What's Happening in the San Diego Housing Market?

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Real Estate Agent with RE/MAX Associates CA BRE# 01048160

What's Happening in the San Diego Housing Market?

Appartment Building

New home sales dropped in February to record low levels across the US and San Diego shares in the new statistics. So what's behind all this as re-sales and prices vacillate only a little up and down each month giving the appearance of a more stable housing market.

Distressed properties , specifically the REO's  are being sold at prices that make it difficult for Builders' to compete. Builders have to pay some very high fees to local governments that makes it somewhat problematic  to come out of the ground unless current market prices  can justify doing so.

Builders like any other business have to make a profit to continue to be in business.

Building Homes in San Diego

From all accounts, at least here in San Diego, the lower sales, may be just an aberration and not a trend  that should be of concern. What is also needing to be considered is that San Diego Building permits in San Diego county are actually up triple digits. In fact San Diego is a standout in the state where building permit numbers are down double digits.

You may remember a post that I wrote this past month referring to an article by Kenneth Harney about the new Federal Housing Report and the de-emphasis on home ownership and a new focus on multi family homes and apartments.

It seems the builders got that message clearly enough as the big increase in building permits were actually for multi-family and apartments and not single family homes.

The Single family home permits dropped. So there is a sort of mixed message here. On one hand we will likely see more jobs return to the construction industry here in the county. And we see that investors are still making up a sizable percentage of the re-sale ( distressed ) homes sales, and when you couple this with the difficulty of many would be Buyers in qualifying and securing home loans, my reaction is that the pendulum is beginning to swing too far in the other direction. My prediction for a robust Spring and Summer housing re-sale market is beginning to raise some doubt that I might have been a bit too optimistic. 

 

 

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Ambassador
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Virginia Hepp - Mesquite NV REALTOR
ERA - Mesquite NV Homes For Sale - Mesquite, NV
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It does not sound like you were too optimistic.  It sounds positive.  Small changes, ups and downs in different areas of the market - things are moving around.

I have been watching some small neighborhoods here that appear to have bottomed out.

Real estate is local.  Right down to the neighborhood.  And in San Diego, the type of construction. Very interesting.  We have very few apartments here, lots of condos.  We are noticing that the rental supply here is dwindling.  That is impacting the market, and the market is impacting rentals.  Hmmm.. I have to think about this.  :)  I think it is positive.

Mar 24, 2011 06:37 PM #1
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Celeste "SALLY" Cheeseman
Liberty Homes - Mililani, HI
(RA) AHWD CRS ePRO OAHU HAWAII REAL ESTATE

Well, I will keep a positive attitude because I want to see something change...for the better. We'll see how this all plays out.

Mar 24, 2011 06:39 PM #2
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William Johnson
RE/MAX Associates - La Jolla, CA
San Diego Real Estate Voice, GRI CRS e-Pro CDPE

Hi Virginia, I hope you are right that it is fact positive and like so many other things and with no crystal ball, it will be a wait and see. 

Mar 24, 2011 07:38 PM #3
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William Johnson
RE/MAX Associates - La Jolla, CA
San Diego Real Estate Voice, GRI CRS e-Pro CDPE

Woo Hoo, I have always been positive  but the shift seems to be of concern, especially if it should be a sustained market shift. But I do know that pronouncements have been made that we will have a large shift in population over the next decade favoring San Diego and we need more housing of all varieties. And we also need more affordable housing in all varieties. For now it may be just a blip but interesting to watch none the less. 

Mar 24, 2011 07:44 PM #4
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Janice Roosevelt
Keller Williams Brandywine Valley - West Chester, PA
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I agree that its local. Change will be small. I like to say it's a "new" market.

Mar 25, 2011 12:47 AM #5
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Jon Zolsky, Daytona Beach, FL
Daytona Condo Realty, 386-405-4408 - Daytona Beach, FL
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William,

When we are looking at the lowest prices, how can you build for that money? It is simply impossible for builders to compete.

Mar 25, 2011 02:26 AM #6
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Renée Donohue~Home Photography
Savvy Home Pix - Allegan, MI
Western Michigan Real Estate Photographer

Our inventory is still low and our prices are declining, unemployment is 15%, new construction starts are down, rental prices are falling.  Pretty depressing in my parts!  I would love to see the bottom!

Mar 25, 2011 11:53 AM #7
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Kay Van Kampen
RE/MAX Broker, RE/MAX - Springfield, MO
Realtor®, Springfield Mo Real Estate

William, I put a new construction home under contract today.....the first one in almost 3 years.  Resale property, foreclosures and short sales still remain the top sellers.

Mar 25, 2011 03:15 PM #8
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Joye Hollis Ridgeway
AgentOwned Realty, Charleston SC - Charleston, SC
- Homes, Land, Investment, Commercial

Very interesting, William.  Makes me want to check those stats for my area.  I do know that in Charleston, the builders are building.  New sub sections in developments are being built.  Thought provoking, thanks for posting.

Mar 26, 2011 01:35 AM #9
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William Johnson
RE/MAX Associates - La Jolla, CA
San Diego Real Estate Voice, GRI CRS e-Pro CDPE

Hi Janice, That is certainly one way to describe it, LOL. 

Mar 26, 2011 07:28 AM #10
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William Johnson
RE/MAX Associates - La Jolla, CA
San Diego Real Estate Voice, GRI CRS e-Pro CDPE

Hi Jon, That's seems to be the big issue of late and the prices of land and impact fees make it very problematic for the new housing that is needed. 

Mar 26, 2011 07:29 AM #11
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William Johnson
RE/MAX Associates - La Jolla, CA
San Diego Real Estate Voice, GRI CRS e-Pro CDPE

Hi Renee, and we were hearing late last year that were improving. I am not sure how they are gauging that if all these other issues are still so abundant. 

Mar 26, 2011 07:33 AM #12
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William Johnson
RE/MAX Associates - La Jolla, CA
San Diego Real Estate Voice, GRI CRS e-Pro CDPE

Hi Kay, I sold one last week as well. But I didn't see anyone else around, even looking at the models. 

Mar 26, 2011 07:34 AM #13
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William Johnson
RE/MAX Associates - La Jolla, CA
San Diego Real Estate Voice, GRI CRS e-Pro CDPE

Hi Joye, I think there are probably a number of markets where this is also true. It takes a lot of homes out here and the costs getting out of the ground are stifling the single home construction industry

Mar 26, 2011 07:37 AM #14
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