San Diego Appraiser Blog

September 29th, 2020 3:06 PM

SanDiegoApartmentMarket
AverageApartmentRentsSanDiego
Source:  Costar, September, 2020

Even with the Covid-19 turmoil, apartment vacancy in San Diego is not expected to exceed 6%.  In our interviews with apartment managers, they indicate that vacancy and turn over issues are specific to the market area and property, with the coastal areas experiencing minimal if any impact.  The brokerage and lending communities are still adjusting and adapting to the rent control measure that took effect in January of 2020 that limits annual rent increases to 5% plus local inflation (7.2% for San Diego in 2020).  Most apartment sales marketing flyers and offering documents still look to rents on turnover.  While apartment appraisers now must look to upward trended rents and estimate that probable turnover rates for apartment properties.  Apartment construction costs in San Diego County have been ranging from $270.00 to $300.00 per square foot for replacement costs, which means higher apartment insurance premiums or risking being under-insured should anything happen to your property.  Apartment management fees are still ranging from 7% to 8% for most properties.  Apartment management fees have not rolled back despite the substantial rental increases over the past few years. 


Posted in:Market Trends and tagged: Apartment Indicators
Posted by Jennifer Chandos on September 29th, 2020 3:06 PMLeave a Comment

Subscribe to this blog
Board of Governors of the Federal Reserve System, June 2020 Monetary Policy Report. This report includes a very detailed assessment of the economy, the impact of the Covid-19 crisis, and projections based on information from June, 2020.  



FederalReserveJune2020Report.pdf



Posted by Jennifer Chandos on July 5th, 2020 4:10 PMLeave a Comment

Subscribe to this blog

The Congressional Budget Office Has Released an Economic Outlook Update as of July, 2020. CongressionalBudgetOfficeEconomicOutlookUpdate2020.pdf

Posted in:Market Trends and tagged: Economic Forecast
Posted by Jennifer Chandos on July 4th, 2020 2:44 PMLeave a Comment

Subscribe to this blog

Many apartment and commercial property owners have been waiting to learn if the eviction moratorium will be lifted.   Today the City of San Diego approved an extension of this moratorium until the end of September of 2020.   Our local NBC news has reported on this here: San Diego Apartment Moratorium 

Our office has been tracking and analyzing apartment rents and to date has yet to see significant discounting of apartment rents in most parts of the County.  Some units appear to be having longer marketing times.   This is happening because tenants are less likely to move and landlords are being very cautious about tenant screening at this time.  We have reviewed at least one national forecast that is projecting a 10% decline in rents by the end of 2020.  The SDSU college area and El Cajon appear to have been the most impacted so far, with students gone there is a higher inventory of one-bedroom units available.  







Posted in:General and tagged: Apartments
Posted by Jennifer Chandos on June 30th, 2020 5:53 PMLeave a Comment

Subscribe to this blog
June 1st, 2020 12:23 AM
Forbes Magazine is reporting on the revisions to the 2020 Realtor's forecast.
Link to article: Revised 2020 Forecast






Posted in:General and tagged: Market Trends
Posted by Jennifer Chandos on June 1st, 2020 12:23 AMLeave a Comment

Subscribe to this blog
May 31st, 2020 11:45 PM

According to the San Diego Union-Tribune, Costar is predicting a 10% decline in apartment rents in San Diego by the end of 2020 in light of the Covid-19 pandemic. Link to recent apartment article:  Union-Tribune Apartment Article   


Posted in:General and tagged: Apartments
Posted by Jennifer Chandos on May 31st, 2020 11:45 PMLeave a Comment

Subscribe to this blog
August 29th, 2019 10:03 AM

The Southern California Rental Housing Association released its apartment rent and vacancy survey this past month.  The publication reported that the City of San Diego apartment vacancy rate was at 4.3%, which is up from the same time in 2018, when the rate was 2.9%.   It should be noted that apartment vacancy rates are seasonal tend to be lower in the spring and higher going into the fall.  The average City of San Diego one-bedroom apartment rents were reported at $1,292, two-bedroom units at $1,850, and three-bedroom units at $2,407 per month.  The report noted that apartment occupancy was more evenly distributed county wide relative to the past, as all apartment property owners are benefitting from this period of very strong demand and limited market inventory.   


