DOWNTOWN SAN DIEGO CONDOS
An enticing opportunity for the long-run investor

Mike Freeman of Union Tribune writes on April 2, 2006:
Downtown “is probably one of the only places in Southern California where you can buy a house for less than you could a year ago,” said Jim Abbott, managing partner of Jim Abbott & Associates Prudential California Realty.

Currently, the rising interest rates and sky-high prices have sobered the housing market countywide, with sales declining and appreciation flattening. The San Diego Downtown real estate market too is mostly following the trend. Append to that the increased condo inventory being added with the new Downtown development projects in the pipeline. While luxury condos with views are still selling well, there is a sizeable inventory in a segment between $550,000 and $900,000 that is seeking buyers.

However, there is a brighter side to the equation. Even in the wake of stagnant prices, the number of condos in Downtown San Diego sold in 2005 surged 39 percent over 2004, according to DataQuick (Figure 1). This is in stark contrast to the 9 percent decline in home sales countrywide. And there are plenty of buyers for the unsold new units, many of them condo conversions.

Although there might be some price slippages, experts doubt there will be dramatic declines. The London Group and other real estate experts think that a number of long-term investors have begun to look at San Diego Downtown condos for possible good deals. There are high chances that San Diego Downtown real estate may wind up as a good long-term investment. Hence, smart people are still there in the market recognizing that the Southern California coastal real estate, long term, always does well.

Downtown San Diego Condos

Thanks to recent real estate developments, Downtown San Diego has seen many an apartment and condo shoot up into the sky. Dilapidated buildings and neighborhoods have given way to upscale hotels, condominiums, restaurants, shopping centers and night spots. The community is rapidly growing, as San Diego Downtown condos fill up quickly and neighborhood gyms and coffee shops settle into the 8 distinct areas of the city.

Since 1999, the residential population of Downtown San Diego has grown by more than 20 percent, spurring a host of new projects in the pipeline. With over 12,000 housing units just built or in the works, Downtown is once again becoming the center of San Diego. There are currently 75 residential projects in the offing that are estimated to add around 9,000 new condominiums, apartments, town homes, row homes and loft homes by 2008. The skyline is changing as luxury apartment buildings and condos are built up along the waterfront, drawing people into what used to be a neighborhood to avoid.

Popular Locations for Condos in Downtown San Diego

If you are looking at career opportunities, a condo in Downtown San Diego makes perfect sense for you. The biotechnology sector, for instance, is mainly consolidated in the northern part of the county, so you’ll want to consider investing in property around Solana Beach, Del Mar or La Jolla. If you’re looking for a career in communications, finance or business, you’ll probably be looking in the downtown area. Banker’s Hill is an excellent place to live if you plan to make a second home at the office — it’s walking distance from many of Downtown's buildings and is popular with young professionals.

The new condominiums near PETCO Park are another coveted option for San Diego’s power brokers and Padres fans alike. Located in what is becoming the heart of Downtown, these buildings offer lots of great amenities that you can’t get in single-family homes, and boast panoramic views of the city and the San Diego Bay. Also, the construction of this Park, the San Diego Padres’ new home, has turned this erstwhile “low-income and industrial district” into one of the city’s most coveted addresses. Nearly the entire area has been torn apart or revamped to make way for lavish condominiums and funky homes, many with views of the Bay or the ball field. This property should be on the list of those who want the ultimate urban lifestyle. And because most of the buildings are brand-new, you don’t need to worry about home inspection or management.

In addition, many condos in San Diego Downtown are available at Horton Plaza, Little Italy and Marina.

Listing and Pricing of Downtown San Diego Condos

There are 18 detached homes and 694 condos currently available in Downtown. Listings of San Diego Downtown condos can be found at Zip Realty.

According to the San Diego Real Estate Authority, condominiums in San Diego Downtown sell for an average of about $610,000. The average price of a single family or condo home sold in February 2006 was $680,811. If you decide to rent a condo, the average rent will be around $912, according to the U.S. Census Bureau, 2003.

While San Diego Downtown has been one of the fastest growing housing markets in the county over the past 5 years, recently it is showing signs of cooling as indicated by Figure 2. This presents a great opportunity for the long-run investor because, as trends have indicated time and again, the Southern California coastal real estate, long term, always does well.