For the past several years, the San Diego real estate market has been steadily improving. We saw a huge jump in activity and prices in 2013 and a decline in inventory and market times. The general consensus seems to be that San Diego real estate is a good investment and the long term outlook is very positive. With the addition of new commercial space, hotels, restaurants and general improvement of the infrastructure, downtown San Diego seems to be heading in a great direction.
Looking at the numbers, there’s been a clear improvement in the San Diego condo market. Starting with market time, we’ve seen a massive decrease in the average Days on Market (DOM). Since 2010 (which was our market bottom), there’s been a 56% decrease in the average DOM. We saw a big drop from 2011-2012 and then an even bigger drop from 2012-2013. In 2014, the average listing sold in just 51 days, compared to 91 in 2010. There are a number of ready and willing buyers who are just waiting for the right property to hit the market. If you’re not pre-approved and ready to submit an offer, you will most likely miss your chance in a market like this.
The average downtown San Diego condo price has also been steadily improving. From 2010 to 2014, the average condo price has risen 43% and while I don’t see this rate continuing, I don’t think prices will drop. In my opinion, the limited amount of inventory and growth of downtown will continue to raise prices, but at a slower rate. Keep in mind that the last highrise was built in 2009. Bosa just started building the Santa Fe Depot Parcel 9, but it would be ready for 2.5 years and will be a very high-end building.
I think we’ll see prices continue to rise at about a 4-6% rate for the next few years, with a big jump in 4-6 years (once more infrastructure has been put in and downtown San Diego becomes more attractive for more people).
Finally, we look at the number of units sold over the last five years. The low housing prices and higher inventory supported significant sales in 2010 and 2011. Then as prices and the number of buyers/investors rose, sales started to decline. With virtually no short sales or foreclosures, the “flip” market has dried up and home prices finally found their bottom. Another reason for the decreased sales is that would-be sellers can’t find anything to upgrade to, so they won’t put their homes on the market. Also, some sellers are too optimistic with their pricing and buyers aren’t willing to overpay.
Currently, we have 226 condos on the market downtown (click here to search the MLS). Prices range from $209,900 to $8,999,000 with a median market time of 56 days. I think the 2015 San Diego real estate market will continue to improve with prices rising slightly and inventory picking up. We know that interest rates will stay low for the rest of the year and with FHA Mortgage Insurance Premium decreasing from 1.30 to 0.85 (reducing payments by nearly 35%) , I think we’ll see more first time buyers – hopefully allowing people to sell and “upgrade” to a new home, further providing more inventory.
If you have any questions about the San Diego real estate market, or need help buying/selling/leasing a property, please contact me. I’ve helped clients with homes all over San Diego county and would love to help you! Here are a few testimonials from some great clients.
Denny Oh – Pacific Sotheby’s International Realty – 858-243-2092 – [email protected]