I have been reviewing the various sources of data available to provide a snapshot of the current market as well as possible future direction of the real estate market.  As a Real Estate Agent in the San Diego area that works with out of state buyers, I am often asked how much further I expect San Diego houses to decline.  Buyers are surprised when I tell them the bottom of our market was in April 2009.  Most buyers today are paying anywhere from 5 to 10 percent premium over what I consider the lows.  We have recently been refinancing previous home buyers who purchased in the past 12 months and typically are seeing appraisals coming in approximately 5 percent above the purchase prices. 

I continue to read how the U.S. housing market as well as many parts of the country are still showing price declines and or are seeing a second dip in home prices.  When you review the existing Data, you will find California, and San Diego specifically were typically well ahead of the rest of the country in home appreciation, as well as the subsequent huge price declines.  Having experienced this, my feeling is you will see our markets lead the way out of the bottom.  I have cut and pasted an excerpt from a recent Forbes article I found

"One way or another the market must clear, and as it has so often in the past, California appears to be leading the way. Los Angeles, San Diego and San Francisco have all had respectable years thus far."

Since April 2009 lows, the San Diego market has experienced month over month price appreciation for 14 consecutive months according to the Case Schiller index.  Over this period San Diego has appreciated nearly 12%.  Of the 20 cities tracked by this report, San Diego was only second to San Francisco's amazing 18% return.

I reviewed the latest Zillow Home Value Index report for housing through May 31st.  Six out of the top ten cities in Year over Year home appreciation were located in California.  San Diego topped all California Cities with 7.0% appreciation second only to Virginia Beach.  The following is the order of appreciation:

Virginia Beach   7.7%
San Diego        7.0%
San Francisco   5.9%
Los Angeles      5.3%
San Jose          4.7%
Santa Barbara   4.5%
Ventura           4.0%
U.S. Avg.        -3.8%

Within the San Diego market you will find certain areas are showing large appreciation while other areas are still showing price declines.  For the most part, the more desirable coastal areas all showed better than average appreciation while the areas in the east part of the county showed less than average appreciation.  The most expensive areas of the county typically showed the worst price appreciation, due to lack of buyers in the multi million dollar home category. 

I would not bet on home prices to return another 12 month run of 12 percent price appreciation.   My best advice to home buyers and investors is to project out 60 months.  Most home buyers will look back at this period of time and wished they had purchased another home come 2015. 

Feel free to comment on this or provide any relevant data.