August 2018 Market Update – Downtown San Diego Condo Market

San Diego’s market has been changing quite a bit over the last few months. No, the sky is not falling. We are entering, what I am going to nickname, the “new normal”. San Diego County has seen insane growth the last 6 years.  Between January 2012 and July 2018, we have seen a 82.0% increase in the average sales price ($384,384 to $699,643). Let’s put that into real numbers. If you bought the perfect average home in San Diego in 2012 and sold last month, you would have seen an increase of $315,259. In order to afford a payment on a home at 384,384, I am going to estimate an annual income of approximately $75,000 on the conservative side. Post taxes on your income, you would have made about the same on your home sale versus working full time at an annual salary of $75,000 a year.

That isn’t sustainable growth, but was triggered by the recovery from the recession. The peak of the market in San Diego County before the crash was in May 2007 and the average sales price was $645,239. We barely caught up to that average price in April of 2017, when we hit $649,340. Now if we consider the cost to build, the continuously growing population, and the thousands of jobs San Diego continues to add, I am hoping we have healthy growth over the next few years.

Last week, my team and I went to one of the largest real estate conferences in the United States. They spoke a lot about improving the consumer experience, offering exceptional service, and of course, where they see the real estate market heading over the next 18 months. The common idea that was passed around is that majority of economists see us heading to a steady 3-4% annual growth rate nationwide. That is a more healthy and balanced market, but in a sense, it is something that is now foreign. Let’s be honest, it is something that scares most people.

Downtown also grew quite a bit as well. During those same time periods, the average sales price in downtown grew by 69.5% from $372,782 to $631,800. On a price per square foot basis, we went from just $357/sf to $594/sf. The biggest difference between now and before the crash is the cost of construction. In order to build a project and make a profit, developers need to sell for upwards of $750+ a square foot. On projects like Pacific Gate and the Park, which have ultra luxurious finishes and amenities, they need to hit prices above $1,000/sf. That means that adding new affordable projects to the downtown market doesn’t seem feasible. As long as population grows and we increase jobs, there will be a demand for more housing.

If you are looking to purchase a home in Downtown San Diego, it important to have a competitive edge. Find out what mistakes buyers are making when purchasing property downtown. It could cost you time, money, and your perfect home!

As the market heads towards a balanced market, now more than ever it is important to work with a professional! Learn how to avoid common mistakes sellers are making in Downtown San Diego so you can net more money when selling your home! There is a difference between listing your home and selling it for top dollar.

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Looking To Purchase a Home or Investment?

Give me a call today at (619) 228-6790 or email me at Ryan@livingthesandiegolife.com for more information or to schedule a tour of the neighborhood!

And Always Remember, It Matters Who You Work With!