92122 UTC: What im seeing

[Robert Comstock]

So I'm a condo owner in UTC.  I bought my property back in 2012 just before the "Property Value Moon Launch" and I have noticed a few things going on that I wanted to discuss.

Observation 1.  Rentals in the area are charging about 1000-1400 per bed room (I like to relate price to bed since student rentals here kind of revolve around that Idea and seems to be a significant factor.....how much does Mom and Dad need to pay to keep Johnny UCSD student Housed.  This means property purchased back in 2012 is just starting to cash flow nicely.

Observation 2.  Last month sales here on the top end (1mil +) houses have started to stall.  Initial offering prices are dropping (slightly) in this range and houses are on the market longer.

Observation 3.  Bottom End housing (2 bed condos) are bumping up above 400K, and don't seem to fly off the shelf....but are still moving.

Observation 4.  A lot of rental product is just now hitting the market and will be coming on line in the near future.  A condo high rise building is currently being built onsite of the UTC shopping mall....another high rise across from the mall is just coming online....I think they are now renting.

Observation 5. The homeless caravan (aka the trolley) will soon have direct access into the heart of UTC.  Property around the trolley line has already started discounting a bit

Soo the question is do you think the value for UTC rental property is going to be capped out for the foreseeable future?

Opinions?

[Dan H.]

San Diego property price has never been capped; it just keeps going up.  In the late 1970s the price seemed high (and it was considering the interest rate), in the early 1990s the price seemed high (and it was considering the interest rate), in 2006 the price seemed high.  Guess what?  All those prices seem low today.  

San Diego has one of the best climates in the US. There is a significant housing shortage in San Diego. The vacancy rate is real low. San Diego is constrained on the north by Pendleton, west by the Pacific, and south by Mexico. East quickly gets harsh; can you imagine living in near Anna Birrego in the summer? it costs about $100k to break ground on a SFR in San Diego. The environmental variation is matched by very few places (ocean/Beach, mountains, desert).

History tells me that a decade or so from today these prices will seem low.  It costs a lot to live in one of the finest places in the US.