Another good article on the outlook for San Diego.

Best quotes:

Leamer said housing markets tend to go up and down, but cycles are different for price than for sales volume. Typically, sales fall first and fast following booms, while prices decline later and drift down slowly.

“The volume cycle has already made a major adjustment,” he said. “We may not be on the bottom, but we aren’t far off the bottom.”

In April, San Diego County’s supply reached 10 months, Appleton-Young said… Appleton-Young said San Diego County’s supply reached a record 23 months in February 1992.

“You’re not having that cut-and-run mentality like you had in the 1990s in L.A. County when so many people lost their jobs that they had to get out,” Appleton-Young said.

During the 1990s, the end of the Cold War led to a significant scale-back of the military, and much of the impact was felt across Southern California. Several bases were closed and thousands of aerospace jobs axed, triggering a six-year-long recession worse than any other the region has had.

In response, home values in the Los Angeles area declined 27 percent, Leamer said.

From 1991 to 1996, the median price in San Diego County —- which was insulated from the base closures that hammered communities elsewhere —- fell 9 percent, according to the California Association of Realtors.

“In a normal market, people buy homes as places to live,” he said. “In abnormal times, people buy homes as investments.”

Economists and real estate analysts are in agreement that a correcting down cycle is under way. They disagree on how long it will last.

Lund, the broker, predicts 18 more months, while Appleton-Young’s crystal ball says 18 to 24 months.