Welcome to San Diego Blog | August 4, 2010
92101 Condo Sales | Downtown San Diego Condo Sales 2nd Qtr 2010
Condo sales in downtown San Diego are still going strong for the second quarter of 2010. There were a total of 350 sales in the downtown 92101 zip code for the period ending June 2010. This is up more than 30% over last year and illustrates that downtown will likely have a positive future in sight. When new home developersare successfully making sales despite all of the foreclosure and short sale opportunities, it show us that San Diego is sitting well poised to have an increase in real estate values.
New Condo Sales for Downtown San Diego
The indicators are really quite simple. New home developers for downtown San Diego condos have been able to march right along with the sale of new condos despite their stiff competition with short sales and foreclosures. However, this paints a confusing picture for most consumers. The prices at which the new home developers are selling is lower than the cost to build. What does this mean moving forward?
The story for downtown San Diego is really illustrated when you look at the fact that there are no new large scale construction projects for downtown condos in the near future. We may see a few small scale projects come online as investors and developers start to dip their feet back into the water, but the reality is that we are going to have a limited supply of condos in about 2-3 years and nothing new coming on the books for some time.
The only variable in the equation isVantage Pointe. Vantage Pointe entails 679 condos, but they are smaller one and two bedroom condos that are geared for the more economical buyer. Vantage Pointe will have no impact on the luxury condo sales market and will be a project that will be delivered to the market over time. They are phasing the building into multiple phases and have one of the three towers leased by individuals to help carry the cost of their current loan. It will likely take 2+ years to sell once they are actually able to start closing escrows. Vantage Pointe may not come online at all due to their financial disputes with the Lien Holder that filed a notice of default.
With the total Downtown sales this year expected to be around 700 condos sold, the supply of condos could rapidly diminish. Bayside is almost 70% sold out, The Markis down to about 26 remaining condos and Park Terrace will be sold out as soon as the last few escrows in place close. Sapphire Tower is down to less than 30 remaining homes so the new sale environment is all going to point back to Vantage Pointe and Smart Corner really soon.
Supply & Demand for Condos Downtown San Diego
Given the scenario discussed above, we could see a healthy market in place in not too long. Currently, there are 466 properties listed for sale on the MLS in the 1500 square acres that comprise downtown San Diego. Let’s add another hundred new home properties which may not be included on the MLS. This would include Sapphire Tower, Bayside, Breeza, The Mark, Smart Corner and Atria.
With 566 properties available and 700 properties being absorbed each year, we have a 9.7 months supply of downtown properties. This would suggest a buyer’s market for the time being. A balanced market is considered a 6 month supply of homes. Once the remaining new homes for sale are absorbed, we are going to see a drastic reduction in inventory which will likely bring us down to less than a 6 month supply of homes for sale. This would create a seller’s market and would help to begin the increase in property values for downtown San Diego properties.
Furthermore, new home builders can’t afford to start class A, high-rise, steel, concrete and glass buildings at today’s low price per square foot sales prices. This means we won’t see any new large scale projects until the values have risen enough for the numbers to pencil out with profitability for those new home developers.
Where do you think the market is headed for Downtown San Diego Properties? Why? Please share your thoughts.