This morning, Scott and I attended a very interesting conference hosted by Craig Sewing and where we were privileged to hear Alan Nevin, a leading San Diego real estate economist, speak on the future of the San Diego real estate market in 2014.
And rather than putting together a cohesive article, I will share key points below:
- Alan Nevin grew up around Washinton DC (as did I), and contends that this hub of American politics is all theater and drama. Of more interest are the Feds, who say interest rates will be staying put for the next three years. Hence, he predicts mortgage rates will stay down–even after Ben Bernanke’s departure.
- So how does this affect San Diego real estate? Nevin says San Diego has a problem: Lack of new housing–which won’t pick up in San Diego until 2015. And since each new home sale generates 4 resales, he says, the San Diego real estate market should have increased strength through 2015.
- Where will housing inventory come from in the meantime? Nevin explains that 43% of San Diego’s condos are owned by investors, while 20% of its single family homes are owned by the same group. He believes that many of these investors will be taking profits off the table, which will result in inventory levels opening up.
- He went on to note that 30% of all home purchases in San Diego are cash sales and that 28% of all San Diego homes and condos have no mortgage debt.
- Foreclosures in San Diego were never as bad as in many other communities (Phoenix, Las Vegas, et al)–and we also bounced back faster than most. And some zip codes here are back to where they were pre-bust. We are seeing that in the 92009 Carlsbad zip where homes in La Costa Valley that were purchased at the height of the 2004-2005 market are now back up to those same prices. Ditto for Encinitas, Carmel Valley and other coastal communities.
- What about October 17 and the debt ceiling crisis? Nevin dismisses it as Washington drama–and not the reality of the economy. Selected states are doing very well–including California and Texas-while others such as Michigan, Indiana, Illiniois and Pennsylvania are suffering, primarily because they are tied to “yesterday’s economy,” says Nevin, who went on to say that San Diego jobs “are tied to tomorrow” and that we will continue to gain jobs–especially high paying ones. As an example, Qualcom pays engineers just out of college a handsome $90,000 per year salary.
Finally, when asked if our country will go broke–Nevin responds that the Federal Governement owns 90 percent of Nevada and a massive number of debt-free office buildings and real estate. The government, if it chose to do so, could sell some of these holdings or syndicate them for profit. The U.S. economy–and certainly that of San Diego–isn’t in the glum condition so often reported by mainstream media.
If you are thinking of selling your San Diego home in the near future, just give us a call at either 877-818-8197 or 769-613-6190.