Posted in:Market Trends and tagged: Multi-Family
Posted by Appraiser Chandos Pacific on August 29th, 2019 10:03 AMLeave a Comment

Subscribe to this blog
November 29th, 2018 1:12 PM

There has been very significant upward pressure on apartment rents throughout San Diego County through 2018.  San Diego Apartment rental rates have increased approximately 6%, per year on a compounded basis.  Month-to-month apartment tenants typically pay rents that are approximately 10% higher than a tenant that commits to a full year lease.  Apartment managers have commenced very high tenant screening standards, are requiring higher deposits, proof of apartment insurance, annual walk-through inspections, and stricter lease terms. The high cost of residing in San Diego has caused an increase in out-migration of some residents.  However, the demand for rentals still far exceeds the supply.

 

According to Marcus and Millichap, developers are underway with 7,800 apartments with delivery dates extending into 2021.  More than 40 percent of this pipeline will be finalized in the next three quarters.  Most of these new multi-family projects are high end and near the urban core.  



Posted by Jennifer Chandos on November 29th, 2018 1:12 PMLeave a Comment

Subscribe to this blog


2015 Is Looking Bright For The San Diego Economy

The USD Burnham-Moores Center for Real Estate’s Index of Leading Economic Indicators for San Diego County rose a strong 1.3 percent in November and followed it with a solid 0.8 percent gain in December.  

Both months featured big positive moves in initial claims for unemployment insurance and help wanted advertising and gains in all the other components except for building permits.  November benefited from a sharp increase in local stocks prices and a smaller drop in building permits.  

With the gains in November and December, the USD Index has increased for seven consecutive months, and November’s gain was the largest monthly gain since February 2011.  San Diego’s economy did well in 2014, with jobs increasing by about 34,000 (before revisions).  

With the strong uptrend in the indicators and with most of them positive, the forecast is for continued growth in the local economy at least through the end of 2015.  The forecast for the year ahead is for job growth in the 35,000 to 40,000 range, which will drive the seasonally adjusted unemployment rate below 5 percent.  Sectors expected to do well are professional, scientific, and technical services, health care, and leisure and hospitality.   
 SanDiegoEconomy2015

Highlights:  A bad year for residential units authorized by building permits ended with a string of nine straight monthly declines and drops in 11 of the 12 months of 2014.  For the year as a whole, residential units authorized fell by 17 percent.  Whereas multi-family units led the gains in this component in recent years, they were responsible for much of 2014 losses.  Multi-family units authorized were down almost 23 percent for the year, while single-family units were down less than 4 percent. . . Both initial claims for unemployment insurance and help wanted advertising were extremely strong in November and December.  

This strength on both sides of the labor market resulted in the seasonally adjusted local unemployment rate falling to 5.6 percent in December, which was down from 5.9 percent in November and from 6.9 percent in December 2013.  It was the county’s lowest seasonally adjusted unemployment rate in six and a half years (since June 2008).  

Although the gain was not large, consumer confidence increased for the 11th consecutive month in December.  Good news in the labor market and falling gas prices likely contributed to the improved outlook by consumers. . . 2014 was a good year for local stock prices, which gained 9.20 percent.  By comparison, the Dow Jones Industrial Average, the Standard and Poor’s 500 Index, and the NASDAQ Composite Index were up 7.52 percent, 11.39 percent, and 13.42 percent respectively. . . The national Index of Leading Economic Indicators was up in 11 of the 12 months of 2014 and was unchanged in the other month.  After a weather-influenced decline in the first quarter, GDP growth has been strong, with the third estimate for the third quarter coming in at a robust 5.0 percent, which follows strong growth of 4.6 percent for the second quarter.  

December’s increase puts the USD Index of Leading Economic Indicators for San Diego County at 132.4, up from November’s reading of 131.4.  Revisions in the national Index of Leading Economic Indicators reduced the previously reported Index levels for July and August and the previously reported change for October from +0.6 percent to +0.5 percent.  For revisions to the previously reported values for the Index and for the individual components, please visit the Website address given above.  

