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Archives for December 2022

Will the Phoenix Housing Market Crash in 2022?

December 22, 2022 by Marco Santarelli

The Phoenix housing market has been on fire, driven by strong economic growth, pandemic-fueled demand, and a surge in investment activity that far surpasses the levels during the last housing boom. Once considered to be ground zero of the housing market collapse, Phoenix has orchestrated a dramatic turnaround in recent years and has considerably outpaced other markets such as Las Vegas, and Miami.

According to CoreLogic HPI, the large cities continued to experience price increases in June, with Phoenix leading the way at 26.1% year over year. Among large metro areas, three recorded monthly price gains of 20% or higher in June: Phoenix (26.1%), Las Vegas (24.3%), Miami (25.3%), and San Diego (20.9%).

Phoenix was one of the hardest hit housing markets during the bust, with home values declining 57% from 2006 through mid-2011. But since the middle of 2011, the housing conditions in Phoenix have markedly improved and prices have risen continuously. The Phoenix real estate market is the top-performing, not only in the Arizona real estate market but nationwide as well.

According to NeighborhoodScout.com as their data also shows that in the past ten years, Phoenix real estate appreciated by 265.52%. This amounts to an annual real estate appreciation of nearly 13.84%, which puts Phoenix in the top 10% nationally for real estate appreciation. During the latest twelve months, Phoenix's appreciation rate has been 26.59%, which is higher than appreciation rates in 96.53% of the cities and towns in the nation. In the latest quarter, the appreciation rate has been 3.48%, which annualizes to a rate of 14.68%.

According to recent Realtor.com research, the Phoenix housing market may soon shift to one that rewards buyers. According to the report, Arizona's capital city ranks third among metro regions with the highest rates of home price decline. In the Valley, 29.5% of listings have had their prices reduced. The current median list price for a property is $548,500. Previously, Phoenix was listed as the metro area selling the most homes in the country.

Reno, Nevada ranks #1 on the list, with a slightly greater percentage of 32.6% of listings receiving price reductions. Austin came in second with 32.4% of listings experiencing price reductions, while Anchorage, Alaska followed in fourth with 28.5%. Following Anchorage are Boise, Idaho, Ogden, Utah, Sacramento, California, Colorado Springs, Colorado, Evansville, Indiana, and Medford, Oregon, rounding out the top ten.

According to another report by Zillow, the average home value in metro Phoenix fell 2.8% from June to July, to $470,800. Despite the July drop, Phoenix-area homes are still valued about 70% more than they were in July 2019. And, as a result of rising prices and interest rates, the average mortgage payment has more than doubled in that time.

In Phoenix, property values are up 8% just this year. The Phoenix real estate market is cooling off. The change should make it easier for prospective homebuyers who can afford to enter the market. According to Zillow, Valley inventory climbed by 11.3% from June to July, while prices decreased on 28.8% of houses listed. There are more available homes, and buyers can negotiate lower costs.

Inventory is still quite low overall. Low inventory tends to create more competition among buyers, which has helped to increase prices. The reason we’re seeing inventory increase right now is that people aren’t buying homes, so homes are not selling and they’re staying on the market longer. However, fresh inventory is not entering the market in general, and we have all of these folks who want to buy. So, if those prices fall to a level that consumers can afford, you'll see people buying, and the prices will begin to rise again, putting pressure on the market.

After losing approximately 230,000 jobs from 2008 to late 2010 (approximately 12% of its workforce), the Phoenix metro has experienced 17 consecutive months of positive year-over-year job growth, with February's growth climbing to a 2.1% annual growth rate. The unemployment rate has also fallen sharply over the last year, dropping to a 3-year low of 7.8% from 8.8% in February of 2011. The local economy has had a boost from several big employers like Amazon.com and Intel who have begun hiring again. Other metros with large amounts of housing distress like Las Vegas and Riverside-San Bernardino lack the economic diversity that Phoenix has, resulting in a far more restrained economic recovery.

