Like the sun, the luxury housing market always seems to shine in San Diego County. Total dollar volume remained strong after luxury sales of just under $50 billion last year. Now, looking at the second half of the year, what does the future show?
For this insight, we spoke with Andy Nelson, president of Willis Allen Real Estate, who said that housing market forecasts are more complex than they seem. “You can’t exactly predict – that’s the strength and weakness of our market.”
A Del Mar, California-born veteran real estate agent—Both literal and figurative, Nelson served in the United States Navy—has over 40 years of experience in San Diego luxury real estate and is the owner of Willis Allen Real Estate. For over 25 years. During this time, Willis Allen has grown into one of the premier agencies in the county, with eight offices and over 200 agents.
In my ongoing coverage of the global real estate scene, I spoke with Nelson about the current state of San Diego’s luxury market and how the previous year’s achievements will impact 2022. Comments have been edited for clarity.
SE: The first half of the year saw a series of high-end sales in San Diego County, well above the initial asking prices after a few weeks of listing – what factors led to such an enthusiastic luxury market?
A: There is a wide variety of materials. First, demand continued to be high in the luxury market. Most applicants out there are those looking for a luxury property – seeking an upgrade from what they’ve experienced before.
Of course we sell a product, but we also sell emotion. People make choices because they walk into a space and make a connection. I once sold a one bedroom home to a family of three children, but they loved the space from the moment they walked in the front door. Emotion determines much of our market choice.
SE: How will the lack of stock affect the second half of the year?
A: I think right now the second half will probably see a little slowdown, it’s not a big deal. One reason there is such low inventory is that the area has older residents on their properties with a lot of capital gains. They stay rather than market their homes and therefore do not bring inventory to fuel increased demand.
But it’s not just inventory, it’s a combination of things. Many people who make money in the stock market have lost some and not enough to create a compound problem, but enough to create a perception that they may need to be a little more cautious.
SE: Are new houses being built?
A: Yes, but now more complex than ever … the cost of materials, the slowness of the application and the building permit process. You used to be able to build a nice house for $450 per square foot, now it’s $700 to $900. New construction is certainly still in demand as people want their perfect home, but it will be cheaper and faster to find and remodel an already existing home.
SE: What are the hottest prices in San Diego right now?
A: Anything around $1.5 million in good territory easily gets four to six bids, sometimes even as many as 12. And people pay a premium over the price they want.
Let me ask you very quickly, do you own or rent?
SE: I rent.
A: You have to buy something! I’m telling everyone, buy something. It can be very expensive and you will have to feed it, but in five years you will be asked, “Wasn’t I the smartest kid?” you will think.
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