Low housing inventory is pushing up prices and creating a positive outlook for the market, San Diego County Treasurer-Tax Collector Dan McAllister told a group of Realtors on Friday.
“It is looking up — if we look back a year ago or so, we see that there were three times as many listings out there, now there are about a third as many. What that says to us is that it’s going to push prices. It’s already started in a lot of areas,” said McAllister at the San Diego Association of Realtors economic outlook presentation.
With values up, there’s more opportunity to put properties on the market, said Donna Sanfilippo, SDAR president.
“Because now they’re catching up, they’re gaining a little equity and people are ready now to maybe make that initial move into either moving up or moving down, which we see a lot of transitioning from single family homes into condominiums. There is pull in both directions. And we’re seeing just about a steady 1 percent across the board, month to month,” said Sanfilippo.
The number of offers coming in on reasonably priced homes has also been increasing, said McAllister. He told the Realtors to encourage sellers to be realistic with pricing because realistic prices are garnering two, three and four offers within the first week or two in some areas.
“Solana Beach had the No. 1 growth last year of all the communities, we understand from the assessor’s office, in terms of valuation increases. That market is hot. Last time I checked, east of [Interstate 5], there are three to five listings only. That’s incredible. Low crime, nice neighborhoods, good schools, good scores, nice people,” said McAllister. “The area in South Bay — EastLake, Otay — there has been a bottoming out there because we have seen the dropping of prices down to a more realistic number in many cases, so that they get multiple offers in many cases on properties. And, they can turn them around and create cash flow if they’re using them as investment properties. In other words, the rent payments come in to help them pay their mortgages, and there’s an offset there. Those are good signs.”
The low inventory is driving prices up because of the supply and demand nature of the business, said McAllister.
“The supply is low, the demand is still high — people want good schools, people want good neighborhoods, people want good places to live. San Diego is a magnet for that. What is there not to like about San Diego?” said McAllister. “We still have positive in-migration every year, meaning more bodies — people are coming here. We still see growth in the economic cycles in San Diego. And in spite of unemployment ... hovering around 8.9, 9.2 … we have a lot to be thankful for in the way of a lot of jobs here.”
Despite the downturn in national defense spending, McAllister said San Diego is “still like a sponge absorbing” and is still receiving money.
“We are a very diverse economy also, which gives us protection. In other words, we’re not a one-trick pony anymore. After the fall of the Cold War and the Berlin Wall, we started to diversify … so well that at no one time are all the sectors down, and at no one time are they naturally all up either, but the progress that we’re making by adding jobs is very positive here. We see a lot of action and a lot of activity,” said McAllister.
San Diego has also diversified in terms of its demographics, said McAllister. The demographics of San Diego are changing, with less than 50 percent of the population being white, down from 95 percent in 1960, he said. In 2002, when McAllister first took office, the staff in the South Bay was receiving 70 percent of its phone calls in Spanish — and not one person in the office could speak the language. This caused the South Bay office to change to employ bilingual workers, and in total the office can speak 14 different languages.
“The ability to help the community with all kinds of parcel owners — it’s important for your own business model,” said McAllister. “Get familiar with your new customers.”
The number of single-family properties reaching the tax sale process experienced a noticeable increase this year, said McAllister. These properties go to sale when the owner fails to make tax payments for five years or more. Five years ago, 2007, was the start of the downturn in the economy, and these properties are just making their way to the annual tax sale, he said.
One of the only positives to the foreclosure situation, McAllister said, is that banks “rushed down to pay taxes” on every property. The banks don’t want a tax blemish, on the property profile or analysis, he said. Banks also don’t appeal a valuation on the tax bill.
“If they did, there’s a good likelihood that the valuation would come in a lot lower than the loan they maybe shouldn’t have made. And more importantly, if they got that re-evaluation, what would they have to do? Disclose it,” said McAllister.
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