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Daily Business Report — Dec. 16, 2009

County’s November Housing Market Improves

Home sales in San Diego County in November jumped by 17.8 percent over the same month of 2008 while median home prices climbed by 6.6 percent over the same period, reports MDA DataQuick of San Diego. Home sales last month totaled 3,148 compared to 2,673 in November 2008. Median home prices were pegged at $325,000 last month while the median  a year ago was $305,000.

Home sales this past October totaled 3,671 and the median was $325,000.

DataQuick said the Southern California housing market (San Diego, Los Angeles, Riverside, Ventura, San Bernardino and Orange counties) continued its step-by-step climb up from the January-February bottom as both sales and prices saw gains last month.

A total of 19,181 new and resale homes sold in Southern California in November. That was down 13.3 percent from October’s 22,132, and up 14.7 percent from 16,720 for November 2008. Sales almost always decline from October to November. The year-over-year increase was the 17th in a row. In MDA DataQuick’s statistics, which go back to 1988, the average November had 22,312 sales.

Sales of newly built homes saw an unexpected jump last month. A total of 2,039 new homes were sold, the highest of any month so far this year, and 25.5 percent ahead of 1,625 for November 2008.

DataQuick said sales have been stoked in recent months by several factors: A federal tax credit for first-time buyers, which had been set to expire last month before it was extended and expanded; robust investor activity, especially inland; super-low mortgage rates; the availability of government-insured, low-down-payment mortgages for first-time buyers; and the allure of a potential “deal” on a distressed property.

“This market is still really lopsided,” said John Walsh, MDA DataQuick president. “Foreclosures and short sales are huge factors. There’s still not a lot of discretionary buying and selling outside the more affordable markets. Anybody who can sit tight is doing just that. The market won’t fully rebalance itself until financing becomes available for the higher price ranges.”

Mortgages above $417,000 – formerly the definition of a jumbo loan – accounted for 15 percent of all home purchase loans, roughly the same as it has been since June. Those loans made up nearly 40 percent of purchases before the August 2007 credit crunch hit.

Only 4.1 percent of last month’s home purchase loans were adjustable-rate mortgages. A higher ARM rate is part of a healthy market. From 2000 through 2005, 47 percent of the Southland home purchases were financed with an ARM.

Foreclosure resales – houses and condos sold in November that had been foreclosed on in the prior 12 months – made up 39.1 percent of all Southland resales. That was the lowest since May 2008 when it was also 39.1 percent. It hit a high of 56.7 percent last February.

Government-insured FHA financing continued to play a vital role in the Southland’s housing market. Last month 38.1 percent of all purchase loans were FHA-insured mortgages, the same as in October and up from 34.5 percent a year ago. Two years ago FHA accounted for just 2.5 percent of purchase loans.

Absentee buyers purchased 19.1 percent of all homes sold last month, while buyers who appeared to have paid all cash – meaning there was no corresponding purchase loan – accounted for 24.4 percent of sales, based on an analysis of public records.

The median price paid for a home in Southern California was $285,000 last month. That was up 1.8 percent from $280,000 for the month before, and the same as November 2008. Last month was the first since September 2007 that did not see a year-over-year decline in the median.

The typical monthly mortgage payment that Southland buyers committed themselves to paying was $1,207 last month, up from $1,196 for October, and down from $1,380 for November a year ago. Adjusted for inflation, current payments were 45.6 percent below typical payments in the spring of 1989, the peak of the prior real estate cycle. They were 55.4 percent below the current cycle’s peak in July 2007.

The Number of New Tech Start-Up Companies Declines

The number of new technology companies created in the San Diego region in the third quarter of 2009 totaled 78 — a decline of 24 percent from the previous quarter and up 18 percent from the 66 startups in the first quarter of the year, according to the CONNECT Innovation Report released this week. The report measures new business creation in the life science and technology-based sectors both statewide and the San Diego region.

Other Report Highlights:

• Technology start-ups for all of California were down 15 percent in Q3 2009 with 617 new companies established compared to the previous quarter’s 729 start-ups.

• Twenty-nine new pharma/biotech/medical device businesses were created in San Diego in Q3 2009.  This represents over 20 percent of all California life sciences start-ups, the most of any county across the state.

• New data from PricewaterhouseCoopers/National Venture Capital Association Moneytree latest report shows that Q2 2009 VC funding to

San Diego companies jumped over 170 percent to $252 million from $92 million in Q1 2009 — much higher than the 90 percent previously reported.

• In Q3 2009, 32 local companies received a total of $236 million in

venture funding — an increase of 18 percent from Q3 2008. The life sciences sector received the majority of the VC funding in Q3 2009, nearly 70 percent, with $155 million in funds invested.

• San Diego led nation in the proportion (67 percent) of total VC financing

going to start-ups and early stage companies. This represents an increase

from Q2 2009 when 57 percent of invested funds went to seed and early stage companies.

