Artificial Intelligence in the Real Estate Market Are you all…
San Diego’s Housing Market Outlook
The housing market in San Diego is consistent with most California cities, but just a tad better for sellers who are getting their price.
It’s the supply side that continues to damage San Diego’s economy and drive prices so high. New listings dropped 26% year over year in January while the average home prices jumped 9.2%. Homes within the $1,000,001 to $1,250,000 range rose 15.2% in price. Inventory levels dropped 38% overall, and down 31% for townhomes.
The overall median Sales Price in San Diego rose slightly 2.6% to $585,000. Condos and Townhomes saw a price growth of 2.4% (now averaging $430,000). Homes in the $250,001 to $500,000 range sold quickest at 28 days. And luxury homes above $5 million took a very long 98 days to sell on average.
San Diego Home Sales Overview from SDAR
You can see the detailed January report at 10K Research
It’s the tale of 2 or 3 real estate tiers in San Diego. The bottom low priced tier has simply dried up while the upper tier is heating up. So the affordability index rise of late translates to nothing much for most buyers and Realtors in San Diego, Oceanside, Carlsbad, La Jolla or Escondido, and most of California.
Lower priced homes in the affordable range have dried up. This chart shows the astonishing evaporation of listings in the $250,000 to $750,000 range.
Detached House Report
New listings grew from previous months which a severe shortage, yet last month’s 2262 units were still 26% less than last January.
SD Attached Market Overview
The attached market which includes condos, row houses and apartments doesn’t have as extreme statistical swings as the detached market.
Zillow is forecasting a price rise of 5% in the next 12 months to $684,000 on average.
Year over year, sales in the attached market grew 18%, while prices rose 5.7% and new listings decreased 3%. Pending sales however are up 18%. Dollar volume of sales reached $1,790,000 billion which is up about 5% from 12 months ago.
Homes for Sale San Diego County
Homes in the range of $250,000 to $1,250,000 dropped 41% ( from to 5927 last November to 3542 last month. Homes priced $1,000,001 to $1,250,000 saw the highest increase in sales (+13.5%). It would seem some of the luxury market is returning.
The housing affordability situation is seemingly better, up 19.4%.
Yet, just like the rest of California, including the Los Angeles housing market, San Francisco housing market along with the Florida housing market, it’s all about demand for affordable units. In San Diego, such housing is very limited. Although San Diego’s economy is fine, it could heat up in 2020, beginning a long stretch of fast rising housing prices.
Declining Inventory Will Put Upward Pressure on Home Prices
But the biggest story is the quick decline in housing inventory. Homes for sale are down 33% from last year and attached homes are down by 23%.
The chart above shows how drastically supply of both attached and detached is declining. If sellers are holding out big prices in 2020 and new construction is limited, it has to mean some very tough times ahead for the people of San Diego.
Average Rent Prices San Diego
Rent prices in the county jumped a little, on top of price elevations the last year. Rent prices in San Diego county are about $1200 per month higher than the national average. The average condo in San Diego rents for $2406 a month.
US and California Looking Good
Overall, the California housing market and US housing markets are still positive. Supply is growing, and interest rates may flatten, so buyers will have opportunity. The US jobs report continues very positive. Right now might be the best time to buy, before the economy really picks up pace again in 2021.
The news coming out of the media really is unjustified. The cost of living and doing business in California are high which is resulting in outmigration. That should help to moderate home prices.
SoCal Counties Market Update
According to CAR, San Diego County had one of the lower rates of sales yet prices continue upward. According to CAR, home sales fell 19% in January vs December, while prices rose almost 1%.
Impressive Job and Income Growth
A look back at last summer: The average income for San Diego households grew 5.6% to $71,481 per year and unemployment was down to 3.1%.
California had another strong month of job growth, adding 44,800 positions in the latest numbers from the Economic Development Department. In year-over-year terms, from August 2017 to August 2018, California’s job growth rate (2.1% or 348,900 jobs) has outstripped the nations (1.6%). Unemployment stayed stable at 4.2% — from report in Beaconecon.
Lack of Housing Availability Hurting San Diego
Last July, SD county did see a loss of jobs, with employers stating they can’t find qualified workers, and some suggest SD’s and California’s economy is in a lull. Is this due to the trade uncertainties in the US or just an elitist corporation looking to import cheap foreigner workers?
