San Diego Real Estate Trends
For the past 18 months, signs that the backcountry real estate market is recovering have been appearing. There have been random periods spanning 3 to 4 months at a time when the pace of sales has gathered momentum, followed by shorter periods when the momentum stalls. Overall, I would describe the real estate recovery process as punctuated growth; spurts of growth followed by periods of rest.
Contributing to these irregular real estate trends are the highly regulated and restrictive lending protocols. A hypersensitive equities market characterized by the back and forth movement of money into and out of the bond market causes interest rates to rise and fall accordingly. World events, now reported in real time, also are a cause for uncertainty that result in buyers being cautious. Moreover, because information is available with the click of your mouse, consumer reactions to world events and monetary markets is immediate, while the interpretation and processing of disconcerting events takes days, weeks, and sometimes even months before consumer confidence is restored.
While the San Diego backcountry real estate market ebbs and flows, the real estate trend is clearly on an upward trajectory in terms of appreciation, or value. The dollar volume of recent sales is still about 65% of peak levels, as investors and savvy high-end buyers dominate the mix of business in this new era of real estate. However, pent up demand for second homes and recreational property on behalf of the “working class” of real estate buyers is showing up as spring emerges. This ‘working class’ of buyers is the sector of real estate needed to keep the forward momentum sustained during times of uncertainty. In other words, consumer confidence will build upon consistent sales data. As this notion relates to the backcountry real estate market in San Diego County, it could take another full season to shore up confidence.
As savvy buyers understand, the window of investment opportunity in the San Diego backcountry is during this period of punctuated growth. The trend is clearly upward in terms of values, but the number of buyers on the sidelines creates a favorable buyer’s market. Once the sidelined buyers begin participating in full force, the supply of quality and trouble-free properties will quickly evaporate and values will rise at a rate that will result in profits for the early buyers, as well as investors who were able to hold their positions during the Great Recession.
The Numbers of the Latest Real Estate Trends
In the foregoing message, I have attempted to describe the current San Diego real estate trends from the perspective of a person relying on the following information in an effort to make a living in rural real estate.
Here is a look at the current statistics for the Julian-Santa Ysabel-Warner Springs general area:
Homes in the San Diego backcountry are, on average, selling for $258,964 at 97% of the offering price in 128 days, which buys 2 bedrooms and 2 baths and 1,673 square feet of living space on a little over 4 acres of land. The 14 sales are only 67% of the total sales during the same period last year, with a 26.5% increase in value for nearly the same square footage and lot size. Thus, homes are appreciating at the rate of over 2.2% per month; less sales for a lot more money – the sign of a recovering equity sales market.
Land sales have shown little signs of improvement. An average parcel of 18.9 acres will cost $90,945 at 61.5% of the asking price after 230 days on the market, on average. To date this year, there have been 11 sales in the 5 zip code backcountry area, a decrease of 3 sales during the same period last year, with a 30% decrease in value. Market time has increased by about 90 day to 230 days average market time for sold properties. It appears from the data that land value is still months off from stabilizing.
Commercial real estate sales in the backcountry are rare. Last year there were no sales for the first quarter. This year, the only sale was our transaction involving the Miner’s Diner building and restaurant for a total of $1,075,000.
Interpreting Real Estate Trends
My interpretation of this data is that the San Diego County backcountry real estate market, arbitrarily defined here as the area within the county exceeding 3000 feet in elevation, is showing solid signs of a sustainable rate of appreciation mirroring the trend now occurring west of the Alpine-Ramona-Valley Center meridian. Land will likely follow these real estate trends within the next 12 to 18 months.
If you would like more information regarding the latest real estate trends and affairs in San Diego County, please contact Donn Bree for a free consultation and/or property valuation.