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Thanks to California Title Company for this information
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Despite a great deal of sensational media coverage addressing the real estate market and fears of collapse, there are significant signs pointing to a healthy economy and a cooling, but not collapsing, real estate market in San Diego County.
San Diego's popularity has resulted in ten straight years of housing gains. The overall annual median price for all homes (new and resale) is $494,000 and has nearly tripled since 1996 when it was $169,000. The appreciation in 2005, however, was only 7.6 compared to 21.1% in 2004, marking the end of five-year run of double-digit price increases.
With all the talk about "the housing bubble," it is worth noting that not all housing booms are followed by busts. From 1978 until 2000, FDIC studies of metropolitan areas identified 50 booms (30% or greater rise in inflation-adjusted prices in a 3-year period) but only 21 busts (15% decline in nominal prices over 5 years). That said, there are those who believe there's a 50/50 chance that prices will decline in San Diego within two years.
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A healthy economy, job growth and a very desirable location stimulates demand
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How healthy is our economy? Experts predict that San Diego's economy will outperform the rest of California and the nation in 2006. Our diverse employment base has helped to drive San Diego's economy, allegedly protecting San Diego from a recession similar to the one in the early 1990's. Job growth will play a key role and is expected to be healthy. Unemployment should remain low.
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Defense Industry |
2nd largest industry in San Diego-over $13 billion/year in revenues Highest military payroll in the country |
| Tourism/Leisure |
Alive and well: projected 6,000 new jobs |
| Education/Health |
More jobs due to expanding colleges and medical institutions |
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Venture Capital |
Over $1 billion per year will generate growing employment in telecommunications and bio-tech sectors |
| Construction |
28% of job growth in 2005; likely to remain flat in 2006 |
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| (Includes resales and new housing in both the single family home and condo categories) | ||
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The bottom line is that the median home price of resale homes and condos increased over 10% from 2004 - 2005, but the total number of sales (new and resale) decreased 9.1%. This is the first time since 2001 that the number of home sales fell from the previous year.
The San Diego Association of Realtors reported that properties took longer to sell - averaging 62 days on the market in 2005 compared to 54 days on the previous year.
In the commercial market, big investors showed strong interest in San Diego in 2005. The Irvine Company purchased the downtown Wells Fargo building for $148 million and Symphony Towers for $134 million. The high cost of doing business does push some companies out of town, such as Intel, Newgen and Aetna, who moved out in 2005. It is possible that a slowdown in the housing market could improve the employment retention package and motivate employers to stay put. |
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Among top five apartment markets in most surveys
#1 in U.S. for retail real estate 2005-2009 (Grubb & Ellis ranking - 50 metro areas)
#2 in U.S. for record high rents in office market, topped only by suburban Washington, D.C.
High among rental rates for industrial market due to lack of space and land.
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At the upper end of the market, strong demand still exists for quality product, especially since San Diego has become a major attraction for the world's affluent
who want to avoid hurricanes, floods, humidity, snowstorms and mosquitos. The Union-Tribune statistics from DataQuick show how the number of sales dropped and the medium home prices rose in the top 20 highest priced areas of San Diego. First American Title's statistics, cross-referencing DataQuick with MLS, DataTrace and other county records, give a more comprehensive view of new and resale homes in 2004 - 2005 in the areas below. | |
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New and Resale Single Family Home Sales Comparison |
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Number Sold Average Sale Price Area 2004 2005 %Change 2004 2005 % Change |
