Building A New Home In San Diego And The Double Dip Recession
There is no argument that the economy, both globally and nationally, still struggles to free itself from the grip of a terrible recession. Depending on who you listen to, the country is either in a slow recovery, sitting in stasis waiting to see what happens or slipping over the edge into part two of a downward spiral in a “double dip” recession.
Somewhere between the “pie-in-the-sky” group and the “doom-and-gloom” crowd lays the truth. That’s almost always a given. But where along that sliding scale do we lay in reality; most particularly in San Diego, CA? Much confusion clouds the answer because to a degree, all three positions appear to be right.
Status of the National Real Estate Market
Nationally, the residential real estate and new home construction sectors of the economy are still taking a beating. But this doesn’t hold true across the board. There are exceptions. Not everywhere experiences the effects of the housing double dip.
The best indicator of where a local new housing market is headed looks at where it has been in the recent past and where it is today. It must be viewed in a micro, as opposed to macrocosmic, way. Much like the politics that affect them, all real estate markets are local.
In December 2010, the Wall Street Journal published the results of a survey of 55 leading economic experts and their predictions for 2011 on a national scale. They collectively put the odds of a double dip recession at 15 percent, which is down from 22 percent three months prior in September, 2010.
Additionally, they predict that the GDP will rise 3 percent over the course of 2011; an increase of roughly .5 from the average increase of 2.5 percent the last two quarters of 2010. They cited recent figures on trade, retail sales, consumer sentiment and manufacturing as leading indicators in their findings. Also encouraging was the compromise on the Bush-era tax cuts; to include an unforeseen temporary payroll tax cut.
All that being said, there is a pall that still hangs over the horizon that may hamper economic growth nationally; unemployment. According to the survey, the experts don’t see the unemployment rate of late December 2010 of 9.8 percent to rise, but they predict a slow decline to about 9 percent by end of year 2011. They attribute this to the slow pace in jobs growth.
While the national housing market shows some signs of stabilization, sales and new construction are barely moving in most locales. The experts predict that the price of homes will remain relatively flat with only a trickle of new home starts. Add to that the absence of tax break incentives available in prior years and the appetite to purchase a new home dwindles a bit.
A Look at New Homes In San Diego
But there is good news for people who want to buy or build a new home in San Diego in 2011. This may well be the year to buy the new home of your dreams for several reasons.
The Standard & Poor’s/Case-Shiller index, widely considered a gauge of the housing market’s health, posted declines in housing values for October-November, 2010 in 19 out of 20 metro areas it tracks. The single exception was San Diego, where prices remained flat.
Only Los Angeles, San Diego, San Francisco and the Washington region posted year-over-year gains in November. In aggregate, prices dipped 1.6 percent in November from the same time a year earlier, falling in 16 cities.
There few predictions that the housing market will decline again in San Diego, but it will not soar to new heights in 2011 as it has in the past. Economists predict a slow and gradual rise in the local real estate market making it a leader in the national economic recovery.
The local economy is gaining traction as well. Consumer confidence is expected to grow again this year as it has steadily since 2009. Although still in the double digits, unemployment is improving due in large part to the diversity in employers: biotech, communication, military, tourism, and the emerging green technology market. These movers and shakers are pushing the region to the top of the list in the recovery.
Custom home builders are gearing up to grow as well as projections are made that the new home market will be recovered by late 2011 to mid 2012. Shapell Homes, Standard Pacific and New Pointe Communities are ramping up residential development acquisitions to meet demand for building new homes as the recovery picks up steam.
Now Is the Time to Buy or Build a New Home
There is currently a balance between supply and demand in the new housing market in San Diego County, but that can change overnight in a recovery. When demand exceeds supply, expect to see sharp increases in the price of housing very quickly. With the market at the current low, those who purchase early will garner all the instant value increased equity brings.
Interest rates are at historically low rates and will predictably stay so through the early stages of the recovery. Most experts agree that rates will edge up toward the end of 2011 as new home inventories deplete and fence-sitters jump into the market. As with prices, securing lending early is better than later to guarantee the best opportunities.
Short of the long is there may never be a better time to buy or build a new home in San Diego, CA. But the window of opportunity won’t be open forever on what may well be the chance of a lifetime. Whether you are a home buyer or an investor, talk to a qualified Realtor about the many new home and real estate development opportunities on the market today.
Visit Shea Real Estate & Investment Group for help building a new home in San Diego, CA. For investors, Shea also offers many great real estate development opportunities.
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