Survey finds many would consider moving away

Wednesday, July 20, 2005
Last modified Monday, July 18, 2005 7:33 PM PDT

By: MARK WALKER - Staff Writer

NORTH COUNTY ---- Weary from traffic congestion and wary of ever-increasing housing prices, a majority of respondents in a recent survey of San Diego County residents say they have considered packing up and moving away.

Fifty-six percent of the 900 respondents in a telephone survey of randomly selected households countywide said the current median house price of $593,000 has them pondering a move out of the region. That's up from 39 percent in a similar survey conducted in 2002.

The latest survey, commissioned by the San Diego Association of Governments and conducted in May, found that while housing costs loom large, the No.1 concern for county residents continues to be highway congestion.

"The survey validates that housing and traffic continue to be the top concerns," said Gary Gallegos, executive director of the association of governments, the region's transportation planning and funding agency. "There's also less satisfaction and optimism about the region as a whole."

The association of governments earlier this year reported that motorists on the region's freeways spent nearly 50 hours sitting in traffic during peak commute times in 2004.

The effect of recent local scandals involving elected leaders also emerged in the survey, in which 13 percent cited concerns about confidence in their government representatives, up from 3 percent in 2002.

An 85-page survey report will be detailed in a gathering for reporters Wednesday and presented to the association's board of directors on Friday.

The survey attempts to gauge public opinion in a variety of areas that include environmental and economic issues, transportation, housing and public safety.

Thirty-nine percent of the respondents said they believed San Diego County would be a worse place to live in the future while 18 percent expressed confidence it would improve.

Among 13 specific issues, survey respondents said the most important was an adequate water supply followed by reducing crime and protecting beaches from pollution.

There are other signs that traffic congestion is changing the way business is conducted.

A San Diego firm, TalentFuse, is opening an office in Carlsbad on Wednesday solely because of the difficulties motorists face each day in traveling from North County to San Diego.

TalentFuse provides information technology workers in the high-tech industry and was forced to open the office in North County, said Brian Margarita, the firm's chief executive officer.

"Two or three years ago we didn't need that, but today employers in San Diego won't even consider a resume from North County," he said.

The market for information technology specialists is so hot, he said, that after a couple of months of working in San Diego someone living in North County will become so frustrated with the daily commuting grind that they quit for a similar job closer to home.

"Our San Diego clients say they don't want any resumes from someone north of the 5-805 merge," Margarita said.

The survey also underscores that housing costs are equally important in worker recruitment, according to Ted Owen at the Carlsbad Chamber of Commerce and Gary Knight of the San Diego North Economic Development Council.

"When we talk to businesses about relocating here their greatest concern is affordable housing and how people can get to work," Knight said.

Owen said he recently talked with the leaders of two biotechnology companies who said they each had to spend $3 million to $4 million in unplanned housing subsidies in order to convince workers they considered vital to move here.

"Recruitment is totally tied to the price of housing," Owen said.

Poway Mayor Mickey Cafagna, chairman of the association board of directors, said he fears the survey's suggestion of an overall declining quality of life may represent a battle that has already been lost.

"I had always hoped we could figure out a way to control traffic congestion and housing affordability, but every area of the country seems to reach a point where the quality of life regresses and people begin to leave," he said. "I'm afraid the same thing could happen here."

Other survey findings include:

- 80 percent of respondents would telecommute if their employers allowed it.

- 79 percent of commuters who responded drive alone.

- Flexible work hours were considered the best solution to reducing traffic.

- 48 percent of respondents favor "smart growth" development that locates housing close to transportation centers and jobs.

- 54 percent of commuters said they would pay to use a toll road.

The $35,000 survey was conducted by True North Research and has an error rate of plus or minus 3 percent, the association's Karen Lamphere said.

To get a look at the survey in detail, log on to http:www.sandag.org and click on publications.

Previous bubble burst may provide clues

Last downturn began around time of 1991 Gulf War
By Roger M. Showley
UNION-TRIBUNE STAFF WRITER
July 10, 2005

Benjamin Leaf has witnessed San Diego County's housing market through its ups and downs since he moved here from the East Coast in 1987.

The high school English teacher and avid surfer rented in Ocean Beach for eight years as home prices first soared and then soured in the early 1990s. Amid the market's downturn, he and his wife bought their first home, a 900-square-foot cottage, for $219,500 in May 1995.
"We were pushing the limits for us financially," said Leaf, 40.

But now, a decade later, after remodeling and refinancing, their bet has paid off several times over. The home on Brighton Avenue could fetch as much as $800,000.

"The housing bubble seems to be made of steel," Leaf said. "It may be a bubble that's not going to break."

Such talk defies history. Real estate is a cyclical business, affected by supply, demand, interest rates, economic conditions and personal tastes. And whenever someone thinks things never will change, they have a tendency to change just about then.

Many here recall a time not so long ago when San Diego's housing market soured after a boom that had prompted the same concerns about rising prices and a lack of affordability that are heard today.

