California is known for hot real estate markets, and San Diego is no exception. An average household income of $103,165 is needed to afford just a median-priced home in the area, with San Diego listed as one of the 10 hottest markets in 2016.
With prices on the rise, real estate is an investment that seems sure to yield dividends in the future.
But there isn't much real estate available with listings decreasing by almost a third every year. These high values in a small market make every residential property matter. A San Diego property management company becomes more important as rents rise to meet tenant demands.
But will these trends continue? Discover some of the top trends shaping the Southern California real estate market in 2017.
Foreign buyers are still thinking big.
There has been an exodus of foreign real estate investors looking to buy North American real estate, especially from countries such as China looking for solid investments for their assets. Vancouver, BC used to be one of the prime locations for these investors, but they recently instituted a 15% tax on foreign purchasers, resulting in an 81% drop in buying inquiries in August 2016.
These buyers aren't going to Vancouver, but they aren't going back home either. This change in foreign real estate investment has helped spur real estate prices throughout the west coast.
The biggest cities are running out of room.
Rent and real estate prices in Seattle and San Francisco are no secret. People view these costs from across the nation and often realize they are priced out of the area. Medium-sized cities often become a more desired locale due to a manageable cost of living.
A San Diego property management company can capitalize on this demand by offering better values to both property owners and tenants, providing housing at more affordable costs than larger cities like Los Angeles or San Francisco.
Mortgage rates expected to keep rising.
Local buyers may find renting a home more appealing, as mortgage rates are predicted to keep rising. The Fed's rate-setting board predicts three more rate increases in addition to the raised interest rates in December of 2016. This may keep some potential buyers out of the real estate market, choosing instead to extend leases. San Diego rental property owners may experience an increase in long-term tenants because of these increases.
These rate increases aren't expected to kill the market, though, as the increases are expected to cap at 4.3 percent on 30-year fixed rates.
Lenders hope to keep pace with looser loan criteria.
While rates may increase, Redfin predicts that fees will go down. This is an expected continuation of a trend started with the Obama administration in 2015.
Reports also state the Fannie Mae and Freddie Mac, government-owned mortgage companies may finally be adjusting their loans to accommodate larger mortgages. While many are cautious about these increases, it has been over a decade since these caps have been adjusted. The increase in borrowing allowance many help many to keep pace with inflation.
New home construction is still booming.
While not the rush experienced in previous years, new single family homes and multi-family properties are still being built across southern California all the time. With a shortage of existing residential properties available, building is expected to increase -- not drop. In addition to the demand, home builders are also being enticed by higher wages and looser credit requirements.
So what makes San Diego property management so unique? Cities like San Diego, Riverside, and San Bernardino offer many of the amenities of larger LA living, without the higher property costs or traffic gridlock. The real estate market provides appeal for both foreign and domestic buyers as prices are expected to continue to rise, yet these rising prices also help spur an increase in rental demand for younger or lower income persons who are being priced out of the market. This is especially beneficial in San Diego, with many younger renters who are still in school at one of the local universities.
As 2017 takes shape with so many political changes, it will be interesting to watch the real estate market unfold, especially if it continues on at this pace.