When a housing market slump hits usually the first things to show signs of change are the increased time it takes to sell a home and the decreased price of the home. 

For San Diego County, one of the cities in the nation whose real estate industry grew the fastest during the boom, is now seeing big drops in the prices of their homes.

Home values across San Diego skyrocketed during the housing boom, so much that some homeowners saw their value double or even triple in a very short amount of time.

Now that the housing market is cooling off, San Diego County is seeing some of the sharpest declines in prices that it has seen in a very long time.

An October 12, 2006 article by Kelly Bennett of Voiceofsandiego.org, “Home price drop largest in 13 years,” looks at how home prices have seen tremendous declines lately.

“The overall median home price in the county in September was $22,000 lower than it was last year, dropping 4.42 percent to $476,000, DataQuick Information Systems reported Wednesday.”

“The drop was the biggest dollar-amount plunge observed year-on-year by DataQuick since it started monitoring the San Diego market in 1988.”

The thing with this decline in prices is that everyone was pretty much expecting it. Everyone knew that since prices inflated so much during the boom, they were bound to come down again.

Reports, facts and figures about the declining market have been coming in for weeks.

“The figures didn't come as a surprise to local analysts. The median price first dipped negative year-on-year in June, one of the first tangible signs the booming housing market was quieting. Even before then, reports of slowing in residential construction staffing and projects, slumping sales rates, soaring unsold inventory levels, spikes in foreclosures and the popularity of risky mortgages had market observers waiting for the median price to catch up with the anecdotal evidence. Some say the market's going to turn around again soon -- but others say the end's nowhere in sight.”

Now analysts seem to be split on the idea of whether or not the market is going to decline further or correct itself.

Some are even worried about its effects on our local economy.

“University of San Diego economist Alan Gin has forecasted a slowdown in the local economy for the end of this year and the beginning of 2007, and the weakening housing market plays into that. So does the employment rate, which could take a big hit if the housing market continues on the path it's on, Gin said.”

“‘To me, the more serious aspect is the slowing of activity,’ he said. ‘Fewer sales, fewer commissions, fewer loans -- that will result in job loss in those industries.’”

Since some many jobs are tied to the real estate and housing markets, we could see an increase in unemployment and layoffs, which could have a tremendous effect not only on the job market, but the overall economy as well.

Hopefully this is just an instance of the market correcting itself and no further slowing will take place.