Now that we’re a few months into the new year, how has San Diego’s economy fared in 2020?
First, let’s look at the Case-Shiller Home Price Index (refer to 0:32 in the video above for a visual representation), which illustrates home pricing trends over time. Prices rose sharply during the period between 2005 and 2009 (when the market crashed) and then began to stabilize in 2013, leading to a steady increase thereafter. That’s certainly reassuring, but that data itself is not the only reassuring aspect of what’s happening in our markets today.
Next, let’s look at the monthly construction starts we’ve seen (refer to 1:04 in the video above). Compared to multi-family unit construction, single-family home construction has remained relatively flat since the market crash. If we look deeper into the numbers, this tells a scarier story for San Diego’s housing.
On average, there are between 200 and 225 new single-family starts on a monthly basis. The population increases by 1,700 people per month. This scarcity of single-family homes doesn’t bode well for many of the people who are looking to purchase as opposed to rent—supply won’t be able to keep up with demand.
“The forecast for 2020 is quite robust in terms of property values.”
Continuing on, we’ll look at payroll employment (refer to 2:27 in the video above). Between 2006 and 2010, in addition to the housing correction, there was also a minor correction for incomes. Immediately after that period, employment and incomes have corrected once more and are actually outpacing housing costs.
In the end, we’ve trended toward a market with a scarcity of properties, which causes prices to increase. We also have very attractive interest rates, which creates an abnormal demand for housing. On top of that, we’ve also got strong employment and incomes here in San Diego. None of these trends seem to be in danger of changing in the near future, meaning the forecast for 2020 is quite robust in terms of property values (though buyers may face some challenges in their search for homes).
If you have any questions about the housing market or real estate in general, don’t hesitate to reach out to us. I look forward to hearing from you!