July 14, 2024
home equity recovery

No doubt,  San Diego is seeing a few green shoots in the housing market. This is especially evident in the low end of the San Diego real estate market. However, I don”t advise joining the overly optimistic crowd who are expecting four years of home value erosion to be quickly recaptured.

In a report from HSH associates, a Pompton Plains, N.J., financial publishing house, they stated:

“According to the Standard & Poor’s Case-Schiller Home Price Index, the popular measurement that tracks changes in the value of residential real estate in 20 metropolitan regions, prices have fallen 32.6 percent, peak to trough, between 2006 and the third quarter of 2009.

“Then from July 2010 through August 2011, a period of 14 months, prices are projected to increase at a rate of about 2.5 percent a year. And from then on out, the company is figuring on a yearly gain of 3 percent.”

With these percentages in mind, let’s look at what happened to the value of a $200,000 condo purchased at the top of the market in July 2006.

By the time the market hit bottom – at least the bottom according to Case-Schiller – that property was worth $134,800, a decline of 32.6 percent. Using HSH’s assumptions, the value of our imaginary house won’t rise back to the $200,000 the buyer originally paid, until 2022. It will be 12.5 more years until this condo is once again worth the  money the buyer forked over.

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1 thought on “San Diego Homeowners – 12 Years To Recapture Lost Equity?

  1. Hey Bob,

    Thanks for the mention! While these figures are speculative — we had to make estimated guesses on future real estate appreciations an such — who knows what could happen in the next decade.

    One thing’s for sure, it’s going to be a while.

    Tim Manni (HSH.com)

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