Emerging from the pandemic, residential real estate markets in La Jolla and Pacific Beach look a lot like they did going in: a seller’s market with a dearth of product available and rapidly escalating prices.
And brokers in both communities say that’s not likely to change soon.
“There’s no inventory in PB right now,” said Scott Booth of Compass Real Estate. “For a lot of sellers, their houses have gone up so much in value that, if they wanted to purchase their home today, they couldn’t afford it.”
Steve Springer, Booth’s Compass teammate, concurred with his colleague while adding: “The velocity of things moving off the market has even continued to increase. At the start of the pandemic, if you were a buyer, maybe you had until the weekend to make an offer. Now you need to get in there right away and make your offer very quickly.”
The residential real estate landscape in La Jolla is similar to PB these days.
“There are less than two months of (housing) inventory right now in La Jolla and it’s creating challenges on all fronts,” said Gregg Whitney, founder/CEO of Billionaires Row La Jolla. “If you don’t have listings – you can’t sell anything.”
Whitney likened the prospect of a turnaround in the present seller’s market to a ship making a course correction. “Like the bow of a ship trying to make a big turn, it’s going to be slow,” he said. “It’s going to be 12 to 18 months right now, due to the lack of inventory.”
Patrick Ahern of Berkshire Hathaway concurs with Whitney, adding there’s a new element these days in the local real estate picture.
“San Diego is being discovered with the changes COVID has brought to the office place (remote working),” he said. “People are coming down from San Francisco, New York, and other areas to discover this amazing place. We have increasing demand and reduced supply. A lot of buyers are frustrated right now because sellers are putting homes on the market on Friday, and are getting so many aggressive offers, that they’re putting them in escrow on Monday and Tuesday.”
Booth agreed buyers are coming from the Bay Area, the rest of the Pacific Northwest, and other big cities where the price of real estate is comparable or higher, to cash in on San Diego’s weather and coastal beauty.
“They can work remotely or part-time here,” he said. “You’ve also got more traditional families wanting to come here to live.”
Advises Booth of buyers: “Be patient. Lots of houses have multiple offers. There will be more inventory eventually. People need to maybe sacrifice on their wish lists. If they have 10 items on their wish list, maybe they need to settle for six or seven of those things rather than all 10.”
“There was a 26% increase this year over last in the price of housing and that could possibly slow after this year to 12%, which is still a big increase,” noted Springer of Compass. He is counseling buyers that “you have to do what it takes to win in today’s environment. You need to remove most of your contingencies, come in with as much cash as you can. Get as prepared as you can to make the strongest offer possible.”
Whitney agreed that buyers need to remain patient and perhaps look beyond the next 12- to 18-month time horizon for housing inventory to pick up. “Even with inflation fears, people are going to want to live in beautiful La Jolla,” he said. “Eventually, increases on the interest rates will start to hopefully slow down some. With a lot of people working remotely, it’s really changing the dynamics of prices here. If you’re a buyer, you may need to wait six to 12 months. If you’re a seller, probably the ideal time to sell in this market is during the next six months.”
“The millennials are moving out, people are moving to San Diego and we’re seeing more of a supply-and-demand issue,” said Ahern of the current residential real estate status quo. “We’re seeing more housing density in the Village of La Jolla with multiple units going in. I think you’re going to be seeing more micro-units in the Village, so people can live and work here without creating traffic issues. I think people need to look at buying a home as an investment. That’s important.”
