By SARAH WARD
The California Association of Realtors recently hosted a workshop on real estate trends and forecasts for our state and I wanted to highlight for you some of the more interesting takeaways from the event.
We are all aware that the work-from-home movement greatly accelerated over the last year but there are quite a few rural areas in California that still do not have adequate broadband access and there are calls to step-up investment in internet access for these areas. These areas, such as along Highway 99 through the Central Valley, the high desert above Los Angeles, parts of rural Northern California as well as some eastern locations of San Diego County are seeing substantial growth in housing development but the lack of adequate bandwidth is causing difficulty for those hoping to work away from the classic job centers. The Association of Realtors expects these areas to have the greatest growth going forward but the infrastructure is not keeping up currently.
Another big takeaway is that the last 16 months impacted our low-income residents the most as that category had the greatest job losses while seeing their living costs, especially rent and fuel, greatly increase. Interestingly, there is a significant migration of low-income people leaving California for such locations as Nevada, Arizona, and the Northwest.
The panelists mentioned that the coastal areas can expect to see a shortage of workers in the service industry causing wage rates to increase and leading to the cost of living to continue to increase. Look for $7 coffee and $12 sandwiches for example coming soon. The lower middle class is also now seeing trends of net migration out of California. The high cost of living is pushing out a lot of people leading to labor shortages and that trend is expected to continue.
Another topic discussed was the explosion in home equity. As many homeowners suddenly have from several hundred thousand in equity to up to and beyond a million dollars in equity, it is causing people to consider moving up or moving down.
I have a buyer currently selling their $900,000 home and moving to a $1.3 million dollar dream-home in East County. However other homeowners are now seriously considering selling and trading down by moving either out-of-state or to a more rural part of California. I have a client that was showing me some properties west of Las Vegas, on a golf course for $575,000. Their house has close to $900,000 in equity so they are going to make the big move to downsize, while putting close to half a million in the bank for retirement. Plus they will have a lower cost of living and lower taxes in Nevada. This is one of the big trends now occurring.
Another topic discussed is that both big-tech and bio-tech continue to expand in the state (especially here in San Diego) but at least 30% of workers will work from home, lessening traffic on the freeways and bringing highly paid young workers to our area. However, it was mentioned that the high cost of living is expected to accelerate causing companies to expand outside of California or leave California all together. Expansion of 5G lightning-fast broadband is one of the biggest factors for jobs eventually leaving our traditional job-centers.
Finally, there is an ongoing trend of both out-of-state Americans and international people moving to our coastal regions, such as San Diego County, and bringing with them substantial wealth. The problem will be finding service workers to fill the restaurants and shops that these new residents will like to visit. Expect housing prices and the prices of “everything” to continue to rise here.
Single-family homes stats
92115 College Area: Median price $725,000, year over year listings up 44%.
92119 San Carlos: Median price $970,750 with new listings and closed sales nearly doubled.
92120 Allied Gardens/Del Cerro median price $990,000 with closed sales up 66%.
More inventory is hitting the market now and I expect that to continue through the fall. The market is loosening up now a bit. Call me for a no-obligation chat about your real estate options at 858-431-6043.
— Sarah Ward is a realtor with Fine & Coastal Real Estate.