In today’s economy, housing inventory is often categorized as a traditional “equity”, bank-owned, or short sale property. Suggesting that 2012 has turned the corner on the market, traditional home sales are approaching 60 percent; up from 30 percent in January 2009. Bank-owned properties are now approximately 20 percent of the resale market; down from 60 percent three years ago. And, short sales, notoriously an open-ended and unstructured process, seem to have gained some modicum of efficiency.

The lack of distressed properties, and decision by many equity owners to hold, rather than sell, has resulted in fewer homes available to potential investors. The so-called “shadow inventory” pipeline of at-risk properties has diminished from 33 percent in 2010 to a projected 15 percent for 2013.

These were some statistics shared at the 4th Annual Regional Real Estate Summit, hosted by the San Diego Association of Realtors, that I attended earlier this month. Keynote speakers included Leslie Appleton-Young, Chief Economist for the California Association of Realtors; and Lawrence Yun, Chief Economist for the National Association of Realtors, whom USA Today recently listed among the top 10 economic forecasters in the country.

The third keynote speaker was Gary London, The London Group Realty Advisors, under whom I studied at UCSD-Extension to fulfill requirements for my broker’s license.  Naturally, I was most interested in his analyses and he did not disappoint.

Focusing the discussion on San Diego, Gary noted that while California traditionally has been viewed as northern and southern, it is now “bifurcated” as east and west, generally divided by Interstate-15, with inland corridor markets sharing similar experiences, and coastal communities, up and down the state, sharing a different set of market similarities. While agreeing with the broader general trends presented, he reiterated that real estate remains local.

Previously, Mr. London continued, our growth was spurred by immigration, but the new millennium has found its base in natural increase, suggesting that our population will continue to grow and require expanded services, regardless of political climate. In a turnaround from how San Diego County has been viewed the past four or five decades, we have literally run out of developable land. While rare pieces of “green field” parcels remain, future development will necessarily build up, rather than out.

In peak periods, 15-20,000 housing units per year have been added in San Diego County; housing permits now show about 2,000 in the last couple of years. Vertical, infill and mixed-use properties will trend smaller with higher prices. As Mr. London explained, it will not be a new “bubble”, but a “re-peaking” of high points in the pricing market. This new peak-level pricing, he believes, will result from high demand chasing very limited supply up and down the coast from Seattle to San Diego.

For the moment, Mr. London stressed, this remains a tepid recovery that, realistically, will take another two to three years to normalize. However, housing prices have always evolved higher, reaching new plateaus, despite ups and downs along the way.

San Diego County Treasurer-Tax Collector Dan McAllister shared that about 19,000 property tax refunds representing more than $10.5 million have been processed and mailed to property owners to date this year, due to the large number of negative reassessments. On the plus side, this is down significantly from the 216,000 reassessments granted three years ago. And, while well below the peak of five years ago, assessed valuations are again on the rise and, for the first time in ten years, tax collection rates have climbed to 98%, drastically reducing the number of foreclosures coming on line in San Diego County.

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