Posted by Jennifer Chandos on February 9th, 2015 1:02 PMLeave a Comment

Subscribe to this blog

Current 2014 population estimates published by the Department of Finance are available at the link below, for all municipalities in the State of California including San Diego, Imperial, Riverside, and Orange County. 

Current California Population Data By City: 
CAPopulation.xls

This report provides revised population estimates as of January 1, 2013 and provisional population estimates as of January 1, 2014 for the state, counties, and cities and includes a calculation of annual percent change. These population estimates incorporate 2010 census counts. 

The methodology for the City and Unincorporated Area Estimates is based on housing units. The HUM is used to estimate total and occupied housing units, household size, household population, and group quarters population. Housing units are estimated by adding new construction and annexations and subtracting demolitions, and adjusting for units lost or gained by conversions. Annual housing unit change data are supplied by local jurisdictions and the U.S. Census Bureau. Occupied housing units are estimated by applying a derived civilian vacancy rate, based on 2010 benchmark data, to the estimated civilian housing units. Adjustments to census vacancy rates are made periodically. Exact data on foreclosures or other housing market indicators are not available to adjust vacancy rates. Military occupied housing units are added to civilian occupied housing units to calculate total occupied housing units. Military surveys are used to track military changes including base realignments and closures. Household population estimates are derived by multiplying the number of occupied housing units by the current persons per household. The persons per household estimates are based on 2010 census benchmark data and are adjusted by raking the current county population series into these estimates. The group quarters population is based on the Census Bureau’s 2010 SF1 File counts on group quarters and annually adjusted using reported changes for group quarters by state, federal, and local agencies. The household and group quarters populations are summed to produce the initial city population estimates. These estimates are aligned to the county estimates described below.

Source:  State of California, Department of Finance, E-1 Population Estimates for Cities, Counties and the State with Annual Percent Change — January 1, 2013 and 2014. Sacramento, California, May 2014. 


Posted in:Economy and tagged: San Diego Population
Posted by Jennifer Chandos on June 24th, 2014 10:41 AMLeave a Comment

Subscribe to this blog
June 24th, 2014 10:33 AM

Apartment vacancy fell to 2.8 percent this year, according to the San Diego County Apartment Association (SDCAA). That is down from 4.5 percent in 2013. This is the lowest rate since 2002, when it was at 2.5 percent. The current average rent rate for a studio apartment is $901, for a one-bedroom it is $1,092, for a two-bedroom it is $1,347, and for a three or more bedrooms it is $1,716.

The favorable demand for rentals has attracted increased investment.   Below is the most recent multi-family data for San Diego County.

ApartmentTrends


Posted by Jennifer Chandos on June 24th, 2014 10:33 AMLeave a Comment

Subscribe to this blog

The State of California has projected the following growth rates for San Diego County:

• Total employment is expected to increase by an average rate of 1.9 percent per year over the next five years.

• Average salaries in San Diego are well above the California state average, and will remain so over the foreseeable future. Real average salaries are expected to rise by an average of 1.1 percent per year.

• The fastest rates of growth will be observed in information and professional and business services. These sectors will increase by annual average rates of 3.8 percent and 2.9 percent, respectively.

• Population growth is expected to accelerate, reaching 1.2 percent by 2017. Annual growth is expected to average 1.1 percent from 2014 to 2018.

• From 2014 to 2018, an average of 9,600 net migrants will enter the San Diego county each year. This represents a dramatic increase over the previous five years, in which total net migration was virtually flat.

• Real per capita income in San Diego is expected to increase by an annual compound rate of 2.4 percent.

• Total taxable sales are expected to increase by an average of 2.5 percent.

• Industrial production is expected average of 3.8 percent per year from 2014 to 2018.

 

SanDiegoEmployment

Source:  California Department of Transportation

 


Posted in:San Diego Economy and tagged: Forecast
Posted by Jennifer Chandos on June 3rd, 2014 10:15 PMLeave a Comment

Subscribe to this blog

The retail commercial real estate market is showing consistent improvement. We are seeing reduced vacancy, upward pressure on rents, and higher prices per square foot being paid along major commercial streets in the Spring of 2014. The most recent graphs from Voit Commercial illustrate the gradually improving market conditions throughout San Diego. We are also seeing significant downward pressure on the capitalization rates of triple net leased investments. Capitalization rates for fast food restaurants are currently under 5% for well located national chains in San Diego County.

