Explore the future of the real estate market in San Diego, CA and discover what trends are expected to shape the industry in 2024.
Shift in Housing Demand
With the continuous population growth and increasing job opportunities in the area, the demand for housing is projected to rise. This will result in a higher demand for both rental properties and homes for sale. In December 2023, Alan Nevin, the Director of Economic Consulting Group at GAFCON, addresses concerns about California's economic outlook. Despite recent reports of a population exodus to Texas, Nevin points out that California experienced a net loss of 341,866 residents in the past year, but also attracted nearly half a million new residents, ranking third in the country for inbound migration. California remains an economic powerhouse with the sixth-largest gross domestic product (GDP) globally. Nevin emphasizes the state's stability, asserting that it is not on the brink of disappearing, and highlights the educational qualifications of newcomers, with over half of immigrants having a bachelor's degree or higher.
Nevin shifts focus to San Diego's real estate market, revealing that while sales dipped slightly from November 2022 to November 2023, the market remains robust. The decline in sales is attributed to a shortage of inventory, leading to higher interest rates and rising prices. Nevin expresses hope for a return to normalcy in interest rates in 2024. Despite the challenges, San Diego's real estate market shows resilience, with median prices for both detached and attached homes experiencing double-digit percentage increases.
For further details, the information is sourced from a presentation by Alan Nevin, Director of Economic Consulting Group at GAFCON, and the data on California's migration patterns and San Diego's real estate market is provided by the California Demographic Research Unit and the Greater San Diego Association of REALTORS® (SDAR), respectively. More information about Alan Nevin and his work can be found on the GAFCON website (www.gafcon.com). For specifics on San Diego real estate, the SDAR website (www.sdar.com) and contact information are available for additional inquiries.
Additionally, the pandemic has also influenced the housing preferences of individuals. Many people are now seeking larger homes with more outdoor space, as remote work becomes more common. As a result, there may be an increased demand for single-family homes and properties with spacious yards.
Influence of Interest Rates
Interest rates play a vital role in the real estate market, and their influence is expected to continue in 2024. NAR is predicting that the 30-year fixed-rate mortgage will average 6.3% in 2024. If interest rates remain low or decrease further, it can encourage more people to invest in real estate. Lower interest rates make borrowing more affordable, which can lead to increased homebuying activity.
On the other hand, if interest rates rise, it may deter some potential buyers from entering the market or make it more difficult for them to qualify for loans. This can potentially slow down the real estate market and impact housing affordability.
Impact of New Laws
New laws and regulations can have a significant impact on the real estate market in San Diego in 2024. These laws can range from zoning changes to new tax regulations. For example, Assembly Bill No. 968, now Chapter 95, was approved by the Governor on July 21, 2023, and filed with the Secretary of State on the same day. The bill, introduced by Grayson, adds Section 1102.6h to the Civil Code, focusing on disclosures related to single-family residential properties.
The bill mandates that sellers of single-family residential properties, who accept an offer within 18 months from the transfer of title, disclose specific information. This includes details about room additions, structural modifications, alterations, or repairs made to the property by a contractor, along with the names and contact information of the involved contractors. Alternatively, sellers can fulfill these obligations by providing a list of such changes given by the contracting party.
Additionally, if permits were obtained for the mentioned alterations, the seller must furnish a copy of the permit to the buyer. In cases where the seller contracted with a third party and did not receive permits, the seller should inform the buyer about obtaining permit information from the third party and provide the third party's contact details.
These disclosure requirements are applicable to the sale of single-family residential properties where the seller accepts an offer from a buyer on or after July 1, 2024. The bill aims to enhance transparency and ensure that buyers are informed about property modifications performed by contractors within a specified timeframe.
It is essential for real estate investors and homeowners to stay informed about any upcoming legislative changes that could affect their properties or investments. Adapting to these new laws and understanding their implications is crucial for navigating the San Diego real estate market in 2024.
Changing Neighborhood Dynamics
Neighborhood dynamics in San Diego are continuously evolving, and this trend is expected to continue in 2024. Certain neighborhoods may become more popular due to factors like proximity to amenities, new developments, or changes in demographics. For example,
The Chula Vista Bayfront Redevelopment.
A partnership between the Port of San Diego and City of Chula Vista, the 535-acre Chula Vista Bayfront redevelopment envisions a world-class destination in the South Bay – a unique place for people to live, work and play. It is designed to create new public parks and recreational adventures, improve the natural habitat, offer new dining and shopping options, provide a world-class hotel and convention center, and more – all for residents and coastal visitors to enjoy.
UNIVERCITY CONSTRUCTION
The UniverCity at Chula Vista project marked a momentous occasion with a groundbreaking ceremony that symbolized the city's commitment to advancing higher education, employment, and workforce development opportunities. This exciting development includes the construction of a state-of-the-art office space and the much-awaited addition of a new city library, the first of its kind since 1995. Located in the thriving Millenia master-planned community, the $96.4 million first phase of UniverCity is receiving $30 million in funding from the state of California, channeled through the California State Library. This transformative project is set to redefine the eastern side of the city and contribute to its continued growth and prosperity. State-of-the-art development opens in 2025.
Children's Park
After being closed for two and a half years, Children's Park in downtown San Diego has reopened following a $9 million makeover, a collaborative effort with Civic San Diego. The revitalized 1.4-acre park, established in 1995 along the Martin Luther King Jr. Promenade, now boasts a new children's play area, picnic tables, adult exercise equipment, an off-leash dog area, staffed public restrooms, a multi-use lawn area, and a vendor building. San Diego Mayor Todd Gloria highlighted the transformation of the previously underused space into a vibrant community hub, aligning with the city's vision for inclusivity and accessibility. The project, funded by developers' fees, also includes a public art piece titled "Petrichor" by San Diego-based artist Miki Iwasaki. The improvements align with the neighborhood's community plan, promoting diverse outdoor opportunities for residents, workers, and visitors. For further details, the source article by Emily Alvarenga provides additional information.
Investors and homebuyers should keep an eye on these changing neighborhood dynamics as they can present opportunities for growth and investment. Understanding the potential of different neighborhoods and their future prospects can help individuals make informed decisions in the San Diego real estate market.
Emerging Real Estate Investment Opportunities
The San Diego real estate market in 2024 is expected to present emerging investment opportunities. These opportunities can arise from various factors including new developments, infrastructure projects, or shifts in market demand. Identifying these opportunities early on can be highly profitable for investors.
For instance, the expansion of transportation networks or the development of new commercial areas can lead to increased demand for real estate in those locations. Keeping an eye on emerging trends and developments can help investors capitalize on the potential growth of the San Diego real estate market.
