Housing Market and Stock Market Forecasts

San Diego Housing Market

 

San Diego’s Housing Market Outlook

2020 housing markets were not a year housing expert or Realtor could have forecasted. But as 2020 passes, and we enter 2021, the market may return to normal predictable patterns in the years ahead.

However, it looks like some things have changed and will affect the San Diego housing market for several years. It’s not that San Diego is sick but the shutdowns obviously prevent home showings, new construction, and prevent many buyers from bidding.

 

We should take a moment during this holiday season to reflect on this how this year turned out. And on why housing is in such low supply everywhere.

NAR predicts the housing market will grow strongly next year by as much as 20%, and prices will rise another 7%.
But San Diego’s market differs from where houses are most in demand. As the pandemic passes late next year, Q3 and Q4 will likely see sharp rises in prices and this may encourage homeowners to let go of their properties.

 

If supply is low and demand returns to SD county and workers return to the workplace in the county, how high could prices rise? Please leave your thoughts below.

What’s Deadening the SD County real estate market?

  1. severe shortage of housing at any price point
  2. prolonged Covid 19 induced recession
  3. continued low mortgage rates
  4. more business shutdowns
  5. small business struggles
  6. military spending outlook heading downward
  7. high unemployment
  8. work at home workers heading outward to less expensive regions
  9. high taxes are pushing resident and businesses to other states
  10. SD county tourism has been decimated

Wealthy Buyers looking for Homes

The rampant pandemic poverty in the region doesn’t seem to affect home prices as luxury homes across Southern California are seeing big demand and rising prices. High taxes, high unemployment, and a lack of affordable housing is leading to out-migration of residents, just as it is in Los Angeles, San Francisco and the Bay Area.

Year over year, home sales in SD County decreased 22.9% for houses while attached homes saw sales fall 4.4%. Pending house sales have retracted 16.6% and pending attached homes dropped in sales by 10.4% year over year. Inventory of detached houses fell 49.3% while falling 31.3% for attached homes.

Total dollar volume has dropped dramatically this fall and affordability was reduced by another 2.3% last month.

Median prices for detached houses rose 13.5% year over year, while dropping slightly from October by .3% to a new price of $755,000.

 

Year to date, house prices also rose by 9.5% year over year to $706,000. Sold detached properties fell by 8.5% and appeared for only 25 days on average, down from last year.

Condos and townhouse sales fell by 13.8% from October and are down 4.4% from last November. Condo/townhome prices rose 12.8% from last year and are up 1.2% from October.

Although pandemic worriers are avoiding high-density housing, it seems byers are so desperate, they will buy a condo.

San Diego home price and sales summary for November. Screenshot courtesy of SDAR.

 

San Diego detached house price and sales summary for November. Screenshot courtesy of SDAR.

As you can see from the timeline charts, home sales and prices in the next 3 months will be lower than last year too.
That might suggest that a lack of listings is the key factor driving home prices and sales.

San Diego attached house price and sales summary for November. Screenshot courtesy of SDAR.

 

The housing market trends in San Diego are similar of course to other big cities in California. Los Angeles, San Francisco, San Jose, and Oakland share the same dynamic of outbound population migration and a lack of houses, which are in big demand.

Southern California home sales and prices for October 2020. Screenshot courtesy of CAR.org.

 

Home sold chart courtesy of SDAR.

The median sales of price of houses in San Diego during November dropped .3% to $986,556 yet this price is up 13.5% from last November. Despite the recession and fewer house sales, the long term price trend is up.

San Diego median Home price chart courtesy of SDAR.

New homes listed for sale are down a whopping 29.3% vs last year.

Screenshot courtesy of San Diego Association of Realtors.

Active listings and pending listings are falling precipitously, much faster than last year this time.

Active and pending home listings in San Diego County. Screenshot courtesy of SDAR.

 

Zillow and Redfin show the same upward, but roller coaster ride in home prices. Zillow predicts home prices will rise 8.9% in the next 12 months.

San Diego Home Sales Overview from SDAR

 

Zillow San Diego Home Price Forecast 2021

San Diego home price history timeline chart. Screenshot courtesy of Zillow.

 

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.

 

Too many San Diego residents are considering leaving or have left for Texas, Arizona, or Nevada.  The high cost of living is too stressful for many.  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 a urban intensification plan. Another problem might be NIMBYS and 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.

For Sellers San Diego’s Real Estate Outlook for 2021

2020 brought huge changes. The loss of President Trump and his miltary support will be a big downer, and likely already is impacting the housing market.

High home prices are driven by the California housing shortage crisis. Because of that, we’ll see big home prices right through the spring and really heat up in the summer. 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.

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 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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