Finding a pessimist among real estate agents nowadays is like trying to find a financial analyst predicting a downturn in the stock market.
The residential real estate industry continues its frenzied seller’s market as homebuyers push the demands of new homes resulting in higher prices and lower inventory in San Diego County.
The San Diego Business Journal ranked the residential real estate agencies on The List by the local sales volume generated in 1999. In 1999, the top 20 real estate agencies reported a combined $13.8 billion in local sales volume, an increase of 17.7 percent from $11.7 billion in 1998.
Eighteen of the 20 real estate agencies reported an increase of sales volume in 1999. Of the 18 agencies, nine of them showed an increase of 20 percent or more in 1999.
– Optimistic About
“The sales figures are going up daily on leaps and bounds,” said Fred Bradley, co-owner of ERA Eagle Estates Realty, No. 16 on The List. “I don’t see any reason for this trend to slow down soon.”
ERA Eagle Estates reported $120.3 million in 1999 sales volume, with 1999 gross commissions of $3 million.
Bradley said the San Diego real estate market recovered significantly from the devastating effects of the recession in the early ’90s.
“After General Dynamics began laying off people, families started to move out of San Diego,” Bradley said. “It affected the economy and the real estate market locally.”
Bradley described San Diego as a slow period for the real estate market during the early ’90s.
– High-Tech Expansion
Affects Housing Demands
Patrick Park, owner of Prudential Dunn, Realtors, No. 19 on The List, said the high-tech expansion in San Diego changed the demands for housing locally.
Prudential Dunn showed an increase of sales to $87.3 million in 1999, a 6 percent increase. The 1999 gross commissions were $2.5 million, with 318 local sales closed.
“There’s an influx of people into San Diego,” Park said. “Some people are either picking out their retirement home or moving here due to a new high-tech firm.”
He hinted at San Diego as the next “Silicon Valley of California.”
“The only thing that separates the two regions is the amount of industry,” Bradley said.
– On A Roll With
He said companies like Qualcomm Inc. and Gateway are attracting many high-tech firms and start-ups to San Diego, thus bringing higher-paying jobs.
“We’re attracting all these people with stock options and investments,” Bradley said. “It’s like hitting the lottery.”
No one is predicting a decline in real estate sales due to signs of a slowing economy and rising interest rates.
“People who are buying are simply annoyed at the rising rates, but they’re still going to buy,” Bradley said. “The only people influenced by the rates are those who can’t afford to buy at the low end of the market.”
Currently, conventional mortgage rates in California are 8.06 percent for a 15-year mortgage, and 8.46 percent for a 30-year mortgage for the week ending Feb. 25, according to Butler, N.J.-based HSH Associates, a publisher of mortgage information.
– Mortgage Rates
Park maintained the mortgage rates are more attractive now than they were decades ago.
“I remember when rates were at 9.5 percent back in the ’70s,” Park said. “Psychologically, only a few people might be concerned about these rates.”
With more demand, San Diego experienced some drawbacks including higher prices and fewer homes to sell.
According to the Greater San Diego Chamber of Commerce, the average price of a single-family home rose to $270,900 in 1999, and is expected to increase to $298,000 in 2000, nearly a 10 percent increase.
In addition, the chamber forecasted 15,000 new housing units for San Diego in 2000, which is far short of the 24,000 units needed for the predicted population increase in San Diego.
“San Diego seemingly became a place for the rich,” Bradley said. “There are a lot of people in San Diego who can’t afford to buy or rent.”
– Condo, Apartment
Bradley predicts there will be more construction toward low-end condos and apartments.
Park said the average price for a home he sells is around $300,000. His agency sells a range of inexpensive homes and condos to high-end homes.
“Low-income housing and rent costs are rising dramatically,” Park said. “The problem is the underlying land value has increased in the past couple of years.”
However, Park believes areas like Clairemont, Golden Hill and South Bay would be revitalized and become affordable to the average buyer.
“Everyone should have a chance to reach that American dream of owning a home,” Park said.