Phoenix is a seasonal market for “snowbirds” who flock to the Valley during the mild winter months and then return to their primary residence during the harsh summer season. This past winter has been the “perfect storm” for home sales in Phoenix with historically low-interest rates. The true test of Phoenix's housing market strength will be in the second half of 2022 amidst rising inflation and high borrowing costs. Will the Phoenix housing prices decline or not?

The above housing and economic considerations have made Phoenix one of the hottest housing markets in the country and have gone a long way in boosting demand for new homes in the area. However, we can't help but wonder what investors will do with their properties when they sense the next downturn has arrived. Stay tuned!

[Click here to see our current list of Phoenix investment property.]

Filed Under: Growth Markets, Housing Market Tagged With: Phoenix Appreciation, Phoenix Economic Growth, Phoenix Housing Market, Phoenix Inventory, Phoenix Investment Property, Phoenix Job Growth, Phoenix Real Estate Market

Is San Diego Real Estate a Good Investment?

December 6, 2022 by Marco Santarelli

San Diego Real Estate Investment

San Diego Real Estate Investment Outlook

Should you consider San Diego real estate investment? You need to drill deeper into local trends if you want to know what the market holds for real estate investors and buyers in 2022 and 2023. Although this article alone is not a comprehensive source to make a final investment decision for San Diego, let’s look at the state of the San Diego real estate market and the factors driving the property market short and long-term.

Affordability has become an issue for many homebuyers in the San Diego area. This is another housing market trend that is affecting many major cities across the country but particularly in the western coastal markets. How big is the San Diego housing market? San Diego is a moderately walkable city in San Diego County with a population of approximately 1,305,700 people.

It is the second biggest California city and one of the ten biggest cities in the country. San Diego is one of the fastest-growing cities in the U.S, and its economy is strong. San Diego is often overlooked in favor of hotter real estate markets like San Francisco and Los Angeles. However, that’s one of the reasons why you should consider investing in the San Diego real estate market. The city of San Diego continues to outpace California's job recovery, which is good news for San Diego’s housing industry.

The San Diego metropolitan area is known as the birthplace of naval aviation, serving as a major employment center in the nation for defense and in the Southern California region for scientific research, health care, education, trade, and tourism. The significant military presence supports hundreds of thousands of jobs, pays billions of dollars in wages, and has an overall annual economic impact on the San Diego metropolitan area of billions of dollars.

San Diego's housing market remains one of the hottest in the nation (ranked 10th by Zillow). Since home building takes time, especially in a heavily regulated environment, there’s little chance of diminished demand. San Diego has been one of the hottest real estate markets in the country for many years. During the 20 years from 1998 to 2018, the median home value in San Diego rose by a whopping 217%. But the median household income only rose by around 77% during that same 20-year time frame.

San Diego has a mixture of owner-occupied and renter-occupied housing. As per Neigborhoodscout.com, a real estate data provider, one and two-bedroom single-family detached are the most common housing units in San Diego. Other housing types prevalent in San Diego include large apartment complexes, duplexes, rowhouses, and homes converted to apartments.

There were 4,100 single-family homes and 6,400 multi-family homes built in 2017, compared to 2,200 single-family homes and 7,800 multi-family units in 2016. Today, the general trend for SFR construction in San Diego County is still far below the 2002-2004 numbers. The next peak in single-family residential construction will likely begin around 2021, but it is doubtful to return to the frenzied mortgage-driven numbers seen during the Millennium Boom.

San Diego Real Estate Appreciation Rates

San Diego is in the top 20% nationally for real estate appreciation. NeighborhoodScout.com's data also shows that in the past ten years, San Diego real estate appreciated by 115.52%. This amounts to an annual real estate appreciation of 7.98%. During the latest twelve months, San Diego's appreciation rate has been around 16.35%.