The last real estate downturn in San Diego began around the time of the 1991 Persian Gulf War.

Then, the economy was saddled with double-digit interest rates while local jobs tied to defense contracting were evaporating with the close of the Cold War. As workers left for other cities, for-sale signs blossomed throughout the county. Meanwhile, housing developers were overbuilding in vast suburban tracts and a wave of speculative buying had hit the market.

With the exception of concerns about a new round of real estate speculation, those factors aren't present in today's more balanced San Diego economy.

Newspaper headlines at the time captured the swing from a robust market to a dream market for anyone able to buy a house. In 1989, the news was "Housing crisis seen as peril to economy" due to high prices and low affordability. By 1992, the story was "Million-dollar homes go begging."

Ocean Beach, known for its laid-back lifestyle and hippie heritage, is a good example when it comes to assessing the depths of San Diego's real estate downturn in the 1990s and the turnaround that has since propelled housing prices there and elsewhere into the stratosphere.

From the 1988-91 boom through the 1991-97 bust, the area within the 92107 ZIP code that includes Ocean Beach and Sunset Cliffs suffered the biggest crash in single-family resale prices, according to DataQuick Information Systems. Prices there fell 36.1 percent, from $244 to $156 per square foot. Since the bust, prices have shot up. The most recent value for Ocean Beach by square footage was $634 in May.

In the same boom-to-bust period, Poway recorded the lowest price drop in the county. There, per-square-foot prices fell 10.5 percent, from approximately $133 to $119. In May of this year, they stood at $361.

By contrast, DataQuick's monthly reports of overall median housing prices from 1988 to today reveal a decline in the early 1990s that was much less dramatic.

The county's overall median for all housing types fell only 2.4 percent, from a high of $170,000 in 1991 to a low of $166,000 in 1994 before the recovery began.

Market gyrations
Still, the turn of the market saw buyers no longer camped out at new housing tracts waiting to make deposits. Instead, builders offered discounts and sellers offered incentives to potential buyers. Through it all, real estate agents continued to say "now" was a good time to buy or sell.

"I think prices are at a low, interest rates are fabulous and there are so many good deals out there," incoming San Diego Association of Realtors President Marianne Eddy said in July 1993.

San Diego County Assessor Gregory Smith said that from 1992 to 1997, market conditions prompted him to reassess 208,000 properties below their purchase price, about 25 percent of all properties in the county. That action erased roughly $16 billion, or 10 percent of the county's overall valuation, resulting in a proportionate decline in property tax collections.

Since the market rebounded, all but 149 homes, 305 commercial properties and 25 mobile homes have been reassessed back to their purchase price and then some.

Smith, who recently announced the biggest increase in the assessed value of county properties in 25 years, said he doesn't expect a repeat of the 1990s bust because the demand for housing locally remains strong and the supply of homes is tight.
But there are those who are concerned about a real estate market that has pushed many potential buyers to the sidelines because prices are so high.

Marketing consultant Sanford R. Goodkin, who is dean of the local real estate industry with more than 40 years of experience, likened the 1980s housing surge to a "feeding frenzy" and the '90s downturn to a "marketplace pumping the stomach out."

Goodkin said the situation today is like that of a patient with high cholesterol and progressively constricting arteries who could eventually be facing a heart attack.

Looking back, the '90s downturn left the local real estate industry profoundly changed. Many independent, local builders changed jobs or moved operations to other states and regions. Real estate sales offices and franchises merged. As they did nationally, locally based savings-and-loan associations vanished.

Almost-empty condos
Those industry shifts affected individual buyers, sellers and builders in different ways.

One example is developer Michael Kriozere, president of Urban West, who built the 320-unit City Front Terrace at 500 W. Harbor Drive in 1993. He planned the project as condominiums, thinking the recently completed Horton Plaza shopping center, the new San Diego Convention Center and other downtown improvements would persuade people to buy and live downtown.

But when sales opened, almost nobody showed up. Interest rates were high, job security was shaky, and people weren't ready to pioneer downtown living in a big way.

"At that time, you couldn't sell anything," Kriozere recalled. "You couldn't give it away."

He sold his interest to his investors, who then operated the property as an apartment project until new owners took over in 2000. In a much-changed environment, the new owners sold the units as condos.

Barbara English was one of the early City Front Terrace renters. Then, in 2002, she bought a ground-floor unit at the complex for $410,000 that she figures is worth more than $600,000 today.

"My concern is there are so many buildings going up that eventually it's going to have to level off," English said. "I guess that frightens me, but I intend to stay here a long time and it's not going to hurt me."

Back in Ocean Beach, Leaf and his wife, Nora, a lab technician at Scripps Research Institute, also are thinking ahead. They now have two sons, Colin, 6, and William, 3, whose housing futures look grim if they are to remain here.

"If they don't go to medical school and become surgeons," Benjamin Leaf said, "if they don't find high-paying jobs, they won't be able to buy anywhere in Ocean Beach."

Or, perhaps, anywhere in San Diego County.