http://www.nctimes.com/articles/2007/12/27/news/top_stories/1_01_3512_26_07.txt

By: ZACH FOX - Staff Writer
Region's year-over-year price drop is country's fourth-highest

San Diego's home prices tumbled more in October than those in any major metropolitan area in the nation, according to a report released Wednesday.

Prices fell by 2.6 percent from September, the highest month-to-month decrease of the 20 metropolitan areas surveyed for Standard & Poor's Case-Shiller Home Price Indices. Local prices dropped more than 11 percent from October 2006, fourth-highest in the nation.

"A 3 percent average (decline) per month equates to a disaster. I do anticipate that until the first month of the second quarter to have small decreases, but I don't think we'll see numbers like that," said Mark Fabela, a real estate agent in Fallbrook.

But Eli Tene, founder of I Short Sale, a Woodland Hills-based firm that deals in distressed properties across the country, said the biggest drop in prices has come since October and has not yet shown up on the Case-Shiller index.

Most real estate agents and analysts said they expect the decline to continue well into 2008.

San Diego's 11.1 percent year-over-year price drop was much higher than the national decline of 6.7 percent, according to the Case-Shiller report. The local depreciation was less severe than just three cities: Miami, Tampa, Fla. and Detroit.

For example, a local home purchased in October 2006 for $500,000 would now cost, on average, about $445,000.

The year-over-year fall and 2.6 percent month-to-month drop were both record declines for San Diego since Case-Shiller started its reports in 1988. It also represented the region's 16th straight month of price decline.

"I think San Diego is taking it on the chin, and I think we'll take the hit hardest early and recover sooner, which isn't a bad thing," said Dan Holbrook, president of Protivity, a Carlsbad-based real estate consultant firm.

Median home price indices support Tene's claim, showing November prices dropped significantly from October.

Case-Shiller's numbers generally show a steeper decline in year-over-year prices than median home prices. Case-Shiller showed an 11.1 percent drop in San Diego's October prices from 2006, and DataQuick's median price indicated a drop of 6.1 percent for the same time.

DataQuick reported last week that November's median home price in San Diego was 10.5 percent lower than a year ago, a 3.8 percent decline from October.

That could mean the Case-Shiller index will show an even greater decline in price for November sales, analysts said.

Median prices are available sooner because the Case-Shiller index compares sales prices with previous sales of the exact same homes, whereas the median home price is the middle point of all sales during the month.

Case-Shiller's report breaks down the change in prices by tiers of high-, mid- and low-end homes. San Diego's low-end homes -- those priced under $462,003 -- have suffered the most from the housing recession, dropping almost 18 percent over the last year. That means a home purchased for $450,000 in 2006 now sells for less than $370,000.

The index for high-end homes -- priced more than $666,652 -- have been the most stable, falling 5.8 percent over the same time, meaning a home worth $1 million a year ago is now worth a little more than $940,000.

Economists with Standard & Poor's, issuer of the Case-Shiller report, expect the housing market will continue its fall until the third quarter of next year, said Maureen Maitland, vice president of Standard & Poor's index analysis.

"Each month we look for a little bit of light at the end of the tunnel and it's just not there. And the fact that we saw multiple new lows shows that we're at the very least at the bottom or that we have not reached the bottom yet," Maitland said.

Most real estate agents agree that prices will continue to fall through next year.

Tene expects to see a larger decline in home prices than many agents' forecasts: up to 20 percent over the next eight months.

"It's not like it's getting better any time soon. Even when we get to the bottom, it's going to be flat for a year or two. We're really five years away from prices going up again," Tene said.

Other real estate agents said they have individually seen better sales over the last few months.

Fabela said September -- with only eight sales in the Fallbrook/Bonsall area -- was the worst month he had ever seen, which might have contributed to October's steep price drop.

He said sales have increased since but prices remain low, something other agents have echoed.

-- Contact staff writer Zach Fox at (760) 740-5412 or zfox@nctimes.com.

Yearly, monthly change in October home prices

The following change shows the percent increase or decrease in home prices, as recorded by the Case-Shiller Home Price Indices. Actual prices are not available because the index only measures in changes in price based off a value set in 2000.

City / Monthly (from 9/07) / Yearly (from 10/06)

Atlanta / -1.3 / -0.7

Boston / -0.8 / -3.6

Charlotte / -0.9 / +4.3

Chicago / -0.8 / -3.2

Cleveland / -1.2 / -4.5

Dallas / -0.8 / -0.1

Denver / -1.7 / -1.8

Detroit / -2.4 / -11.2

Las Vegas / -2.2 / -10.7

Los Angeles / -2.1 / -8.8

Miami / -2.1 / -12.4

Minneapolis / -1.4 / -5.5

New York / -0.4 / -4.1

Phoenix / -2.2 / -10.6

Portland, Ore. / -0.3 / +1.9

San Diego / -2.6 / -11.1

San Francisco / -2.1 / -6.2

Seattle / -0.9 / +3.3

Tampa / -1.8 / -11.8

Washington, D.C. / -1.1 / -7.0