When it comes to investing in a California property, San Diego beats other cities as it continued to demand high price tags across all property types for the second half of 2018. In the report released by CBRE, San Diego properties, particularly for office and industrial types posted strong sales volumes. Commercial and apartment H2 sales remained stable but almost doubled its H1 totals along with increased price per square foot per unit on most types of assets.
Why is San Diego a Property Hot Spot?
Most investors put their trust and money in the San Diego market following a number of factors. San Diego was ranked No. 11 among the most desirable places for real estate investing. Investors have more confidence in San Diego’s real estate market because it has a diversified economy and low vacancy rate. Additionally, the city still has a lot more room for development. Low supply of development sites and new industrial establishments and offices in the area means more people will rent. Thus, higher returns for investors.
As more investors put their money into the property market of San Diego, whether it be for a new structure or for fixing up an old building, the local economy improves and this will further increase their profit. For 2019, more capital chasing deals will dominate the market but the overall sales volume will largely depend on the big opportunities that will come to the market. Most of the big investments will come from the area’s centralised suburban industries but more stabilised properties in secondary suburban markets will probably occur across the city.
San Diego is one of the few US cities that has a healthy economy. As of May 2019, it has an unemployment rate of 2.9%, way below the national rate of 3.5%. There is notable slow down in new job creation. However, the existing industries are enough to drive the population up and therefore, increase the demand for rental properties.
Flipping Houses in San Diego
As mentioned, investors are buying old properties in San Diego to fix, improve, and sell. Since the San Diego market has an abundance of old homes affordably priced, investors are taking on the task of flipping these houses to make a profit.
In 2018, San Diego led with the most share of flips, about 9.55% of the state total, with investors profiting an average of $101,900.
San Diego Real Estate Market Trends 2019
San Diego is among the fastest-growing US cities. Whilst the market is often overlooked over the more popular Los Angeles and San Francisco, the San Diego market is worth investing in as well. The city is forecasted to have a positive real estate market for 2019. Property prices in San Diego will continue to increase by as much as 4.7%. Rental rates will increase by 8.4%.
With this trend in mind, investors will probably get more profit from rental income. An investor can make the most of the rental income and sell the property by the end of the year, with a real estate appreciation, and make a generous return on investment.