San Diego Housing Market 2020

San Diego Housing Market 2020

San Diego’s Housing Market Outlook

It seems there’s nothing normal, rational, or traditional about real estate markets these days. And the San Diego housing market is no exception.

Should you buy a house now in San Diego?  What are the latest home prices here?  This report reveals prices will go higher.  If prices grow 5% on a median price of $800,000 home, that is $40,000 rise in equity each year. In 5 years, that home will be worth $1,021,578. Would you hold onto your home for another $200k?

That makes it a troubling situation where home listings are plummeting and perhaps further. That could set the stage for a fast price rise in 2020 and a worsening of the housing crisis in SD County. Who is buying in SD?  Wealthy baby boomers looking to retire or have a second home, military personnel due to announced trillion dollar spending, and perhaps Asian buyers, spooked by China’s aggressive actions.

While home prices are dropping, listings are plummeting, affordability is improving, and buyer financial capability is improving, sales of houses and condos are not rising. They’re not available, and if they were, buyers can barely afford to buy a home or a condo.

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.

Sales of single family homes in November fell 133 to 1644 from 1771 transactions in October.

Detached House Report

New listings fell from 2458 in October to only 1658 homes in November. That is also much less than the 2,291 listings available last November.

The average price of a house in San Diego fell last month to $848,642 from $852,535 in October. That’s a drop of about $4,000. Last year at this time, house prices were $834,114, or 1.7% less. Zillow forecasts a rise of only 1.7% in 2020, so there must be some hidden factors in the market that have yet to be revealed.

Median home prices have risen 8.8% in 2019, and that rate was not predicted one year ago. Homeowners saw their home equity rise $34,850 in just one year. And it was a year that was supposed to be horrible, followed by a terrible 2020, according to the housing experts.

Screen capture courtesy of SDAR

 

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.

Screen shot courtesy of Zillow.com

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.

Screen capture courtesy of SDAR

Homes sold by price range. Infographic courtesy of SDAR

Housing Affordability

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.

San Diego Housing Affordability. Screen capture courtesy of SDAR

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%.

Home Inventory. Screen capture courtesy of SDAR

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.

San Diego Rent Price Growth Timeline courtesy of Zillow.com

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.

Chart courtesy of SDAR

 

Comparison of So Cal City Home Prices in November. Screen capture courtesy of CAR.org

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.

Cover Photo courtesy of Dream Homes Magazine

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.

Screen capture courtesy of Firstuesday

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.

Should I Sell My San Diego Home?

When is the best time to sell your home in San Diego?  This fall may actually be a good time to sell, if you think the Democrats will win in 2020. If Trump wins, home prices will keep rising, and much faster in 2021.  Home prices will likely climb higher than are anticipated.

To ease this housing crisis, governments could offer incentives for home sellers to let go of their property.  For sure, new housing will not ease this crisis. What will make a difference is Realtors convincing people to sell their homes and move on with their lives.

Factors Driving Real Estate in San Diego?

Here’s 13 factors you should be weighing when buying or selling in San Diego County:

  1. Housing Demand – High overall demand with new military and Hong Kong buyers
  2. Housing Supply – Throttled, supply is far from what’s needed
  3. Mortgage Rates – Continuing Low, especially in light of global economic slackening
  4. Down Payment and mortgage rules – Banks are withdrawing FHA loans however some are offering down payments as low as 3%
  5. Regional Employment – Very low and falling
  6. Buyer Income – low yet rising quickly
  7. Home Prices – High and rising – out of reach for most buyers – many consider San Diego County homes grossly over-priced
  8. Demographics – Millennials coming into family and home buying years and their income is growing fast
  9. Number of Renters – increasing fast
  10. New Home Construction: slow (100k to 140k per year) and illegal workers being chased out
  11. Economic-Foreign Trade – Trump expected to raise US GDP and add fuel to incomes and home prices
  12. President Trump – uncertainty of what Trump will create and how much interference he’ll see
  13. 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 Has All the Charm and a Good Economy – But are You Communicating That Well Enough?

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?

bestbusinesses

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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