Overall, San Diego Condo pricing values are still reflecting 5 year highs from the market decline in 2008. Many local reports like last week’s article in the Union Tribune entitled Home Prices Up From a Year Ago site 15% to 17% increases in local home and condo values. In April, May, and June we saw some visions of the market the way it was in the boom of 2004 to 2007. During the last several months, we as Downtown San Diego Specialists approached the market with cautious optimism. We were of course pleased that we could report increases and unseen activity in the Downtown San Diego Real Estate market since the times of the boom. However…we were cautious as to how sustainable this type of market would be for any period of time. In terms of Inventory…there was a shortage of Downtown San Diego condos on the market available for resale. This was especially true in the price range below $500k that was dominated by the investor buyers looking for rentable and flip opportunities.
Fast forward to the recent month of July. Worried that the real estate market increases were unsustainable, the Fed decided it was time to finally raise the artificially low interest rates that had been in the low 3% range for a couple of years now. These rates had done the trick in terms of reigniting the national and local Downtown San Real estate market. The big question…were the national and local markets strong enough to endure on their own without the government assistance or artificial rates? In early July, we saw rates increase as much as 1 full percent from the mid 3% to mid 4%. For more detailed information on what actually happened and how it affected the local markets, check out this YouTube video blog from our lending partner Alexandra Harbutska of the Gaylord Hansen Real Estate Group.
From the boom Downtown San Diego Real Estate market of the first two quarters of 2013 to the present (1 month removed from the rate increases of July)…where does this leave us now and where is the market going? The rate increases were successful in at least slowing down home sales. We saw these results as Pending Downtown San Diego condo sales dropped of a slight percentage. The “slowdown” of Pending condos added to the market time of Downtown Condos and the number of overall inventory. Back in April and May we averaged about 180-190 Downtown San Diego condos “Active” or for sale. Today, the number is closer to 220…an increase in excess of 20%. It has taken a few weeks for the perception of the rate increases to settle. However…in the last week we have started to see buyers come back to the market with the mindset that rates are not going down and that the Downtown San Diego Real estate market will continue with improvements of course…just not the double digit increases that we saw in Quarter 2. Inventory while higher in % is still not enough to say that we are anywhere close to an excess. We can have a conversation about that when the inventory of Downtown San Diego Condos exceeds 400+ as it did back in 2007-2008. The bottom line is that it is still a good time to purchase a condo for sale in Downtown San Diego. Rates and pricing are expected to continue over the next several years. Modest value growth, expected rate increases (Brace for Higher Mortgage Rates), and the fact that there is still no significant new construction that will add to the number of Downtown San Diego condos…will make “the present” an interesting period of opportunity for any buyer or investor interested in Downtown San Diego Real Estate. ')}