Wednesday, Jan. 31, 2007 | In the article “In Cooling Market, Condos Keep Coming,” Kelly Bennett makes the same mistake that most other writers do when reporting on downtown San Diego; specifically, she ignores units that are under construction and under contract — treating these as “unsold” since they haven’t closed. She references “The Mark” and its 244 units at the bottom of her article, but only 100 of these remain “unsold.”
There may be 3,414 condos currently under construction downtown, but most of them are already sold. Currently, there are about 180 new, unsold units on the market ready for move-in, with another 850 scheduled for delivery this year, and another 180 new, unsold units to be delivered next year. A total of about 1,200 new condos to be sold in the next three years. This is a glut?
If you eliminate 2004 and the 2,750 units sold that year, downtown San Diego averaged almost 1,600 sales per year over the last five years. This includes resales, which average about 500 per year. At this rate, we have enough condos downtown for about one year, and then we have a serious shortage for at least two years after that.
Considering that we are projecting less than 9,000 permits to be pulled for all of San Diego County in 2007, we are still only building about one-half of what we need for our region’s job growth. Add to that the fact that apartment vacancy rates are under 3 percent, and we have a serious housing shortage, despite what articles like these present. Rental rates were kept artificially low for the last few years due to low interest rates, but have been rising dramatically for more than a year, and are projected to continue rising for the foreseeable future.
Aside from the damage to an important part of our economy, stories like this hurt the first-time home buyer the most. At a time of rising rents, low but rising interest rates, motivated sellers and shrinking supplies, rather than more doom-and-gloom, you should be telling them their time has come.