COMMENTARY
July 30, 2007

San Diego County Real Estate Market Solid Amid National Concerns

As printed by the San Diego Daily Transcript on July 30, 2007

By Supervisor Pam Slater-Price, Third District

There are two sides to the real estate market in San Diego County: the flagging housing prices that have forced sellers into a stand-off with buyers and the burgeoning commercial property sector which continues to show gains.

The hardest hit in valuation is buyers who entered the market during the 2005-06 booms.

Sadly for them, the county Assessor’s Office reduced the value of more than 11,500 residential properties this year. Owners hurt the most by the shaky market live in condominium conversions, new condominium projects and new subdivisions.

Yet overall, San Diego County’s real estate market continues to impress even as the national average declines during this correction period for an over inflated market.

What does that mean for local governments and the services you depend on, like libraries, parks and road repair?

San Diego County Assessor Greg Smith recently released a surprising report. It showed that the assessed value of all taxable property in San Diego County increased by $33.5 billion over the previous year to $391.4 billion – a 9.36 percent increase. That increase includes home parcels, businesses, boats, mobile homes, and aircraft.

The County’s assessed value benefits 387 different taxing jurisdictions.

This year, the county will collect $4.4 billion in property taxes which gets divided as such: 13.2 percent for the County, 12.4 percent for cities, 3.6 percent for special districts and 43.3 percent for schools.

The largest taxpayer was San Diego Gas & Electric Co. at $38 million in taxes. Southern California Edison Co. ran a distant second with $19 million.

For San Diego County’s part, about 20 percent of its budget is property and other taxes. In June, my colleagues and I on the San Diego County Board of Supervisors passed a balanced county budget of $4.68 billion for the 2007-08 fiscal year, which includes an emergency fund for times of economic uncertainty of $760 million.

New construction and sales in the residential sector slowed, and nationally new constructions have dropped by more than 13 percent. But the commercial and industrial market in San Diego County continued to be strong, and carry the day for municipalities. The largest property valued this year was the Sheraton Harbor Island Hotel at $362.3 million.

Meanwhile in the housing market, the median home price in June was down 1.9 percent over last year, according to DataQuick. This might indicate a struggling workforce unable to purchase property in this weakened market, but more than 4,000 new jobs were added between May 2006 and May 2007, according to the state Employment Development Department. Whether these are jobs that allow an employee to buy a home remains to be seen.

Still, it stands to reason that home buyers are taking advantage of this weakened market, and lying in wait as long as necessary before prices bounce back.

But what is clear today and into the future, is the interdependence between a robust economy, and a local municipality’s ability to provide services. In some cases, like the Board of Supervisors, we have saved for a rainy day. But a booming real estate market can help to keep your libraries open longer and your potholes fixed sooner.

Doing things better, cheaper and faster becomes even more important in a down economy.

When I was first elected to the San Diego County Board of Supervisors in 1992, the median price for a single detached home was $205,482. By last year, the median price more than doubled to $507,000. And while prices went down last month, $495,000 for a median price is hardly what many envision as the proverbial bubble burst.

In fact, it’s hardly a trickle.

Property owners who disagree with new values of their homes and who can support a lower value must file an assessment appeal before November 30, 2007. Necessary application forms are available from the Clerk of the Assessment Appeals Board at (619) 531-5777 or online at www.sdcounty.ca.gov/cob.