting people.”
Seasonal Lull
Scruggs said there probably are a number of factors affecting consumers’ decisions to buy new homes. Around September and October, he said business typically slows down for the holiday season from Thanksgiving to New Year’s Day.
“Sept. 11 still isn’t helping anything,” he said. “The economy was teetering on a recession anyway. What the 11th did was throw the economy into a recession much faster, but that sets it up for a faster recovery. The market hasn’t seen a drop-off in prices, but some drop off in activity,”
In 1989 and 1990, Scruggs said the rest of the country was experiencing economic problems, which spread to San Diego for the next three to four years. But San Diego is in a better position employment-wise. The employment base is better at absorbing economic problems, he said.
“San Diego is still better-priced than other California coastal cities. We may see appreciation slow down, but don’t expect to see price drops for three to four years like the early ’90s,” Scruggs said.
Phillis Dattilo, a San Diego real estate agent with Prudential California Realty, said Sept. 11 had an impact.
“There’s no doubt about it. I think everybody kind of stepped back a little bit,” she said. “The stock market made a big difference too. People who had money for a down payment in the stock market lost a lot of money.”
Dattilo said it is taking longer to sell homes, but she hasn’t seen prices drop. Hesitation in buying a home has been in all price ranges, she said.
Dattilo brings in business by referral and works on transactions all around the county. Calls have been picking up in the last week or two, she said.
“I’m starting to see more interest because of the rates. I hope it brings out more people who are renting because they’re really paying a premium in San Diego,” she said.
Gradual Rebound
Martin Lighterink, San Diego division president for Los Angeles-based homebuilder KB Home, said traffic and sales numbers at new housing developments have gone up each week since the terrorist attacks.
“With that event, people put more of a focus on having some permanence and being in a neighborhood. People are more likely to make purchases like that than to take a trip to Europe,” Lighterink said. “Even with the events of Sept. 11, interest rates continue to fall. It’s an opportunity to buy something you wouldn’t have been able to buy a year ago.” Mortgage rates bring monthly house payments for some buyers close what they’re paying in rent, he said. Currently, a $1,700 monthly payment can be arranged for a 2,500-square-foot house in Oceanside, while rents for some apartments are $1,400 per month, according to Lighterink.
“Actually, I think we see a lot of people out buying today that weren’t buying in the summer,” Lighterink said.
Putting the San Diego housing market’s recent slowing into perspective, Valone said the county averaged about 8,400 new homes per year from 1997 to 1999, and in 2000 a little more than 10,000 homes were built.
“I don’t think we’ll hit 10,000 this year, but more than the ’97-’99 cycle,” he said.
Valone said he doesn’t anticipate builders will slow down, but they may be more conservative about the numbers of homes released in each new phase of a community, going from 12 to 15 homes in a phase to nine or 10.
According to the Construction Industry Research Board in California, which tracks building permits, 7,355 building permits were issued in San Diego County for single-family homes through the end of September.
A total of 632 permits were issued in September, down from 819 in August. Only one month so far in 2001 had a lower number of permits than September; 592 were issued in March.
According to Multiple Listing Service, statistics for San Diego County, more homes were sold in August than September. In August, 1,884 homes were sold, and in September, 1,483 were sold. In 2000, 2,248 homes were sold in August and 2,047 were sold in September.
Year-to-date, 16,843 homes have been sold, compared to 18,226 in 2000. This year home sales total $6.46 billion as of the end of September, compared to $6.51 billion through September 2000.
