New Residents Push Demand for Real Estate
The average price of a resale detached house in San Diego County hit $386,172 in October, a 25 percent increase above the $308,402 recorded in October 1999, statistics from the San Diego Association of Realtors show.
The average price of an attached condominium home reached $213,941 as well. That’s a 28 percent increase over the $167,000 average sale price recorded in October 1999.
“There’s no doubt, it’s low supply and high demand that’s driving prices higher,” said Mark Riedy, director of the real estate institute at the University of San Diego. “We have low unemployment, and people moving up and out of rentals, so there is a lot of pressure from the bottom on real estate prices.”
He said he anticipates the housing affordability crisis getting worse in the coming decade. That’s because there are only 9,000 to 10,000 dwelling units being built each year in the county, but about 50,000 new arrivals are taking up residence here annually, according to the San Diego Association of Governments.
Riedy sees higher-density redevelopment of neighborhoods in the urban area as one solution to the affordability problem. Building self-contained communities complete with houses, industrial and retail buildings in rural areas may be another possible solution, he said.
“I don’t see any downturn in prices in 2001 or 2002, although whenever it does come, there are a lot of two-income families that are going to be hurt badly if one of the couple loses employment,” Riedy said.
The average resale home price of $386,172 is fast approaching the average sale price of a new house, $392,000, said Russ Valone, president of MarketPoint Realty Advisors of San Diego.
Usually, a resale house sells for 10 percent to 15 percent less than a new house the same size, he said. But because there is so much pent-up demand for housing that gap is closing rapidly.
He also said higher-density redevelopment in the urban area will help alleviate the housing crisis.
“Affordability is a statewide issue,” Valone said. “We realize that the housing crunch is Southern California-wide.”
Both of the men said in order to encourage building of affordable single-family attached housing, construction defect laws need to be eased. They said that current laws have stifled developers fearful of being sued for construction defects years after they build a project.
While prices have continued to increase, the number of sales has fallen so far this year, according to the real estate agents group.
In the first nine months of 2000, 19,194 houses closed escrow, compared to 21,470 in the first nine months of 1999. Almost 9,700 condos and attached houses closed escrow in that period, compared to 9,930 for the first nine months of 1999.
