Scott Marks 2:48 p.m., May 23
SD Home Prices at Bottom, Says Forbes. Guru Robert Campbell Disagrees
Housing prices have hit bottom in five large cities that were walloped in the real estate mayhem: Las Vegas, Phoenix, San Diego, Miami, and Los Angeles, according to Forbes.com, which used data from Mountain View's Altosresearch.com. In January of this year, 45% of San Diego homes had suffered price reductions; by Sept. 11 of this year, that was down to 30%. Similar declines took place in the other four cities. Five years from now, San Diego metro area prices will be up 25.41%, says Forbes. That's better than the other four cities, whose prices five years from now will range from minus 2.93% (Miami) to up 12.36% (L.A.) San Diego home prices are down 42% from the peak of November, 2005.
San Diego's Robert Campbell, who writes the Campbell Real Estate Timing Letter, doesn't agree with Forbes. "The current upturn in prices may be more short-lived than many believe, or want to believe," says Campbell. Once a prime borrower fails to make a payment, there is now a 94% ability of a default. Between 2000 and 2006, only 55% of loans that fell behind would go into default. Unemployment, which is certain to last for some time, is a major reason for the stark decline of the cure rate, says Campbell. Further, 32% of properties are worth less than the mortgage owed. "Southern California housing prices are likely to fall for the next three to six months," says Campbell.