Real Estate - Nationwide

Interest rates are rising, inventory increasing and home sales cooling off -- that seems to be the theme in some of the nation's most expensive housing markets. But in San Diego some areas are still doing well and some other parts of the country are stabilizing.

"The slowdown is not uniform throughout [San Diego] County," says Alan Nevin, director of economic research for Marketpointe Realty Advisors.

The National Association of Realtors (NAR) is now reporting that the national market is stabilizing based on a slight increase in May in the index of pending home sales which is considered to be a leading gauge for the housing sector. NAR is calling for a "soft landing for the housing sector."

The Pending Home Sales Index showed a 1.3 percent increase, bringing the index to a level of 113.4 from an index of 111.9 in April. However, the index was slightly more than 10 percent lower than May 2005.

The index is based on pending sales of existing homes. A sale is pending when the contract has been signed but the transaction has not closed.

According to NAR, an index of 100 is equal to the average level of contract activity during 2001 which started five consecutive record years for existing-home sales.

In San Diego, Nevin says there are a number of new attached and detached housing project areas that are doing very well while other areas in the county are lagging in sales.

"Generally the product that is well designed and priced right continues to sell," says Nevin.

He says there are no particular geographical boundaries that separate communities; rather it is a case-by-case situation. Some housing products are selling and others aren't. The reason may baffle you even more, Nevin speculates, "There were some projects that were over-priced and the sellers have not reduced their prices fast enough, but there are also projects at the high end that are selling very well."

Those producing homes in the million-dollar-plus range still are selling but Nevin points out that there aren't as many of them being built all at once.

"Resale [properties] are off 15, maybe 20 percent. It's really a matter of there being too many listings right now, but the listings will decline over the next three to four months as people take their homes off the market," says Nevin.

He claims it is a very dependable pattern that is about to set in. "What happens is that you get a whole bunch of people who think their homes are worth gold and they put them up for sale for high prices and then they sit for months and months," explains Nevin.

He adds that many of these hopeful sellers were really just trying to test the waters. "They didn't really want to sell anyhow. So they pull them off the market and then the market gets back into equilibrium and that's what's happening right now," he says.

You've likely heard the buzz words "it's a market correction" that we're experiencing -- and we all know that being corrected is often a hard pill to swallow. So take a big gulp and understand that if you're putting your home up for sale you're likely not going to get the incredibly high market prices seen in recent years. But Nevin says it's not doom and gloom as had been reported nationally. Nevin says resale homes that are appropriately priced will sell.

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