Too many San Diego residents are considering leaving or have left for Texas, Arizona, or Nevada. The high cost of living is too stressful some. This all points to a lack of housing being built in the region. Too much red tape to keep people out of paradise. It will be a battle with local politicians until buyers get tired of it. Giving up on buying in San Diego isn’t a good way to go. Stay and fight the politicians, get red tape cut, and let builders know you’re on their side.
Lot’s of reasons to love San Diego, with so much to do with its beautiful climate.
If you’re selling an upscale home in SD County, Dream Homes Magazine is the premier way to showcase the value and prestige of your property.
What’s San Diego’s achilles heel? Lack of housing development and urban intensification. Another problem might be politicians trying to suppress growth in this little piece of heaven. But San Diego’s smack dab in the middle of everything. They’ll be under extreme pressure to stop the resistance and net migration into SD County.
Political Resistance to Population Growth
In the face of huge demand, politicians will be under the gun about putting the Kibosh on SD’s amazing real estate fortune. This factor will ensure prices will rocket out of control. Are local SD County politicians and the California government doing much to grow housing developments inland? Will the exodus of illegal Mexicans ease the issue? Are illegals buying homes?
Demand for homes in San Diego County will never subside. It is one the best places on earth and prices will stay high. For homeowners here, it is one of those infrequent opportunities to cash out and make a killing. You only need a dream and somewhere to go.
Here’s an easy to understand Forecast of San Diego’s real estate future.
San Diego’s Real Estate Forecast is Rosy
Experts believe 2020 will be a quiet year, with some suggesting a recession. Others believe it’s just a lull before the US economy takes off again in 2021. Increased military spending announced by President Trump is no doubt influencing sales and price expectations.
If President Trump wins in 2020, there will be little to stop the US economy. Corporations will begin to spend again but right now they may be boycotting the Trump government in an attempt to open up imports from Asia again.
The election will be a battle. If Joe Biden or Elizabeth Warren should win, the Dems will be in a precarious spot. If imports are opened up again, the flight of capital from the US will create a terrible vacuum. Then the possibility of a stock market crash and housing crash become very real.
High homes are driven by the California housing shortage crisis. Because of that, we’ll see big home prices right through the spring. The same outlook applies to Los Angeles, Orange County, San Jose, Sacramento, Oakland, and the San Francisco Bay Area.
The Three Tiered Market in SD
This excellent chart below courtesy of First Tuesday, shows how demand for lower priced properties is almost a separate world.
It’s an excellent opportunity for rental property investors who want to capitalize on the severe housing and rental property shortage. Property owners near the I5 with waterfront views in La Jolla, Del Mar, Claremont, Solana Beach, and Encinitas may not have much to be concerned with.
As long as the Trump economic surge continues, San Diego’s outlook should be bright.
Factors Driving Real Estate in San Diego?
Here’s 13 factors you should be weighing when buying or selling in San Diego County:
- Housing Demand – High overall demand with new military and Hong Kong buyers
- Housing Supply – Throttled, supply is far from what’s needed
- Mortgage Rates – Continuing Low, especially in light of global economic slackening
- Down Payment and mortgage rules – Banks are withdrawing FHA loans however some are offering down payments as low as 3%
- Regional Employment – Very low and falling
- Buyer Income – low yet rising quickly
- Home Prices – High and rising – out of reach for most buyers – many consider San Diego County homes grossly over-priced
- Demographics – Millennials coming into family and home buying years and their income is growing fast
- Number of Renters – increasing fast
- New Home Construction: slow (100k to 140k per year) and illegal workers being chased out
- Economic-Foreign Trade – Trump expected to raise US GDP and add fuel to incomes and home prices
- President Trump – uncertainty of what Trump will create and how much interference he’ll see
- Taxes on Sale of Home – Tax situation is great for sellers
With the new Trump Era fully engaged, job growth will pick up steam in Southern California. This will drive growth in places like Escondido, Del Mar, Oceanside, Carlsbad, and San Diego.
If you’re thinking of selling, this might be the best time to contact a San Diego Realtor and begin the process. There is no vertical price rise on the graph, or glut of first time buyers with underwater mortgages.
