Update on downtown sales and inventory numbers

[davelj]

I was forwarded a research report that had a pretty thorough analysis of San Diego inventory, including non-MLS properties (that is, properties for sale from the builders).

Where downtown is concerned, there were approximately 1760 condos available for sale at the end of 1Q07. Again, that includes both what’s on the MLS (500-600 units) AND what the builders are (still) trying to unload.

The sales numbers are a little complicated, but we know that MLS sales have been between 40-50 per month for several months now. This report suggests that builder sales are around 40 per month. So, let’s go crazy and assume that the total between the two is 100 sales per month. That suggests that there’s almost 18 months of “real” inventory available downtown under a very conservative interpretation of the data.

Clearly this situation will continue to deteriorate as (1) the buildings still under construction are completed, and (2) there’s further fallout from mortgage recasts. I see no reason for the sales numbers to dramatically increase in the near term, so the months-of-inventory should continue to climb for some time.

[Anonymous]

In my opinion, this is one of the real sources for the upcoming (underway, actually) recession (moving to depression): that we have too many homes and office buildings (and cars and boats), and that they will sit unused. There’s no need to build another home (5% of GDP) or office (2% of GDP) for years. That’s a big chunk of the economy.

We’ve lived in a gilded age these last five years. It will be clear to all, in five more years, looking back, that we lived in gilded age.

[SD Realtor]

All I can tell ya is that it is a nightmare downtown right now, at least for resale.

SD Realtor

[PerryChase]

Thanks for sharing Downtown SD information. It’s one of the markets I’m watching.

——–

Do you think that Downtown will become a good place for retired people? I mean aside from the premier buildings such as the Grande, Meridian, Harbor Club, near the water. Those buildings seem to be self-contained islands with not much interaction with the local community.

I wonder if a condo Solana Beach or Carlsbad would be better for old retired people. (I’m thinking for my elderly relatives in their 80s). Casa de Manana in La Jolla?

——–

Another area of concern is the development of Chula Vista and National City’s waterfronts. With those going, there’s going to be future competition for Downtown SD.

What about the airport relocation. Moving the airport would suddenly make plenty of land available for development.

[blahblahblah]

Do you think that Downtown will become a good place for retired people?

It’s a good place for homeless people. You could call them retired since they’re not really working anymore. Sort of like how we call fry cooks assembly line workers now.

[4plexowner]

Add the 3400 condos currently under construction downtown (slated to come online over the next 18 months) and you add another 34 months of inventory

Let’s see 18 + 34 … carry the naught …

That’s 52 months or 4+ years

[no_such_reality]

All I can tell ya is that it is a nightmare downtown right now, at least for resale.

I sometimes wonder if San Diego is going to split into a two-tier housing situation. One were condos/townhomes directly compete with rental rates and the other were SFRs on individual lots (real lots) remain disconnected from underlying fundamentals.

Okay, they can’t remain disconnected from fundamentals indefinitely, however, in the short term 3, 5, maybe ten years, could the dissolution of the condo market become so prevasive, that ownership cannot compete against renting because of the transaction cost to off-load or the rising vacancy rate and subsequent and the perception that owning a condo is just throughing money away that you can never get back?

Hmm, maybe I’m jaded. I’ve done the townhome thing before, won’t do it again. The more I see the condo market imploding the more I’m focusing on SFRs only. I wonder how many others are doing the same?

[PerryChase]

no_such_reality, in your view, what is the downside of living in condos/townhouses?

My elderly relatives are living in SFRs but don’t need all the space and should move to condos to avoid the maintenance. I think it’s more fun for the elderly to live in an urban setting rather then being stuck in a boring mcmansion out in the burbs. It’s fine if you have family and kids. But what would an old person do all alone in an SFR? It might be nice for some relatives and friends to all live in a downtown building. That way they can be close to each other but still have privacy.

[PerryChase]

For those interested, here’s a list of projects Downtown.

http://www.ccdc.com/index.cfm/fuseaction/projects.home/category/residential

http://www.sandiegometro.com/urban/

[an]

Very good link PerryChase. Do you happen to haven something similar for SFR/master planned cummunity?

[no_such_reality]

PC, at certain points, they’re good choices, but essentially, it boils down to one thing. A condo is an apartment where you get all the maintenance expense and that maintenance expense is managed by others with conflicting interests and profit motives.

For anybody that isn’t just starting out in their life, it’ll require a minimalist attitude to get rid of their stuff. Combined with the storage problems of no garage, no yard, where’s the BBQ go? Can you even have one? Where you keeping your bicycle? The longboard?

A townhome with garage, IMHO, is better, but you still get the maintenance headache with the HOA. HOA fees can be pretty substantial and often leave you wondering what the money really is buying.

I understand your elderly relatives don’t want to do all that upkeep on the yard or house, but at $300/$400 month, equivalent of a mid-range condo HOA, pays for a lot a regular maintenance.

[Author]

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