I started this blog in April of this year and nearly 200 posts later we find ourselves in a real estate market that has made a significant change in direction. I had been predicting this in other forums and with friends and colleagues for awhile which makes the market move not a surprise for myself however given that this was a very unpopular prediction I feel somewhat vindicated.
At any rate I am going to diverge from my usual posts featuring price action on specific properties and market news to make some predictions for 2007.
1.) San Diego property will continue to decline in value with condos continuing to lead the movement down. This decrease will range from 5-25%.
2.) Downtown condos will depreciate another 10-25% in another slow and orderly decline similar to how 2006 played out. Quality will be key in terms of holding value.
3.) At least one more downtown condo project will go rental before completion. As noted on this blog the former Broadway Lofts condominiums has reverted to a rental project. A potential candidate for going the rental route is Solara Lofts which is an office building conversion project that should be finished by early summer, since sales haven't started yet it may be prudent for them to pull the development off of the market until prices stabilize.
4.) The massive number of new urban condos coming will continue to impact price declines in the attached sector of the market, however since many of the developers will decide to carry inventory for 3-6 months after project completion and since the natural tendency for construction projects to take longer than scheduled the inventory increase and price declines continue into 2008.
In summary the decline trend continues for 2007 with a bottom in the market pushed out past the coming year. A significant wildcard are interest rates which could drive a quicker decline if the one two punch of materially higher rates combined with adjustable mortgage resets combines to drive more foreclosure and short sale activity.
Have a great new year!