ondominiums are an general slowing in the San Diego
important part of San real estate market, has placed
Diego’s real estate downward price pressure on unit
landscape. Although there are owners. For example, most areas
some very pricey condos, in of San Diego County reported
general, condos are more reductions in the median price of
affordable than single-family resale condos from August 2005 to
homes and represent a good August 2006, ranging from 1.1% to
housing option for moderate and 2.6% decline. This is also the
lower income buyers. With the fifth month in a row in 2006 that
housing boom seen over the last the median price has been lower
few years, San Diego experienced than the year before. Moreover,
a rapid expansion in the number the number of units sold in
of condominium units available August 2006 was down 27.4%
for sale. Much of this expansion compared to sales in August 2005.
occurred by converting existing The one exception to this trend
apartment complexes into were the coastal communities in
condominium projects, a process northern San Diego county, which
known as condo conversions. had a 2.1% increase in the median
price during August 2006 compared
The rapid construction of new to August 2005.
condos, as well as condo
conversions, has created an A major source of new condominium
oversupply in the number of units came from converted
units. For example, as of June apartment complexes. In some
2006, there were approximately cases, investors undertook
5,800 unsold units in new substantial debt to purchase
condominium communities. buildings during a time in 2004
and 2005 when prices were
The glut of condos, and the appreciating rapidly and units
sold quickly. However, we are now condominiums projects planned or
in a time of declining condo underway. Some conversion or
prices and much longer marketing expansion projects have been
and sales times, but many temporarily frozen until excess
building owners must continue to inventory is sold. Other projects
pay interest on the loans they have been cancelled altogether.
took to purchase and convert
buildings. No one knows for sure how long it
will take to sell the excess
The pressure of carrying debt is supply of condominium units. In
forcing some owners to reconsider general, the real estate market
their options. Depending on their cycles from periods of excess
financial situation and goals, supply, to excess demand, and
some owners have decided to be periods in which demand is
patient, not drop prices, and roughly equivalent to supply.
wait for the market to pick up What makes this situation unique
again. Others have decided to is the sheer volume of units
offer substantial price available. Clearly it will take
reductions and buyer incentives some time to get through this
to unload the condo units. Some oversupply of condominiums.
owners are temporarily or
permanently returning units This article was written at the
planned or available for sale end of September 2006. Since
back to the rental market. This factors impacting the supply and
option allows them to offset some demand of units can change
of their loan costs with revenue rapidly, readers should obtain
from rentals. the most up-to-date information
available before making any
The excessive inventory has also decisions about buying or selling
impacted the further expansion of real estate. Be sure to consult
with a knowledgeable Realtor considered reliable but is not
before buying or selling guaranteed.
condominiums in San Diego County.
The information above is
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Relocate to San Diego
Affordable Homes San Diego
Residential Real Estate San Diego CA
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