Welcome to San Diego Blog | April 23, 2018
Downtown Market Update Spring 2018
If you want to know what’s happening with real estate in Downtown San Diego on a Micro Level, then market absorption rates are really the indicator for what trends we are seeing. If you watch the news, you’ll likely hear sensational headlines like, “San Diego Real Estate market is hot” and while that is true to some degree, you’ll learn why it is just one piece of the real story.
Downtown San Diego Condo Market
So, what is really going on in the Downtown Condo Market?
We are seeing two major groups of properties in the condo market in Downtown San Diego. If you look at the fundamentals of what is a buyer’s market and what is a sellers market, you can see that these two groups fall into opposite categories. The first group is clearly a seller’s market and the second group is clearly a buyer’s market.
What makes a market a buyer or seller market?
It’s all about supply and demand. If there is a 5 to 7 month supply of homes based on the average number of homes sold over the last 12 months, we would call this a balanced market. If there is less than 5 month of supply of inventory, then it would be called a seller’s market. A seller’s market makes it more difficult for buyers because they would essentially be competing with each other for the limited number of homes available to buy.
If there is more than a 7 month supply of homes on the market, this is referred to as a buyer’s market. It’s called a buyer’s market because sellers are competing with each other among many listings for the limited number of buyers out there. These sellers may need to lower their price, make special incentives or do work to make their property “turn key” so they will attract a buyer among so much competition.
- Segment one – So, going back to the two segments we’re seeing in the Downtown San Diego Condo Market, if you look at the chart below, you can see that homes priced in the $200,000 to $799,900 price segment have an average ranging from 2.5 – 3.55 months of supply over the past 12 months. If you remove The Hardrock Hotel condotel properties from this, it indicates even less of a supply (3.55 drops down to 2.87). So, the market really is hot up to about $800,000. Buyers are competing for a limited number of affordable condos and sellers are having good success in this market segment for homes that are priced wisely based on the most recent similar sales.
- Segment two – If you look at downtown condos if you look at the chart below, you can see that homes priced in the $1,000,000 to $1,499,900 price segment have an average of 11.56 months of supply over the past 12 months. This indicates that this market segment is a buyer’s market and buyers have properties to chose from and don’t necessarily feel the pressure of fear of loss because it is taking properties in this market segment longer to sell. This would not be considered a hot market by any means and the 6 month and 3 month trends suggest that more inventory is starting to stack so this market segment very well may go flat on property value appreciation. As a side note, there are a large number of properties that are new at Pacific Gate and Savina that are not on the MLS and are not represented here. If you take these into consideration, there is a large supply of $1 – 1.5m properties and seller’s will have to compete with buyers for existing condos and a large number of new properties. This, coupled with a rise in interest rates will be something to track over the next few months to see where the market trends.
|$200,000 – $399,999||Closed Sales in the past:||12 month||6 months||3 months|
|Number of Homes Sold||176||81||38|
|Average # Homes Sold per Month||14.67||13.50||12.67|
|Current Homes Active on Market||52||52||52|
|Months of Supply||3.55||3.85||4.11|
|Days of Supply||106||116||123|
|$400,000-$599,999||Closed Sales in the past:||12 month||6 months||3 months|
|Number of Homes Sold||349||171||83|
|Average # Homes Sold per Month||29.08||28.50||27.67|
|Current Homes Active on Market||80||80||80|
|Months of Supply||2.75||2.81||2.89|
|Days of Supply||83||84||87|
|$600,000-$799,999||Closed Sales in the past:||12 month||6 months||3 months|
|Number of Homes Sold||193||93||44|
|Average # Homes Sold per Month||16.08||15.50||14.67|
|Current Homes Active on Market||51||51||51|
|Months of Supply||3.17||3.29||3.48|
|Days of Supply||95||99||104|
|$800,000-$999,999||Closed Sales in the past:||12 month||6 months||3 months|
|Number of Homes Sold||72||32||18|
|Average # Homes Sold per Month||6.00||5.33||6.00|
|Current Homes Active on Market||37||37||37|
|Months of Supply||6.17||6.94||6.17|
|Days of Supply||185||208||185|
|$1m – $1.499m||Closed Sales in the past:||12 month||6 months||3 months|
|Number of Homes Sold||55||25||13|
|Average # Homes Sold per Month||4.58||4.17||4.33|
|Current Homes Active on Market||53||53||53|
|Months of Supply||11.56||12.72||12.23|
|Days of Supply||347||382||367|
|$1.5m – $2.499m||Closed Sales in the past:||12 month||6 months||3 months|
|Number of Homes Sold||28||11||3|
|Average # Homes Sold per Month||2.33||1.83||1.00|
|Current Homes Active on Market||15||15||15|
|Months of Supply||6.43||8.18||15.00|
|Days of Supply||193||245||450|
|Closed Sales in the past:||12 month||6 months||3 months|
|Number of Homes Sold||6||1||0|
|Average # Homes Sold per Month||0.50||0.17||0.00|
|Current Homes Active on Market||10||10||10|
|Months of Supply||20.00||60.00||#DIV/0!|
|Days of Supply||600||1800||#DIV/0!|
* All data is deemed to be reliable, but is not guaranteed. Data pulled directly from Sandicor MLS
* data pulled 4/20/2018
For more information on Condos in Downtown San Diego, please reach out. We help both buyers and sellers and would be happy to make sure you get the best representation possible.