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| San Diego building inspector Michael Schwartz (l.) discusses building plans with contractor Oscar Afshari. This is one of
the first homes being built to replace ones lost in last fall's wildfires. Lenny Ignelzi/AP |
U.S. economy still ticking, just barely
GDP rose by only 0.6 percent last quarter, the slowest rate in one year.
from the January 31, 2008 edition
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However, it could be another year or two until housing prices begin to stabilize, Gay says. "For the next six months, we're at the crescendo of the forced sales," he predicts.
On Tuesday, there was continued evidence of the home-price decline. The Standard & Poor's/Case-Shiller home price index fell 2.1 percent in November compared with October. Year over year, prices are down 7.7 percent. Seven metro areas showed double-digit declines.
But in some parts of the country, it's not all doom and gloom. Portland, Ore.; Seattle; and Charlotte, N.C., continue to see modest price increases.
There may also be some signs that San Diego, which went into a housing slowdown earlier than most areas, is starting to improve. For one thing, buyers from Asia and Canada are picking up properties. "The Korean government took restraints off their citizens so they can own property outside their country, so that has helped," says Sherman Harmer Jr., president of Urban Housing Partners Inc. in San Diego. "We have seen a doubling in traffic in the last two months."
Once the economic stimulus package passes Congress, as it is widely expected to, Mr. Harmer thinks that housing in San Diego will benefit from one of the package's provisions, which will increase the size of loans that can be purchased by Fannie Mae, Freddie Mac, and the Federal Housing Administration (FHA). Under the current rules, a high-quality loan can be sold to one of the government agencies if it is under $417,000. Under the new provision, the loan limit would temporarily go up to $729,750.
"It will allow buyers to make $30,000 less in income to qualify for a loan and will result in a $600-a-month smaller payment," Harmer says of the proposed change.
San Diego County is also benefiting from a continued increase in jobs. The county expects to add 14,000 jobs this year, Harmer says. The growth is coming from biotech firms, which are benefiting from state funding of stem-cell research, and clean-tech companies.
Helped by the weaker dollar, tourism in California also continues to grow: Foreigners are flocking to the United States, and it's becoming more expensive for Americans to travel abroad.
Tourism in Los Angeles County also benefited from the higher price of gasoline as tourists stayed closer to home, says Carol Martinez of LA Inc., which promotes tourism.
Later this year, she says, tourism on the West Coast will get a boost when China allows its citizens to visit the US as part of a special visa program for group tours. International travel represents 18 percent of L.A. County's visitors but 30 percent of the tourist spending. "We like people with fat wallets," Ms. Martinez says.
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