The latest numbers show that home sales fell 16 percent in San Diego last month compared to a year ago.
Marney Cox is an economist with the San Diego Association of Governments. He says the new information changes predictions about the housing market.
Cox : What this new data shows is that home sales weakness has broached over into the existing home sales, and that's actually the largest part of the market. That represents 84 percent of sales that takes place each year. New sales represent only about 16 percent. So this new data says there's potential further downsliding than what we've seen so far.
The slump in the San Diego real estate market is affecting the local economy as growth continues to slow down.
Cox : Where that ripples into is not only just the construction workers but also the escrow and finance people who take care of that and also into the retail sector who are selling all of the furniture and carpet and stuff like that to those new homes. So it's beginning to broaden now, beginning to affect many other industries.
Cox says originally real estate watchers believed the lagging housing market might bottom out this summer when home buying season is in full bloom. But the fact that existing home sales are falling means that the softness is likely to continue into 2008. He says there are two scenarios of how the market might play out.
Cox : If it remains relatively slow, the air is let out slowly. We'll probably see another 5, maybe 8 percent drop in the medium price of homes. If things come crashing down, meaning we actually go into recession, unemployment rates rise, there's a lot of job losses in the San Diego area. We're likely to see a 15 to 20 percent drop in home prices.
Still, Cox says he doesn't think there will be a housing market crash in San Diego.
