Recall the days when there were 1000 condos to choose from in down-town North Park, there were a lot of, heads would spin just trying to find out which structures to examine and should you get it re-sale condo, brand new condominium or some thing under construction.
Well the real-estate cycle proceeds through its somewhat normal routine of over-supply to the today small supply. As a percent of the absolute condominiums in downtown San Diego, simply 2.3% are for purchase. By most standards that’s a real shortage.
The amount of condominiums on sale in Jan 2011 was about 450, now as lately November 2011 were all the way down to 230. I really don’t see this stock tightening craze stopping anytime soon. Back about a decade ago when there have been about 50 units (or 1.5% of the total) for selling in downtown, you had to make an offer the evening you noticed it came in the market and for over selling price or a different customer was going to take the unit up.
Obviously we are still in the down creating cycle without any new condominiums anticipated to come online before 2015 no condominiums are presently under development. Exactly what does this imply for the real estate buyer or seller? Well in case you are a purchaser consider that the selections you have are as good as your going to have over the next 5-8 years. All but two prime lots are left to construct condos on.
The two condos I am speaking about are to get Bosa Development condominium processes now where in fact the Office Depot building could be the other the huge parking lot close to the Harbor Club and convention center. The following condominium they are planning to build behind Bayside may constantly play second fiddle to Bayside since it is going to be one block back of the “residential front row”. Regardless of the quality, that we believe is not going to exceed Bayside, its location is not as good as Bayside’s in terms of the sights.
This building was supposed to appeal to record prices that could be paid by the buyers and remember, Bayside was created around 2005 while the market was going up and up without any limit in picture. Obviously by the time that it was finished the market rates were down and if they’d known the actual prices models would be marketed for Bayside would not have already been built to the high specifications. Therefore lets recap, available inventory is at is lowest level since 2002, no inventory is arriving on point till 2015 at the first, most potential inventory will soon be in places perhaps not as desirable as the buildings presently built. Just in 2018 and maybe again in 2021 will you’ve Bosa’s final two high rise condominium to choose from which will probably exceed the grade of Bayside.
If you think about the economics 101 classic offer and demand formula you might have to be inquiring are costs likely to climb? Demand is not actually slowing down, sure the speculators searching for a quick turn have departed industry years past, however the 2nd home customer from the warmer and colder climates remain active as well as full-time retirement citizens.
One exclusion is the flipper buying dumped foreclosures and repairing them up and turning them, that is going on now and they appear to be making about a 20% increase in the sales price for their initiatives. You could check out Harmony Home Medical supply San Diego for smart facts. The local work market is just not healthy but holding steady along with the new federal courthouse downtown along with the far off proposed Notion District in the East Town could include lots of jobs in walking distance to such condominiums. Interest levels are likely to remain low for some years out as well as the coming election could hopefully have some positive impacts on the macro economy.
I believe that it is best to become a landowner now plus a vendor during another few years rather than a buyer trying to uncover a buy in an industry with limited selection and lots of competing buyers. What about the “shadow stock” being held from the banking? Furthermore wont individuals start marketing if the costs climb? The darkness inventory I think is a myth for down-town, I really do not observe banking holding on to qualities here, the marketplace is not overloaded with for sale inventory as different parts of the nation where they are liberating foreclosures for sale in drip quantities as absorption is slow.
Most proprietors that have held on to their condos that took a large hit are probably still down 25% or more in worth, if prices rise 10% they are not going to rush away and sell, even at a one-fifth increase I don’t see them selling, where they going to go? They could trade-up nevertheless the brand new spot may also be 20% higher priced. In case it is an buyer happy to view the worth of these investment condo rising, exactly what are they likely to place their money in whether or not it they market. The stock market isn’t super attractive today plus they’re going to drop the leverage. It is the leverage they need, if costs are growing, that’s what they were hoping for to start out with, they’re likely to desire to buy more perhaps not sell.