Home prices in San Diego County returned to their free fall in October, according to a report released Tuesday.Prices declined 3 percent in San Diego County —- the fastest rate since February —- according to the respected Case-Shiller index of home values compiled by Standard & Poor’s. It was just the fourth time in the report’s 20-year history the county’s home prices declined by that much; all four declines have occurred since November 2007.
“It was not a good report,” said Maureen Maitland, vice president of index and analysis for Standard & Poor’s. “People are usually looking for silver linings, and there’s really nothing of that sort in this report.”
A bloody October for real estate prices brought San Diego County’s tumble to 36 percent below that 2005 peak and 27 percent off the level a year ago, according to the report. The county’s price index fell to its lowest level since January 2003.
The Case-Shiller index is one of the most closely watched reports because it measures prices against the previous prices for the same houses.
Case-Shiller does not report an index for Riverside County, but an earlier report by the Office of Federal Housing Enterprise Oversight, a government agency, showed a 31.5 percent decline from a year ago for the Riverside-San Bernardino area.
Declines there might be even greater if measured by Case-Shiller. The federal agency’s national numbers have shown smaller declines than Case-Shiller’s because it looks only at Fannie Mae and Freddie Mac, or government-backed, loans.
While too early to definitively name emerging trends, Tuesday’s report indicated that two previously stable markets might soon join the home-price cliff diving.
First, metropolitan areas outside of the “Sun Belt” —- outlined as California, Arizona, Florida and Nevada —- have started to see big declines. Second, San Diego County’s higher-end market, defined by the report as more than $469,174, saw a larger decline in October than the low-end tier, defined as lower than $317,768. October was the first time that happened since prices peaked in 2005.
The high-end market dropped 2.9 percent in one month, compared to 2.8 percent in the low-end.
“It hit the lower class, the subprime market, like a sledgehammer,” said Dave Hopkins, a mortgage broker with Rancho Financial in Rancho Bernardo. “It’s hit the higher-end much slower, so it’s hard to tell when it’s going to really hit and how hard, but it’s coming.”
Still, the low-end continued to get hammered. October’s decline brought the tier’s dive to 46 percent off a 2006 peak.
Over the same time, the high-end has fallen 26 percent.
Also, new pain in areas that have not tumbled so far, such as Portland, Ore., and Seattle, might mean tougher lending qualifications locally. Falling prices tend to correlate with more foreclosures for national banks, straining their balance sheets.
After a couple months of slowing declines, October numbers undermined evidence that prices were approaching a stabilization point. During the summer months, declines dropped below 2 percent per month, bolstering hopes among some analysts that prices might stop falling —- stability deemed necessary to market recovery.
But the trend reversed in August, and price drops have increased since.
“I’ve read reports that we’re on the bottom” of price declines, said Mark Fabela, a real estate agent in Fallbrook. “But we don’t feel it on the streets.”
Contact staff writer Zach Fox at (760) 740-5412 or zfox@nctimes.com. Read his blog, “On the Realside,” atbizblogs.nctimes.com.