The first indicator of trouble
an increase in unsold inventory/vacancy
The second indicator of trouble
The transition from hyper supply to recession is marked by the second indicator of trouble in the cycle: occupancy falls below the long-term average.
New construction stops, but projects started in the hyper-supply phase continue to be delivered. The addition of surplus inventory leads to lower occupancy and lower rents, which significantly reduces revenue for landowners.
The third indicator of trouble
Finally, investors must watch for the third indicator of trouble: an increase in interest rates.
There may be some variation but it is hard to see a lot more supply coming onto the market in the greater San Diego market in the near term so it may well be another 8 years before the cycle completes.
As far as San Diego, did supply ever have anything to do with it? Last major construction boom was in the mid-90s, but the blessed correction in 2008-11 still happened.
As far as San Diego, did supply ever have anything to do with it? Last major construction boom was in the mid-90s, but the blessed correction in 2008-11 still happened.[/quote]
on the downslide, rents didn’t play along the story line in San Diego either. Residential rents anyway. We used to have big arguments here from dire rental market bears vs. some on the more optimistic side.
If you look at the data in the article the last 3 cycles have been very different lengths so I will say I think it is very difficult to predict out 8 years. My guess is it will be less than that, I hope I am wrong however.
There was plenty of construction downtown during the bubble, as well as in Eastlake and the NE San Diego suburbs, plus infill duplexes in place of single family houses and apartment to condo conversions adding to supply everywhere.
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