October 31, 2007 by Gloria Penner  

Homeowners in San Diego lived through a delightfully euphoric period a few years ago when the biggest housing boom in the region’s history created wealth as home equity doubled in three years.  But by 2006, it became clear that the housing bubble was punctured, and home values diminished along with sale prices and number of sales.  Indeed, the high flying housing market had come back to earth.

By October 2006, housing starts showed a sharp decline,  especially in single family homes.   As the building industry slumped, so did the economy.  Construction jobs evaporated, the lending industry weakened, stories of unpaid subprime loans and foreclosures punctuated the news.  Predictions were that San Diego was in for several sluggish years as major segments lost impetus: the real estate industry, the building industry, and home construction.  Additionally, retail paralleled the slowdown with reduced sales of major home appliances and furniture.  San Diegans began to prepare for slimmer budgets and fewer luxuries.

But a change was in the wind – actually and metaphorically.  On October 22, 2007, just a year after the housing market’s downward direction was established, the Santa Ana began blowing through Southern California with disastrous results.  Some estimates put San Diego’s loss at $2 billion.  Lives as well as property were lost.  The emotional damage is incalculable at this point.

Yet, there are signs that out of the misery of the wildfire’s devastation, something positive is about to emerge like the mythical Phoenix which is reborn through fire and emerges out of the ashes.   According to University of San Diego economist Alan Gin, the 2007 wildfires could stimulate some rebuilding effort which will increase construction employment which will stimulate sales which will benefit the economy.  After all, close to 1500 homes were lost to the fires, each accommodating families needing to be sheltered again.  Four years ago when the housing market was burgeoning, there was economic growth after the 2003 fires.  This time around, with a deflated market, the economic boost is needed.  We mourn the losses as we anticipate the gains.

For an in depth look at the future of San Diego’s housing market, make sure to watch Gimme Shelter – A Housing Project on Wednesday, November 14 at 9 p.m. on KPBS cable channel 11, simulcast in HD.