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| Rancho Santa Fe 433 351 -18.94% | $2,533,940 $3004,498 +18.57% |
| Del
Mar
255 |
$1,552,057 $2,001,915 +28.98% |
| Solana Beach 106 95 -10.38% | $1,256,536 $1,297,495 + 3.26% |
| Carmel Valley 735 787 7.07% | $1,046,255 $1,165,979 +11.44% |
| Santaluz 127 105 -17.32% | $1,172,802 $1,589,948 +35.57% |
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Top 20 Highest Priced Areas 2004-2005 in San Diego |
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Number Sold - Median Resale Home Prices - Percentage Change |
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| SINGLE FAMILY CONDOMINIUMS | |||||||||||
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#SOLD |
MEDIAN PRICE |
#SOLD |
MEDIAN PRICE | ||||||||
| ZIP | 2004 | 2005 | 2004 | 2005 | #CHANGE | 2004 | 2005 | 2004 | 2005 | #CHANGE | |
| Rancho Santa Fe | 92067 | 212 | 130 | $2,275,000 | $2,708,750 |
19.10% |
6 | 6 | $1,261,000 | $1,005,000 |
-20.30% |
| Rancho Santa Fe |
92091 |
42 |
30 |
$1,750,000 |
$2,007,500 |
14.70% |
35 |
22 |
$694,000 |
$805,000 |
16.00% |
| La Jolla |
92037 |
396 |
351 |
$1,450,000 | $1,750,000 | 20.70% | 462 | 443 | $604,000 | $625,000 | 3.50% |
| Coronado | 92118 | 200 | 163 | $1,315,000 | $1,516,250 | 15.30% | 168 | 161 | $840,000 | $995,000 | 13.60% |
| Del Mar | 92014 | 207 | 135 | $1,300,000 | $1,500,000 | 15.40% | 138 | 66 | $660,000 | $700,000 | 6.10% |
| Solana Beach | 92075 | 93 | 87 | $1,125,000 | $1,126,000 | 00.10% | 186 | 137 | $635,000 | $700,000 | 10.20% |
| Carmel Valley | 92130 | 533 | 443 | $970,000 | $1,040,000 | 7.20% | 442 | 344 | $535,000 | $560,000 | 4.70% |
| Bonsall | 92003 | 70 | 52 | $649,500 | $974,500 | 50.00% | 36 | 34 | $325,000 | $335,500 | 3.20% |
| Point Loma | 92106 | 212 | 189 | $770,000 | $890,000 | 15.60% | 34 | 28 | $522,500 | $575,000 | 10.00% |
| Mission & Pacific Beach | 92109 | 248 | 210 | $799,500 | $877,500 | 9.80% | 413 | 374 | $499,750 | $575,000 | 15.10% |
| Cardiff | 92107 | 125 | 127 | $810,000 | $855,000 | 5.60% | 67 | 47 | $440,000 | $470,000 | 6.80% |
| Hillcrest & Mission Hills | 92103 | 218 | 176 | $750,000 | $849,500 | 13.30% | 294 | 229 | $431,000 | $470,000 | 9.00% |
| Rancho Bernardo West | 92127 | 300 | 339 | $660,000 | $845,000 | 28.00% | 184 | 191 | $354,500 | $390,000 | 10.00% |
| Encinitas | 92024 | 580 | 528 | $750,000 | $835,000 | 11.30% | 257 | 209 | $442,000 | $508,250 | 15.00% |
| Carlsbad SW | 92011 | 320 | 265 | $795,000 | $835,000 | 5.00% | 219 | 177 | $582,000 | $625,000 | 7.40% |
| Sorrento Valley | 92121 | 47 | 38 | $750,000 | $815,000 | 8.70% | 68 | 67 | $457,000 | $507,000 | 10.90% |
| Ocean Beach | 92107 | 188 | 156 | $730,000 | $790,000 | 8.20% | 113 | 97 | $418,000 | $436,500 | 4.40% |
| Jamul | 91935 | 144 | 104 | $657,500 | $773,000 | 17.60% | NA | NA | NA | NA | NA |
| Carlsbad SE | 92009 | 566 | 530 | $740,000 | $772,500 | 4.40% | 546 | 399 | $406,750 | $439,000 | 7.90% |
| Scripps Ranch | 92131 | 438 | 412 | $709,000 | $749,000 | 5.60% | 402 | 331 | $430,000 | $450,000 | 4.60% |
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| Interest Rates: Conventional 30-year fixed mortgage rates ended the year at 6.21%, higher than at the beginning of 2005. Rates are expected to hover in the 65% to 6.75% range, but could cause problems if they climb above 7%. | |
| Higher oil and gasoline prices: We have many long-distance commuters. Alan Gin, economist at UCSD, says that every 10-cent increase in the cost of a gallon of gas takes $7 million per month out of the San Diego economy. If gas prices go up 50 cents a gallon, that is $35 million. | |
| Inflation:
The high price of gasoline and an expensive heating season could affect inflation expectations and signal hikes in the federal funds rate. The Fed's top priority is to maintain price stability. This makes rising inflation the most important downside risk for the national and local economy during 2006. |
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| National
Trends: Most booms have been driven by regional economic cycles. The current boom is found in 55 cities and is driven by three national forces to watch: |
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| 1) | Low mortgage rates |
| 2) | Loose lending practices such as interest-only and option ARMS (43% of first-time home buyers purchased their homes with no-money-down loans in 2005!), high loan-to-value mortgages, heavy use of home equity loans and extensive sub-prime loans |
| 3) | Investors choosing real estate investments over equities |
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