SAN DIEGO — For a long time, this was a cruel place for any would-be homeowner who didn't have a wad of bucks or a tolerance for the high-risk, short-term mortgages that some call suicide loans.
Finally, the seemingly unstoppable ascent of real estate here has stopped. Last week, reports showed that the city's median home price dropped 1% in June from a year earlier, the first decline in a decade.
That should be good news for Carmen Buck, a 29-year-old homemaker who has been saving and hoping for a house. But she sees little to celebrate.
"Homes were more in reach a year ago," Buck said.
Prices might have been a bit higher back then, she noted, but interest rates were a whole lot lower.
The long-awaited shift in the market's direction isn't pleasing many others, either. Sellers are chopping prices to get deals done. Buyers worry that values will continue to fall, putting their investment at risk. There's widespread uncertainty, and some anxiety, about what happens next.
San Diego had the wildest run-up among major California cities, with prices tripling since the mid-1990s. The boom was stoked by cheap loans, changes in tax law, creative financing and a generalized mania that fed upon itself.
The market also began to fade first in San Diego. The craziness seemed to peak about two years ago, when bidders routinely submitted letters saying that they and their children would be forever honored if the seller would consent to choose them.
Whatever happens here, optimists and pessimists agree, will happen later in the rest of the state.
That's about the only thing everyone agrees on. The size of the coming hangover is a particularly contentious matter.
Most analysts and people in the real estate industry insist it will be mild. The housing bears say the bulls are either misguided, uninformed or shills.
At a Century 21 sales office in the Ocean Beach neighborhood, broker David Davis said the market had already bottomed out. The spring was weak, he acknowledged, averaging only one or two sales a month -- half the office's usual rate.
But things are already back on track, Davis said. He expects four sales this month, about normal.
The last San Diego real estate collapse, which hit in the early 1990s, was triggered by convulsions in the aerospace industry. The post-Cold War downturn caused widespread unemployment and a generalized exodus from much of Southern California. High interest rates contributed to the misery.
