Economists predicting price decline over next year

Reports continue to be mixed on what home prices will do in San Diego.

Three weeks ago, the California Association of Realtors projected resale home prices to remain flat or rise slightly in 2011.

A story here today in the San Diego Union-Tribune painted a much different outlook, with an 8.5 percent dip in prices projected for next year.

State and federal buyers' credits were cited for propping up the market earlier in the year, but those credits expired on September 30, nothing was renewed and their has been no talk of another round of credits.

Interest rates will be key over the next weeks and months. If they show signs of rising, then it could prompt buyers to action in order to take advantage of rates that haven't been seen in most peoples' lifetimes.

Rates rise, then fall back

Jim Kubicka, the mortgage advisor at the Coldwell Banker office in Rancho Bernardo, spoke at our weekly meeting on Wednesday and mentioned that interest rates were tracking upward, moving from 4.3 percent earlier in the week to 4.6. They would come back later in the week to 3.375, but they bear watching over the next few weeks.

Many buyers have been on fact-finding missions in recent weeks, and I've come across several who have located homes that they're very interested in. But they just can't pull the trigger on a purchase.

The sense I'm getting is that people believe prices are still going to come down — especially since we're in the slow season with the holidays on the horizon — so they're not feeling an urgency to buy. What they have to be careful of is saving an extra, say, $5,000-$10,000 on the price, but giving it all back — and perhaps more — because of a rise in interest rates.