From the L.A. Times: All Eyes on Home Market in San Diego:

Dramatic rises in home prices, particularly on the West and East coasts, have sparked a nationwide debate about whether the housing market is engulfed in a bubble that is about to burst.

San Diego has become a focal point of that discussion. Those who believe the market is about to implode say San Diego’s cooling could be among the first signs of a pronounced downturn or even a possible crash in California. But housing industry leaders say the slowing in San Diego reflects the normal damping of a sizzling market that made millionaires out of many homeowners and investors. Because San Diego was the region’s hottest market, it’s not surprising that it’s one of the first to simmer down and return to more normal conditions, they say.

John Karevoll, chief analyst at DataQuick Information Services in La Jolla, which tracks home prices, called San Diego “our statistical canary in the mine shaft.”

“It is further along in the current cycle, and what happens there could predict what will happen elsewhere,” he said.

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 — 6.3% on a year-over-year basis as of June.

Amid concern that prices may be peaking, more homeowners are selling, doubling the number of single-family houses and condos on the market from a year ago. Yet fewer are finding takers. Homes that a year or two ago sold virtually overnight — in many cases triggering bidding wars — are on the market for weeks.