Wednesday, December 24th, 2008 at 4:15 PM
Downtown SD Condo Market
From the Union-Tribune:
Buyers flock to resales amid glut of new condos
The ubiquitous construction cranes that not long ago pierced the downtown San Diego skyline have largely disappeared, leaving in their wake hundreds of unsold condos that were planned years before the current real estate slump.
Developers who once snapped up downtown land with almost giddy abandon have retreated amid falling prices and low demand. Of the 22 condo buildings in which developers are offering units for sale, all but three have completed construction, and 1,549 condos remain unsold.
It would take more than five years to sell that many condos if the sluggish pace of sales during the past year were to continue, according to MarketPointe Realty Advisors, which tracks the new-home market.
Meanwhile, nearly two dozen additional apartment and condo projects with more than 3,400 housing units have been approved. But none are slated to begin construction anytime soon, according to downtown redevelopment officials.
“Those projects won’t be developed mostly forever,” real estate analyst Gary London predicted. “This market is in lockdown, as well it should be. It needs time to resuscitate. Except for the few cranes in the air, that’s the last you’ll see of them for at least six years.”
The full article:
Posted on Wednesday, December 24th, 2008 at 4:15 PM in Builders, Forecasts | 8 Comments » | 
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I remember about two years ago on this blog debating the suggesting that San Diego was just a few years away from running out of land. Downtown was going to “run out of housing”.
Today in UTC, I still see plenty of land and unfinished projects less than a mile away, and new homes are being hit much harder than existing. In fact, if you only look at new or existing home sales and not REOs from foreclosures, we’re almost down to half from last year.
That said, sales are important because realtor’s should be able to make a living whether the market goes up or down. It’s only in recent years that people have been so dependent and self-invested on a bubble that anything less would be a disaster.
This bubble was kind of like people who have no money to find shelter, so they burned what little money they have for warmth. Or alcoholics who drink to forget that they’re alcoholics. Even today you see people and the government doing everything they possibly can to create a new price bubble, without realizing that was a key component of the problem.
BDiego | December 24th, 2008 at 4:33 pmMerry Christmas, Jim.
Thanks for this great blog.
Smithers | December 24th, 2008 at 5:25 pmThanks Smithers for being a long-time devoted participant – Merry Christmas!
Jim the Realtor | December 24th, 2008 at 5:44 pmInteresting article. Personally, I hope downtown San Diego makes it in the long haul. Although I’ve lived here for years, one thing that’s always bothered me is that San Diego seemed to have no soul. It’s really only in the last 5 years or so that downtown has really developed some character, rather than just being a line of tourist trattorias. It would be nice to see that renaissance continuing. But it will be harder to happen if there are blocks of empty housing, reams of foreclosures, and deep-discount renters.
Dwip | December 24th, 2008 at 7:25 pmThere is only a “glut” of condos because the sellers won’t lower them to the price required to move them.
The thing they’ll learn in the next two or three years is that you don’t make the problem go away by closing your eyes. The market will give them a lesson how economics works.
greenlander | December 24th, 2008 at 7:28 pmEven as a downtown resident, who’s been following the market semi-closely for a year, these figures were shocking.
1,549 unsold condos.
Does that number refer only to for sale by builder condos, or does it represent the entire market? If 1,549 describes the former, then just… wow.
I love downtown. Hope it pulls through. But I’m doing the rent/buy and buy to rent out calculations frequently, and the numbers are not looking good. Prices will have to move one way or another. The Fed will probably take care of tis via inflation…
Even with the buildings in which most units have been sold by the builder, there was so much spec and 2nd home activity that most of the building remains for sale on the secondary market anyways. But of course, everyone who’d read this blog already knows that :]
Merry X-Mas folks.
Mercutio.Mont | December 25th, 2008 at 10:26 pmFrom the article, “When Canadian Pointe of View Developments started construction more than three years ago on Vantage Pointe, a 40-story condo tower in East Village, there were no warning signs of a deep housing malaise.”
No warning signs? Really? Oh, that’s right, I forgot, nobody saw this coming…
Troubled Loner | December 25th, 2008 at 10:52 pmA lot of the new downtown condos currently for sale will turn into rentals in ’09. Aperture is a good example. The developer sold 60 of the 70 units (how, I have no idea) and is going to hold onto the last 10 as rentals. They won’t have much trouble finding a lender to finance the 10 rentals as they’re going to put up a chunk of equity in the deal. Anyhow, we’re going to see a lot of that, although I think we’re going to see more cases where only 40%-50% of the building is sold such that half the building is rented out. So, a lot of the units currently for sale will be sucked up rather quickly… but not by end buyers, rather by the developers or by groups buying out the developers’ units and financing them as multi-family residences.
Dave | December 26th, 2008 at 3:24 pm