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Housing report: East County

Expert: Buyers less concerned that prices will fall

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A model home at the new Morning View development in Santee, which has recently sold out.

Tighter supply is reflected in price changes throughout San Diego County, and David Warren of McMillin Communities said that while sales are up, pricing remains flat.

The average price for a detached home is $374,000, said Russell Valone, president and CEO at MarketPointe Realty Advisors.

“That’s down from $500,000 one year ago. It’s down because of downtown product is a small sliver of product — the higher priced [property] is not available,” Valone said.

The average price for detached properties is $629,000 countywide, $30,000 more than one year ago, and $65,000 more than nine months ago, Valone said.

“Prices are starting to move up because supply is less,” Valone said. In 2008, 2009 and 2010, San Diego County was averaging 10 to 12 new projects per quarter. Over the last nine months, Valone said the county has averaged seven to nine projects per quarter.

One of the biggest things driving the marketplace are the interest rates, and “there’s not as much concern that prices are going to continue to fall,” Valone said.

Las Brisas in Santee was the most active development in East County during the second quarter, with nine units sold, seven unsold and 12 remain for development.

The Morning View development in Santee by developer McMillin Communities sold five units in the second quarter, the last of its 46 total units.

“At the Morning View project, the propensity for single stories was very high,” said David Warren, senior vice president of home building at The Corky McMillin Cos. “Forty to 50 percent of homes were single story, even though we offered both.”

Verandas were also popular in the Morning View development, he said, as well as multi-car garages, large backyards and energy efficiency.

Buyers are looking for functional space and formal living areas are “not necessary anymore,” Warren said. Only about 25 percent of buyers want to have a formal living area.

Most of the buyers at the Morning View development came from a five to 10 mile radius, according to Warren.

“In general, we’ve seen traffic up in all sales offices. Sales are up, pricing remains flat,” Warren said. “People are starting to get off the fence – they’ve been sitting on it for five years or more.”

One challenge Warren said he faces is the availability of finished lots.

“You can’t develop a lot for what a house sells for. There’s not too many finished lots out there anymore,” he said, and that won’t change “until pricing starts going up. No one is going to give lots away.”

There were three active developments in Santee in the second quarter. Twenty-two units were sold, eight remained unsold, and 12 remain for development, according to data provided by MarketPointe Realty Advisors.

Developer McMillin Communities had four active developments in the second quarter — one in Santee and three in Chula Vista. Thirty-two units were sold in the second quarter, 15 remain unsold and 140 remain for development.

Of the 2,797 units remaining for development in the county’s active housing projects, 1.25 percent, or 35 are in East County, according to data provided by MarketPointe Realty Advisors.

Five of the 118 active projects — those with unsold houses, units remaining for development or that sold units in the second quarter — are located in East County.

There were 734 new homes sold in the county during the year’s second quarter, 3.68 percent of which, or 27, were sold in East County.

Central San Diego was the only submarket that saw less activity in the second quarter, according to Valone. San Diego County as a whole saw an 8.4 percent increase in activity.

“Downtown, the supply is diminished. Nothing new is coming online,” Valone said. “The market is improving. We’re not back to anything near the heydays of the past. It’s better quarter over quarter, and you have to go back to the first and second quarters of 2010 to find a better quarter than the second quarter 2012."

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