RetailRealEstate

 


Posted in:Commercial Appraiser Blog and tagged: Retail
Posted by Jennifer Chandos on May 21st, 2014 6:54 AMLeave a Comment

Subscribe to this blog

The San Diego Multiple Listing Real Estate Data Service, SANDICOR, has successfully launched its new system Paragon this week. Paragon was designed to be mobile friendly, work on all kinds of devices and browsers, allow for multiple searches at one time, the uploading and display of slide shows, and new tools that allow appraisers to analyze data in greater detail. The new MLS system includes embedded training videos and they will do training sessions at larger real estate sales and appraisal offices on request. My appraisal office started using and testing the system when they rolled it out as a transitional system. Paragon has worked very well on our new computer systems using multiple browsers and is a major improvement over the prior MLS real estate data portal in terms of the new search tools and speed. Congratulations and our thanks to SANDICOR for such a successful and well planned launch.


Posted by Jennifer Chandos on May 21st, 2014 6:47 AMLeave a Comment

Subscribe to this blog
April 4th, 2014 2:15 AM

Cassidy Turley Commercial Brokerage has released its San Diego 2014 Commercial Real Estate Forecast publication. This real estate market forecast discusses industrial, office, retail, apartment, hotel, and investment market trends for San Diego County. The report goes into detail about vacancy rates, absorption, and commercial rental rates. Because the report includes year end statistics, compiled from many sources, this publication is typically released in the Spring. Their Research Department always does an excellent job and this publication is constantly improving. Below is a synopsis from this report and a link to the complete report.

Commercial Real Estate Market Forecast Synopsis

Office: In 2014, the negotiating power between landlords and tenants in the Class A central core submarkets is expected to shift further supported by strengthening leasing fundamentals and moderate new construction. Countywide office vacancy is forecasted to decline 40 bps to 14.3% by the end of 2014 and Class A vacancy is expected to drop below the pre-recession level of 11.7%.

Industrial: The industrial market continued its growth in 2013 with its 10 consecutive quarters of positive net absorption. Until new speculative construction returns, the steady absorption of existing available inventory will continue to drive vacancy rates lower. The countywide direct vacancy rate is forecasted to decrease by 120 basis points to 5.9% by the end of 2014 and fall below the pre-recession level.

Retail: Continued pressure on asking rents and competitive concessions offered by landlords will support positive leasing activity in 2014 resulting in a moderate decrease in the countywide total vacancy rate from 4.5% in 2013 to 4.3% in 2014. The recovery is underway, albeit sluggish, and is much more evident in the prime coastal submarkets compared to the rest of the county. Retailers will continue to compete for the most visible locations, investors will continue upgrading existing properties, and new ground-up construction projects have begun.

Investment: The San Diego commercial real estate investment market transaction volume reached $5.1 billion in 2013, marking the 4 consecutive year-over-year gain in volume, a trend that is expected to continue in 2014. The Federal Reserve Committee’s reassurance of a highly accommodative stance of monetary policy, an increased availability of capital and easing lender standards will positively support the investment environment. Demand for top products in secondary markets including San Diego will remain strong, but will be met with a shortage of large scale offerings.

Multi-Family: Development activity has heated up, making the multi-family sector the first to fully recover and begin sustainable expansion. Fueled by pent up demand and historically low interest rate financing, investment activity in this sector is forecasted to remain fierce. With household formation and employment poised for moderate improvement, San Diego should expect to see vacancy dip to 2.5% and rental rates rise slightly by the end of 2014.

Overall, we expect 2014 to be a stable year for San Diego’s commercial real estate market. San Diego will increasingly be a relatively attractive market for investors to place their money in 2014. There will be attractive leasing opportunities for tenants/users that do not need to be in large Class A projects in the core markets. 


 


Posted by Jennifer Chandos on April 4th, 2014 2:15 AMLeave a Comment

Subscribe to this blog