Is San Clemente's Real Estate Market Poised For an Upturn?

Don’t you just hate questions like that?

Reprinted from November 11, 2011 Mike Cotter's SanClementeRealEstateBlog.com

As we draw near the end of 2011, we approach the fifth anniversary of the historic zenith of the San Clemente residential real estate market.

It’s hard to believe that San Clemente’s median home price topped out at about $900,000 in January 2007.  Almost five years later, it’s just under $600,000.

While the finger pointing will probably never end – and there’s plenty of blame to go around – many people would like to know the simple facts of the recent local market decline, and everyone would like to know what the San Clemente market may do next.

Historic facts on local “bubbles” and “bursts”: 

• The latest so-called housing “bubble,” or price rise, began in 1996 and lasted 11 years.  San Clemente market prices grew at an average 15 percent per year.  People are surprised to hear, however, that this was not the longest period of price increases in the last 43 years, nor the sharpest period of local price increases.  The 14-year period starting in 1968 was longer, and the 16 percent per year growth from 1986 to 1989 was sharper.  Funny that no one has ever called these two other periods of dynamic growth “bubbles.”

• The latest so-called “bursting” of the so-called “bubble,” or price decline, began in 2007 and to date has lasted almost five years.  So far, the San Clemente market has lost about eight percent annually.  This is a sharper drop than the only other local declining price period in the last 43 years – the six-year period starting in 1989.

• For the last two years, local prices have declined, but at a rate much lower than the previous three years.  San Clemente home prices on average have been dropping about 3 percent to 4 percent annually lately.  Prices in some areas of town have been flat.  Every neighborhood is its own market.

What the San Clemente market may do next:

Looking at a 43-year chart of San Clemente’s real estate market, prices have technically performed in a “channel,” rising for a while, then falling, within a “range.”  Chartists say that this indicates that current San Clemente home prices have hit bottom.  I say maybe, maybe not.

My crystal ball is cracked, but I went out on a limb last Spring and predicted the local market would be flat for at least two years and will then be hit with rampant inflation due to global and domestic circumstances.  I believe that coming inflation will make the 1970s look like the 1960s.  Bada boom.

For more about the local real estate picture, check out the latest San Clemente market trends at mcotter.com, especially neighborhood statistics.