Now it has attained a more dubious distinction: It's the first major California real estate market to see its median home price fall below year-ago levels, according to data released Wednesday. Another once-sizzling market, Los Angeles County, saw home prices in June rise at their slowest year-over-year rate since 2001.

San Diego County's median price for new and existing homes in June was 1 percent lower than a year ago, a stark contrast to the 20 percent-plus annual gains it was posting during the peak of the boom two years ago, according to data released by DataQuick Information Systems, a San Diego-based real estate research firm.

The question now is whether the county's slump is a harbinger of a deeper decline in prices, or part of a ``soft landing,'' in which prices merely level off in the near future.

Tugging San Diego County into reverse is a tumbling in demand and prices for new condominiums in downtown San Diego, whose rebuilding renaissance sparked a rush of investors and wide-eyed developers. Many other attention-getting U.S. markets, such as Miami, New York and Las Vegas, have also seen sharp decelerations in home price gains -- but have yet to post year-over-year price declines. Some smaller California markets, such as Napa and Marin counties, and markets that never joined the boom, such as Wichita, Kan., and Flint, Mich., have begun to see price depreciation.

In many ways, San Diego has been ground zero for a nationwide debate about whether the housing market is in a speculative bubble.

By M. Sese
http://realestatepress.org