For San Diego, California in June of 2018, the median house cost broke a record again, getting to $575,000. The previous record was $570,000 in May of this year. But sales dropped to a low that hasn’t been hit in years.
All year, records are being broken. And as of June in a year’s time, prices have risen 5.5%. There has been a tremendous scarcity of houses for sale which has resulted in considerably lower sales. This scarcity forces housing prices to rise.
In June of this year, 3,927 homes were sold. This is a decrease of 9.4% from June of the previous year. For San Diego County this is the lowest number of sales in 4 years.
What is causing such low sales? Most likely it’s low inventory and affordability. And what is behind this affordability?
Household incomes that are rising
A strong economy
The resale house market in San Diego County has the bulk of sales. While the number of sales has dropped, the cost of single-family homes hit $630,000 which set a new record. This is a rise of 5.8% in a period of a year.
Condos which are being sold hit a median of $430,000. This was 1,190 condos – the lowest number since June of the year 2014.
Houses that have been newly built reached a price median of $667,250. This was with 334 houses sold which is a higher number than a year ago at this time.
Rents have been rising. And at the same time, the population is going up each year. This increase in rent puts a tremendous financial constraint on some renters who have to budget for higher and higher rents.
With rising prices of homes, it’s tough for many renters to enter the housing market. They need to get on a rigorous savings plan, and many of them need to increase their income.
When it comes to making offers – buyers need to make the highest offers they can. The San Diego housing market is somewhat like a feeding frenzy. Of course making a cash offer won’t hurt. It could be the trump card that seals the deal.
In the city of San Diego, California, households have an annual median income of $71,481.
Moving on to San Diego commercial real estate, we are going to look at the San Diego industrial market. The industrial market is booming. Rents are in a robust rising trend, and the number of vacancies are lower, as well as absorption is on an increase. Two other important factors:
Unemployment is 2.9 percent – a low number.
The economy is flourishing.
This causes investors to shop very carefully for very good properties. The selection is low, so finding a very good property can be difficult. This includes those properties that are in the category of last-mile distribution.
What is last-mile distribution – also known as last-mile delivery? It is a core part of e-commerce sales in which there is a network of facilities both regional and final-mile to deliver e-commerce goods quickly and cost effectively.
A good example is an Amazon last-mile facility near a major city that has millions of goods and hundreds of thousands of square feet.
A company named Realterm Logistics got long term financing for a last-mile property it acquired last year in San Diego. It is a 180,000 square foot building.
Realterm Logistics has the goods it stores set up to minimize delivery costs. One of the ways it accomplishes this is that this San Diego property is close to California Highway 56 and to I-15. This gives quick access to a heavy population of residents.
Another important factor is that this piece of real estate can be expanded according to future needs.
It also has three vehicle flow e-commerce logistic requirements:
1. A facility designed for delivery flow.
2. A facility designed to fulfill loading needs.
3. A facility with excess parking.
If any of these requirements is not adequately fulfilled, it could jam up the works causing late deliveries and loss of income. It does happen. Amazon had a big delivery to a population of a major city that was suppose to be delivered within a day. They could not fulfill it. It did not make for happy campers on either side of the transaction.
The San Diego Industrial market is tight. It can be very challenging to acquire very good industrial properties needed to fulfill company needs. In the meanwhile, those who are in the driver’s seat of the San Diego industrial market have the opportunity for prosperity.
To find out more about apartment real-estate in San Diego, go to https://www.theapartmentconsultant.com/
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