Housing demand remains strong in San Diego County and will continue throughout 2018 despite a shortage of available properties for sale and new housing construction unable to keep up with population growth, according to the California Association of Realtors.
Throughout the United States, many cities and towns have a limited supply of residential properties, yet San Diego is experiencing an especially tight inventory. As a result, buyers will continue to face fierce competition from other buyers, often engaging in bidding wars which drive up prices and lead to lower affordability as well as weaker sales growth. Adding to the low supply, in 2017 San Diego continued to see a decline in residential building permits due to several factors including lack of buildable land close to businesses, community opposition, and the slow and expensive process of gaining permits in San Diego.
Another factor contributing to the housing shortage: retirees are not selling their homes and moving into retirement communities in numbers they have in the past. Bloomberg reports that homeowners 55 and older own 53 percent of U.S. owner-occupied homes. In California, many refuse to sell due to lower real estate taxes thanks to Proposition 13, which ties the property’s value to when the home was purchased in the 1970’s.
There will continue to be an increase in demand in San Diego for residential properties in 2018 due to a multitude of factors. As one of the nation’s most desirable cities, San Diegans looking to sell are in an enviable position.
- In May of last year, 2017, the U.S. Census Bureau reported that San Diego had the tenth largest population increase in the country, gaining 15,175 residents between July 1, 2015 and June 30, 2016 with Coronado growing twice as fast as any other San Diego city.
- First-time homebuyers are ready to make their first housing purchase as consumer confidence remains near a 17-year high, suggesting growth will continue into 2018. With unemployment at its lowest level since 2000 and a strong stock market reaching record numbers, San Diegan’s expectations remain at historically strong levels.
- Median U.S. household income was up for the second straight year in 2017, according to the U.S. Census Bureau, and the trend indicates that 2018 will likewise hold good news, especially for the middle class.
- Interest rates have remained relatively low, making home buying especially attractive and affordable.
- Renters are seeing a rise in rental rates. In 2017, San Diego County rental rates hit a record high, increasing 7.59%, according to MarketPointe Realty Advisors. As a result, many renters are making the jump to homeownership as prices are often not much more than renting.
- Qualifying for a home has become easier since the recession. Lenders are relaxing some rules in order to attract more clients with many attractive loan options, including lower down payments.
As long as demand exceeds supply, we could see a continued increase in housing costs. Prices could fluctuate due to rising interest rates, though the anticipated rate rise will be slow and higher wages should offset any interest rate changes. When all is said and done, homeownership still remains one of the most solid and stable investments available. To find out more about how the market changes impact your situation, contact San Diego Funding at 619-260-1660. Our experienced loan officers have in-depth product knowledge to evaluate every individual situation and provide the best advice and products.
For more than 30 years, San Diego Funding has been helping buyers achieve their dreams of home ownership by closing thousands of loans throughout the county. We are a direct lender that can facilitate the entire loan process from underwriting, approvals, docs, and funding of loans, all in-house. San Diego Funding has also partnered with numerous portfolio jumbo lenders to deliver the very best jumbo financing in the industry. www.sdfunding.com