San Diego: Southern California real estate barometer?

According to an LA Times article, All Eyes on Home Market in San Diego San Diego was the first ultra hot Southern California real estate market and thus, might be the first Southern California real estate market to hit the 'slowdown' side of the real estate cycle.

So where is the San Diego real estate market? "After more than doubling in the last five years, jumping almost 30% in one 12-month period, San Diego-area home prices are rising more modestly at 6.3% on a year-over-year basis as of June." The article further notes that home sales are not turning into bidding wars. In fact, homes are staying on the market longer and many sellers are even lowering sale prices.

So is the Southern California bubble bursting? Alan Gin, an economics professor at UC San Diego, told the LA Times, "What you've got here is a slowing situation and not much of a chance of a severe downturn," he said. "To have a downturn, you need a triggering event, such as massive job loss."

What does this mean for the rest of Southern California real estate? Orange Country,Ventura County and Los Angeles County have also showed signs of slowing, though not as much as San Diego. Still, it is economically depressed areas of Los Angeles County, for example, that offer the biggest gains in home appreciation. Areas such as, Lawndale, Pico Rivera, or Palmdale are leading the way for Los Angeles County.

With mortgage rates almost certain to rise, the slowdown in the real estate market is almost guaranteed to continue its slowing trend. Without a "triggering event"; however, the slowdown probably won't lead to a bubble burst - at least not in the short term.