My guess is that we’re in for good times for a while in San Diego. Please do review and share the 2018/2019 Los Angeles housing report , San Francisco housing report and Sacramento reports for info on California’s housing demand.
Case Shiller’s home price index for San Diego is 229 compared to the national average of 185.
San Diego is in Demand
California was just named the 5th largest economy in the world and it’s had a great year in 2016. That’s amazing, but does San Diego’s small business and startup growth compare to that of LA and silicon valley? Some of the data below suggests that despite growth in manufacturing and professional services, talented workers may not want to move to SD county. With the Trump presidency firmly launched, San Diego, San Francisco and Los Angeles may be headed for boom times.
Source: Wallet Hub
Which industries are best for startup businesses in San Diego?
Team Up with the Right Partners
Should San Diego Chamber of Commerce and San Diego Regional Economic Development be doing more? Although some startups have found success, it isn’t easy to succeed especially in digital marketing against tough competition.
Companies would be wise to get connected with companies and investors in other cities, perhaps Canada or the UK to build a wider base of success. By networking and accessing those components that don’t and never will exist in San Diego, SD might be able to compete equally with LA, NY, Boston and Silicon Valley. What shouldn’t be underestimated is the desire of companies in Vancouver or Toronto or London to work with SD companies. Motivation is a key factor in performance.
San Diego’s wonderful leisure climate and opportunities are a powerful draw to bring smart talent, business entrepreneurs, and investors from around the world. All that’s needed are people who believe in San Diego!
Check out SDEDC’s downloadable infographic of the current economic stats (June 2016)
Should SD be Leveraging the 4 Pillars instead of Leaning on Them?
San Diego has 4 key industries including maritime/naval, healthcare, tourism, and research.
US naval fleets and operations are the biggest engine of business and tax revenue in San Diego. The Trump government is spending hundreds of billions of dollars on defense. San Diego still needs to grow and diversify to generate greater opportunity, investment and of course jobs.
According to dot.ca.gov, in 2012, most employment sectors in San Diego enjoyed job growth. And the city’s current 4.2% jobless rate is extraordinary. Most cities can only dream of that. The largest gains occurred in professional services (+5,700 jobs), leisure and hospitality (+5,400 jobs), and retail and wholesale trade (+4,500 jobs), and education and healthcare (+4,300 jobs). The only sector that lost jobs was government (-1,400 jobs).
It’s expected that from 2013 to 2018, growth will average 1.9 % per year and the fastest rates of growth will occur in information and professional and business services with annual rates of 3.8% and 2.9%
Compare SD’s per capital income growth to San Francisco’s pictured here at right, and you can expect more skilled, creative talented IT related workers to choose Palo Alto and Mountainview rather than San Diego to work and live. But for startups, it might be better to stick to Toronto (see Entrepreneur.com’s vote), Vancouver or Charlotte. Boston, LA, San Francisco, and Silicon Valley are expensive. And Sergei Brin of Google agrees.
Don’t launch your startup in Silicon Valley. During the boom cycles, the expectations around the costs – real estate, salaries – the expectations people and employees have … it can be hard to make a scrappy initial business that’s self-sustaining. Silicon Valley is good for scaling that opportunity, providing more capital and allowing more risk.” — Sergei Brin stated at the Global Entrepreneurship Summit June 27, 2016
From 2016 to 2020, SD’s population will grow about 180,000 and per capita income will grow about $4,000 to an average of $58,428. The professional services sector will see the strongest job growth in total of more than 20,000 new jobs.
And in this graphic at right, we discover that per capita income will rise much faster than the California average (other CA counties will do much better).
High wages in San Francisco, Palo Alto, Mountainview, Santa Clara, San Jose will draw high skilled IT workers like flies. However the Bay Area is pricey and the cost of doing business there will eat away at capital and profits. Silicon Valley looks to India for alleys but Donald Trump might throw a monkey wrench into their machine.
Where will you find San Francisco apartments for rent? Are you looking for the best cities to invest in real estate in 2019? Where is the best Vacation destination: Costa Rica or San Diego? Is this he right time to sell your home? Reports suggest people don’t intend to sell their homes so what impact will that have on the US housing construction forecast? In 2020 the mortgage rate forecast is excellent so first time buyers might now get the mortgage financing they need to buy.
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