Clouds in San Diego!? Housing prices down 5.5% y-o-y

Although I live in Seattle, I frequently "Fantasy Shop" for houses in San Diego. So naturally, yesterday’s release of Zillow’s Q4 data on housing prices piqued my interest when I learned that San Diego housing prices (as measured by our Zindex) were actually DOWN 5.5% in the 4th quarter of 2006 versus a year earlier. However, I did a little data digging (if you’d like to do your own data analysis, feel free to download the San Diego data) and found these interesting tidbits:

• Zillow has Zindex data on 163 different neighborhoods in San Diego, ranging from Del Mar Mesa (Zindex: $2M) to Mission Valley West (Zindex: $294K)
• The median Zindex of those different neighborhoods is $491K, meaning that half of the neighborhoods have homes worth more than that, and half worth less

Now here comes the really interesting part — the average change in home prices in 4Q06 vs 4Q05 for the more expensive neighborhoods (as defined by their Zindex being > $491K) was -2.2%. Meanwhile, the average change in home prices for the less expensive neighborhoods was -5.4%.

As with most income disparities in the US and elsewhere, this gap is even more pronounced at the top. The average change in housing values for all 12 neighborhoods with Zindexes > $1M was a stunning INCREASE of 5.8%. So while, overall, housing prices in San Diego DECLINED 5.5% year over year, the most expensive neighborhoods INCREASED 5.8%.

If you’d like to read further about San Diego — here are a couple blogs written by locals you might find interesting:

• San Diego Blog: Real San Diego Daily
• Kris & Steve Berg’s San Diego Home Blog
• Broker For You
• Dan Melson’s Searchlight Crusade (focused on financing)
• America’s Most Opinionated Mortgage Broker