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1st Pacific Bank's mid-year real estate report

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Lease or buy? Build or renovate? Often, business owners are focused on their core business versus real estate decisions. However, their choices can have a significant impact on the bottom line. Making informed decisions with assistance from a trusted source can be a valuable asset to a business owner. A real estate banking expert helps customers understand real estate deals and what works best for their business.

The real estate banking experts at 1st Pacific Bank use a variety of methods to understand the local market. They watch trends and analyze key indicators. Plus, they validate research with real-world knowledge gained from advising customers in real estate issues. From this perspective, the real estate market in San Diego continues to show interesting trends halfway through 2006.

Commercial real estate

San Diego's commercial real estate market continues to show strong growth. A majority of activity is in office, retail, medical and industrial space purchases. Business owners facing increasing rent costs are choosing to purchase their space for as little as 25 percent to 35 percent down, depending on the loan involved. A mortgage is a long-term commitment; however, it can help get costs under control and build one more asset for the business.

Residential real estate

Considerable slowing in residential sales was predicted for 2006. However, there has not been a significant change. A robust local economy, interest rates that continue to stay fairly low and positive consumer attitudes have contributed to steady activity. Even though new home sales have decreased, it's still within market ranges when compared to the whirlwind of activity in 2005. Appreciation values continue to trend slightly downward and supply levels are reasonable as they compare to demand.

Compared to national levels, San Diego's home prices continue to be among the highest. This continues to pose a problem for first-time homebuyers trying to save funds for a down payment or afford monthly payments on a large mortgage.


If you are an investor in the real estate market, plan on a longer hold of property. With appreciation levels lower than prior years, along with higher interest rates and increased sales times, investors need to adjust expectations on returns to meet the current market trends.

In general, the real estate market continues to be fairly strong. There is positive growth, even though lower appreciation ratios coupled with higher interest rates have generated a slowdown in market activity. Real estate purchases may continue to slow down or plateau as consumers are a bit more cautious and investors are finding the market more realistic.

A great business bank

1st Pacific Bank is a San Diego-based, locally owned and operated financial institution, founded by bankers who understand this region's business environment. The bank offers a complement of business, personal and online products and services, focusing on small- to medium-size business customers. To talk to one of our real estate banking experts, call C.W. Southwick at (619) 757-1807 ext. 150, Rich Dickerson at (760) 643-1922 ext. 110 or visit www.1stpacbank.com.

Submitted by 1st Pacific Bank

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