Kimberly Blough 6:28 p.m., March 9
SD home values not in bubble, says Cunningham
Home price rise consistent with economic gains, should continue rise
San Diego home prices, which rose 9.8% between January 2012 and January 2013, are probably not in a bubble, says economist Kelly Cunningham of the National University System Institute for Policy Research. To reach that conclusion, Cunningham compares the home price increase with jobs growth in 20 metro areas. San Diego's 9.8% gain, 9th among the cities, is in line with 2.5% jobs growth, 8th among cities. On the other hand, Phoenix home values shot up 23.2% in the year, highest among the 20 metro areas, but jobs growth has been only 2.4%, 9th best. Las Vegas prices rose 15.3%, 3rd highest, but jobs growth was 2.3%, 10th highest. By contrast, San Diego's home price increase and jobs growth have "been more or less in step. While buyers should be prudent, it seems likely that the price increases will continue and have not yet become separated from underlying conditions," says Cunningham.
The one argument I have with this study is that Phoenix home prices plunged 55% before recovering, and Las Vegas prices plummeted 62%. So both those cities were coming back from much deeper troughs than San Diego. Its home prices dropped a bit more than 40% at the nadir, and are still down 34.7% from the late 2005 peak.
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