Will the “Gold Coast” Lose its Sheen?
April 2008 | by John Graybill

"Available," but will it be "SOLD"?

San Diego's housing market is in the correction phase of the real-estate cycle. At the end of 2007, the median sales price in San Diego of $430,000 dropped 17% from its November 2005 peak of $517,500. Sales volume was down 26%. Nationally, foreclosures are at a record high, and home equity is at a record low. There are lots of gloomy statistics.

However that is not the case for Del Mar's housing market. At the end of 2007, the median sales price in the Del Mar area (92014) of $1,442,000 dropped only 1.6% from the previous year. Solana Beach showed no change in median sales price. La Jolla dropped only 0.1%. Most sections of Carlsbad were up as were Encinitas and Cardiff.

Why don't the North Coastal areas follow suit with San Diego County? Pricing is one reason. Homes prices under $500,000 fell the most. It's rare to find a habitable home in Del Mar for under $500,000. According to First American Title Company's 2008 Real Estate Forecast, this area is different for the following reasons:

Biotech companies in the nearby Torrey Pines area are growing and still lure top researchers;

Nearby areas have low unemployment;

Only a few homes were lost to foreclosure in 2007 (11 in the Del Mar area);

The Carmel Valley area is becoming a new legal power hub;

Vacation-home buyers don't mind short-term market fluctuations.

Realtors refer to the North Coastal area as San Diego's “Gold Coast.” Del Mar has been insulated from much of the housing correction: Many property owners in Del Mar don't need to sell at any particular point in time; They generally have more financial reserves (staying power) than sellers in other areas -- for example, if a seller can't get his or her price, the property can be taken off the market until there are more buyers to bid up the price. Therefore, fewer sales occur during a down market when lower prices would otherwise be recorded.

So the $1,442,000 question is whether this trend will continue. Experts differ. The median price of a home in San Diego rose 210% from 2000 to 2005. A 15-35% drop in price isn't too bad when you've enjoyed a ride of 210% in such a short period. Some economists believe this is a normal breather for an overly robust market. One of San Diego's respected real-estate consultants, Sanford Goodkin, stated that San Diego is capable of shedding another 15%. All bets are off the table if there are multiple bank failures and the economy falls into a long, deep recession. In that case, even the Gold Coast will feel the correction. Most experts believe the housing market will hit bottom in one to three years.