The top ten investments in San Diego companies for Q3 2009 were:

Roka Bioscience Inc. : $37.2 million

Zogenix Inc. : $36 million

Intellikine Inc. : $25.5 million

DriveCam Inc. : $19 million

Liquid Environmental Solutions Corp. : $15 million

BeneChill Inc. : $13.5 million

Rayspan Corp. : $12.5 million

Achates Power Inc. : $12.1 million

MedSphere Systems Corp. :$12 million

Altair Therapeutics Inc. :  $11.0 million

While VC funding in San Diego totaled $580 million for the first three quarters of 2009, venture investment in 2009 is likely to fall well below the $1.2 billion invested in 2008 and $2 billion invested in 2007, according to the CONNECT report.

National Institute of Health (NIH) grant awards in San Diego jumped 44 percent compared to last quarter to a new high of over $383 million.

National Science Foundation (NSF) grant funding doubled in Q3 2009 to $114.5 million from $56 million in Q2 2009.

Mergers and acquisitions were up in San Diego in Q3 2009 with 32 deals closed compared to 24 deals closed in the Q2 2009.  Nearly 25 percent of all the M&A deals closed in Southern California involved San Diego companies in the third quarter.

San Diego patent applications and patents granted were up approximately 14 percent compared to Q2 2009. San Diego accounted for 17 percent of all patents filed and 12 percent of patents granted in California in Q3 2009.

Latest available data showed employment and average weekly wages paid by private research institutions in San Diego continued to fall from Q4 2008 to Q1 2009.

Procopio Hosts Interactive Session in Copenhagen

The San Diego law firm of Procopio, Cory, Hargreaves & Savitch LLP will partner with OpenOceans Global and the University of San Diego School of Law’s Energy Policy Initiatives Center to present a live, interactive update from Copenhagen on the United Nations Framework Convention on Climate Change Conference of the Parties (COP-15).  The event will take place on Thursday (Dec. 17) at the USD Joan B. Kroc Institute of Peace and Justice. Following the broadcast, San Diego Mayor Jerry Sanders will address the audience in-person and be available after his remarks for a brief meet and greet with the audience.

This month’s Climate Conference in Copenhagen seeks to reach a global climate change deal to follow on the first phase of the UN’s Kyoto Protocol, which expires in 2012. Governor Schwarzenegger’s Climate Team will be among the exclusive group of duly nominated representatives of parties and observer states to attend the conference.  Procopio said that the members of the Climate Team have agreed to participate in an interactive panel discussion to be transmitted live from Copenhagen to an audience at USD. The Climate Team will provide their perspectives on how the proceedings in Copenhagen might affect U.S. and California policies, including national emissions targets, cap-and-trade policies and more.

The Climate Team members participating in the broadcast from Copenhagen include Linda Adams, Secretary for Environmental Protection; Mike Chrisman, Secretary for Natural Resources; A.G. Kawamura, Secretary of California Department of Food and Agriculture; and Mary Nichols, Chairman of the California Air Resources Board. Carl Nettleton of OpenOceans Global will moderate the event from Copenhagen and Procopio Partner John Lormon will moderate from San Diego.

Online registration to the event is available at www.procopio.com/events.

Breakfast With The Mayor

Mayor Jerry Sanders will discuss past, present and future city government reforms that have and will shape the San Diego region during NAOP San Diego’s fourth annual Breakfast with the Mayor forum on Jan. 19. It will be held at the Mariott San Diego/Del Mar, 11966 El Camino Real in San Diego. Registration is at 7:30 a.m. and the program runs from 8 to 9:15 a.m. The cost is $40 for members and $60 for nonmembers. Attendees may pay online at naiopsd.org. NAIOP San Diego is a chapter of NAIOP, the Commercial Real Estate Development Association, and it comprises more than 500 members serving the local San Diego market.

Jones Lang LaSalle Achieves LEED Certification for Office

The San Diego office of Jones Lang LaSalle has achieved Leadership in Energy and Environmental Design (LEED) Silver certification from the U.S. Green Building Council for the interior build-out of its 15,000-square-foot office located on the fourth floor of La Jolla Commons, a LEED Gold rated office building located at 4747 Executive Drive. Some of the strategies Jones Lang LaSalle’s staff used to attain Silver certification for the office include diverting more than 75 percent of construction waste from landfills; using reclaimed furniture and supplementing with furniture containing high percentages of recycled materials; specifying non-volatile organic compound paints, adhesives and sealants; and implementing an extensive office-wide recycling program. Lynne Marrs from Jones Lang LaSalle led the interior build-out project.

Federal Contracts . . .

L-3 Communications RCCS in San Diego won a $42,500 federal contract from the U.S. Naval Supply Systems Command, Mechanicsburg, Pa., for the repair or modification of data processing terminals.

Tetra Tech Em Inc. in San Diego won a $2,365.96 federal contract from the U.S. Department of Veterans AffairsNational Energy Business Center, Seven Hills, Ohio, for the feasibility evaluation of a solar photovoltaic system. Place of performance will be in Los Angeles.

(Source: Targeted News Service)

The Daily Business Report is a product of REP Publishing Inc., publisher of San Diego Metropolitan magazine and the North Park News.

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