OB single family inventory slips below 1 month

[gzz]

20 active listings on MLS and 22 sales in the last 30 days.

The $2+ million listings are selling at a strong pace.

A 7-10% price increase for 2016? looks like it. 12%? not out of the question.

Someone noted that CV, with about the same population, has 100+ listings, and that is considered tight.

it is interesting that the condo conversation complex on spray and long branch has not gone on the market yet after failing to sell around 2008-09. might just be they are making bank as rentals. i toured them when they were for sale, really nice interiors and beach views. i think they were mostly 1/1.5, so good for a couple without kids living with them.

[an]

I think this is happening through out SD. In my area, active SFR is @30 while December closing is @45.

Suck to be a buyer right now.

[gzz]

92107 is now at 15 SFH on MLS and 20 SFH closings in December. The cheapest 4 bedroom is 1.55 million!

[gzz]

Point Loma 92106 is at 2.5 month SFH inventory.

However, nearly half of inventory is $2 million+ that sits on the market forever.

Sub-$2 million inventory is about 1.2 month supply compared to both Dec and Nov sub $2 million sales.

[flyer]

It’s true.

Have family in both Point Loma and Sunset Cliffs, and agents are constantly asking them if they want to sell.

In general, very few people who have the homes they want in the location they prefer are willing to sell. Most people we know are planning to pass everything they have along to their kids, so things might get even tighter in desired locations in the future.

[Hatfield]

[quote=gzz]The cheapest 4 bedroom is 1.55 million![/quote]

Although to be fair, 4+ bedrooms are very rare in OB.

BTW, I guess I owe you a beer. That dump on Long Branch sold for $500k.

[Escoguy]

I’ve been making this point for some months now. I track three zip codes where I have rentals: not coastal but a good cross section of North county, 92127, 92078 and 92027.

There is less and less supply for SFH with 3+BR
When I check zipRealty, there are 1100 SFR 3+BR (non manufactured) with 1200+ sf below 750K in the entire county going about 10 miles east of I-15. So no there is not much inventory and some of these 1200 homes are surely over priced by normal criteria.

same criteria below 650K is: 874 homes

In more exclusive areas, many owners may just realize the property is irreplaceable and thus will never sell unless a major tragedy occurs.

If one considers that in a given year, several hundred properties get bought by investors, then the remaining homes for occupancy drops further.

Scary to think that the entire “affordable” housing stock could be bought by a couple of plane loads of investors from any country of origin.

[mixxalot]

Low inventory, low interest rates and speculator/foreign cash is driving the RE bubble!

[Escoguy]

I think the term bubble isn’t the right one here. There may be pockets of certain markets which are overpriced due to a lack of new buyers earning high salaries locally, but what I’m seeing is a more fundamental shift.

In the past, investors might sell to take a gain but today, if there is no pressure to sell, rents are coming in, inventory is tight and foreigners are competing for the few homes on the market, and it’s harder to get a mortgage (i.e. real ability to pay matters) I’m not sure that bubble is the correct term. More lack of good perceived safe alternatives for mid to long term funds.

For now, the only catalyst I can see that would bring down housing would be if the risk free rate earned on T-bills and other “safe” assets would go above 4% on the 10 year. Not to say it can’t happen but it’s not in most forecasts for the next 5+ years.

“The implied forecast also shows forward 10-year U.S. Treasury yields rising to 2.71% in 2025, down 0.25% from December 18.” from seekingalpha today.

The doomsayers who suggested that commodities/oil/gold/the Euro were safe havens, have been proven wrong for the time being.

Even oil futures show only $53/barrel in 2019 which get us closer to the average price of 2015.

As the dollar continues to strengthen and more capital comes into the US, real estate will benefit in my view.

There may be some shift in perspective in a few years if other assets with solid yield become relatively cheaper but for now, there is liquidity and the perception of safety in US real estate. I just don’t see a specific catalyst which would change this dynamic in the next few years barring another huge 20% spike in prices (blow out phase) but I also don’t see that happening in San Diego specifically. I’m thinking more 2-5% gains/year over year. Driven by income growth of 2-4%/year, population growth of 1.5%/year, lack of building and continued low interest rates.

Days like today in the stock market only reinforce this.

If there is a solid counter point, I’d like to know but I’m not seeing it now.

[Author]

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