Welcome to San Diego Blog | July 23, 2019

Downtown San Diego Real Estate Market Update

Curious as to what is going on with the downtown San Diego real estate market?  If so, then we’ve got some insight for you!

While it’s absolutely true that the market has cooled off as compared to the long run of gains we saw from early 2012 through mid 2018, things aren’t quite what the news might lead one to believe.  We’ll try to give good perspective that any potential buyer or seller could use to their advantage.

First off, it all begins with the price range that is relevant; not all market segments are equal.  To compare a $400,000 one bedroom condo to a $4m luxury condo and lump them into the same story would be a mistake.  Below, we’ll see one of the major indicators of what controls property values- Market Absorption Rates.

While there are many factors that determine real estate property values, the most simple indicator is supply and demand.  How many homes are there for sale and how many buyers are out there trying to buy those homes.  As you can see below in our market absorption rate chart, homes priced from $200,000 (if there were such a thing) all the way to $1.5 million in downtown are in a fairly similar state.  They are in a fairly stable market place.

Condo Market Downtown San Diego

A balanced market is said to have a 5-7 months supply of inventory.  Looking at condos in downtown San Diego in the chart show that properties priced between $200,000 and $600,000 have a 4.3 to 4.7 months supply.  This is slightly leaning towards a seller’s market, but not much in favor of either party.  It’s still relatively balanced as compared to 2015 when we might find a 1.8 to 2.4 supply of homes in the same price segment.

As you can see, homes from the $600,000 price range to $1m are in a very balanced market.  With just over  a 5 months supply of condos, this is by no means a distressed market. What we are finding is that properties are taking longer to sell; average market time in this segment is up 37% according to InfoSparks.  With that increased market time, we are seeing sellers on properties that are not in ideal locations where they are having to make multiple price reductions to get their property sold. 

One of the largest differences we’ve seen between the old “hot market” and this newer “cooling market” is that in the hot market, buyer’s will still pay top dollar for up and coming areas.  In the new market, properties that are on the fringe of a good area are not selling as fast or for as much as they did before.  As an example, we’ve seen buildings like M2i and Park Terrace in East Village see a softening of values from the peak.

We’re also seeing buyers be more discriminatory than before.  With more properties to chose from, buyers demands are greater for a similar priced property.  Today’s buyer is looking for a property to be updated and turnkey; in most cases, they aren’t willing to pay top dollar for the 15 year old property that has new paint and carpet, but everything else is original.  They want the property to be updated with new appliances, new countertops and fixtures, new hard surface flooring – today’s buyer wants the sexy factor.

Price Range        
$200,000 – $399,999 Closed Sales in the past: 12 month 6 months 3 months
  Number of Homes Sold 162 79 41
  Average # Homes Sold per Month 13.50 13.17 13.67
  Current Homes Active on Market 59 59 59
  Months of Supply 4.37 4.48 4.32
  Days of Supply 131 134 130
         
$400,000-$599,999 Closed Sales in the past: 12 month 6 months 3 months
  Number of Homes Sold 263 129 73
  Average # Homes Sold per Month 21.92 21.50 24.33
  Current Homes Active on Market 103 103 103
  Months of Supply 4.70 4.79 4.23
  Days of Supply 141 144 127
         
$600,000-$799,999 Closed Sales in the past: 12 month 6 months 3 months
  Number of Homes Sold 138 69 33
  Average # Homes Sold per Month 11.50 11.50 11.00
  Current Homes Active on Market 58 58 58
  Months of Supply 5.04 5.04 5.27
  Days of Supply 151 151 158
         
$800,000-$999,999 Closed Sales in the past: 12 month 6 months 3 months
  Number of Homes Sold 57 33 16
  Average # Homes Sold per Month 4.75 5.50 5.33
  Current Homes Active on Market 25 25 25
  Months of Supply 5.26 4.55 4.69
  Days of Supply 158 136 141
         
$1m – $1.499m Closed Sales in the past: 12 month 6 months 3 months
  Number of Homes Sold 57 27 14
  Average # Homes Sold per Month 4.75 4.50 4.67
  Current Homes Active on Market 34 34 34
  Months of Supply 7.16 7.56 7.29
  Days of Supply 215 227 219
         
$1.5m – $2.499m Closed Sales in the past: 12 month 6 months 3 months
  Number of Homes Sold 8 2 0
  Average # Homes Sold per Month 0.67 0.33 0.00
  Current Homes Active on Market 24 24 24
  Months of Supply 36.00 72.00 #DIV/0!
  Days of Supply 1080 2160 #DIV/0!
         
Closed Sales in the past: 12 month 6 months 3 months
  Number of Homes Sold 8 3 1
  Average # Homes Sold per Month 0.67 0.50 0.33
  Current Homes Active on Market 10 10 10
  Months of Supply 15.00 20.00 30.00
  Days of Supply 450 600 900
         
* All data is deemed to be reliable, but is not guaranteed. Data pulled directly from Sandicor MLS
       
* data pulled 7/9/2019
       

The market segment for properties in the $1 to $1.5m range is tough to interpret.  While there is a 7 month supply that shows, this doesn’t take into account all of the properties in Savina or Pacific Gate.  As an example, we’ve had 3 closings so far at Savina (with 8 more to come) and they don’t show in MLS or in the data above because they are not public record at this time. 

The same can be said for properties in the $1.5-$2.5m range.  While we see what looks like a 3 year supply of properties in this category, it doesn’t account for any of the sales at Pacific Gate (and there were many – only 34 remaining properties there at this time) or Savina.  So, while it’s hard to paint a clear picture of the luxury condo market, I will comment that the resale market has definitely slowed down in this segment.  We are competing with new sales and everybody likes new.  With less international buyers in the market place, it will likely take more time for the remaining $2m plus homes at Savina and Pacific Gate to be absorbed so this market may lag behind the $1.5M and below market.

The News doesn’t say it all!!  If I were to go off the median or average sales price of a property in 92101 this year compared to 2016, there’s quite a difference!  If I were to do this as a news reporter might, I’d be missing all of the $2m plus sales at Pacific Gate that would have a tremendous impact on both the average and median home price.

In summary, while the market has cooled off from peak activity 


Written by: chad

Categories: Absorption Rates, Market Conditions, Market Trends, San Diego Condos, San Diego Real Estate

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