Is San Diego’s Housing Market Headed For Another Bubble?
Wednesday, June 19, 2013
Aired 6/19/13 on KPBS Midday Edition.
Erik Bruvold, president National University System for Policy Research
Alan Gin, professor of economics at the University of San Diego, and author of USD's Index of Leading Economic Indicators.
Economists are warning that there are signs that housing prices are going up a little too high, a little too quickly.
In May, San Diego home prices were up nearly 24 percent over last year's and California as a whole experienced the biggest year-to-year housing price jump in 33 years.
Alan Gin is a professor of economics at the University of San Diego and author of USD's Index of Leading Economic Indicators. He said the situation is better than when the housing market crashed several years ago.
"We're still below all-time highs and the economy is improving," Gin said.
Gin said key economic indicators like good job growth, low interest rates and lack of construction support the increase in home prices but we still should be cautious.
National University System for Policy Research president Erik Bruvold said he's looking at the ratio of income to home price in San Diego.
"It's usually a one-to-three ratio income to home prices in the rest of the country. In San Diego, it's always been a little bit higher, and now we're on a run up that is at the top of what's sustainable — a one-to-five ratio."
According to real estate market analyst Zillow, in the fourth quarter of 2012 San Diego had one of the highest income to home-price ratios in the country with homeowners paying 44.6 percent more than median incomes.
But Gin said there are safeguards in place. "Banks are more cautious. We don't have the problem with subprime loans," he said.
"It's not the same now," he added. "Less bad loans and less money being borrowed now makes things a little bit safer."