In the latest quarter, the appreciation rate has been 2.79%, which annualizes to a rate of 11.64%. Overall, there exists a limited supply of homes in San Diego, and buyers are forced to compete often resulting in higher prices and/or quicker sales that tend to benefit sellers.

The San Diego Housing Market Is a Relative Bargain

California is known for its insane real estate prices. San Diego stands out as a relatively affordable real estate market. The median home price is around $550,000. This sounds bad if you compare it to the national average of $300,000, but it is a bargain in California. You could snap up several San Diego rental properties for the price of one home in San Francisco.

The San Diego housing market is cooling. Home price appreciation fell below 5%, and home prices in some areas are declining due to decreasing demand. This is an improvement over the 6 to 8% appreciation San Diego had been seeing. The expanding inventory of houses on the market makes this a great time to invest in the San Diego housing market.

San Diego's Housing Supply Is Constrained As New Construction of Homes is Quite Slow

San Diego is a growing housing market. By 2050, the population of San Diego County is expected to grow to 4.5 million, approximately a 50% increase from the population in early 2007 of 3,098,269 people. Population trends have connections with housing trends as it increases the demand for housing supply. However, construction in San Diego has stalled. Single-family residential construction is well below the demand for such homes in the San Diego housing market.

There has been faster growth in the construction of multi-family housing in the San Diego real estate market, but that is also below historic rates. Currently, both single-family and multi-family housing construction is increasing in San Diego. Even though there are more multi-family starts over single-family homes in terms of raw numbers, the percentage of single-family homes being constructed outpaces that of multi-family units.

San Diego also shares several geographic constraints that other California coastal cities do. You can’t build on water. The Cowles Mountains limit how much the city can expand inland, constraining the housing supply. Regulations limit high-density construction, preventing the area from meeting demand with too many tall condo towers. So, do the wilderness areas off-limits to construction like Cuyamaca Rancho State Park and Cleveland National Forest.

The Diverse Student Market Feeds the San Diego Rental Market

San Diego is a major metropolitan area, and it is home to several colleges and universities. The University of California at San Diego is one of the largest. It is sometimes confused with San Diego State University, a different campus, and the University of San Diego. Point Loma Nazarene University is a Christian school in San Diego. National University is located in nearby La Jolla.

Smaller schools like the Art Institute, Alliant International University, Azusa Pacific University, Brandman University, Miramar College, Mesa College, and California College of San Diego fill out the San Diego real estate market.

A side benefit of the diversified student market is that you can buy multiple properties across the San Diego housing market and enjoy a “diverse” investment portfolio. You won’t see demand for the property rise and fall based on the popularity of a flagship school, and the strong San Diego housing market allows you to rent it to newcomers to the area or military officers if you can’t fill the unit with students.

San Diego’s economy isn’t as reliant on tourism as other coastal towns. Instead, defense and the military are a larger part of the local economy. This dumps tens of thousands of renters into the San Diego real estate market who will never buy because they could be deployed elsewhere in a year or two. The military also gives generous allowances for those who rent San Diego rental properties, keeping rents near the military base strong regardless of the state of the economy.

Rents are Going Up in San Diego

The San Diego real estate market has been ranked among the ten most expensive real estate markets in the country, though it ranks below several other West Coast cities. This creates massive demand for San Diego rental properties by those who simply cannot afford to buy homes. The rental market will continue to grow as the city grows an estimated 500,000 population by 2050, adding tens of thousands each year. The median rent in San Diego is $2700. The rent you’d receive on single-family San Diego rental properties would, of course, be much higher.

If you find a good bargain and make it family-friendly, you could charge well over $3000 a month. If you can convert San Diego rental properties into smaller units, you’d receive around $2200 a month for a one or two-bedroom apartment. The cash on cash returns for properties in the San Diego housing market is around 2.5% for traditional rental properties and nearly 2% if you rent on Airbnb. The fact that the city isn’t too dependent on tourism means you could rent properties on the beach to newcomers, locals, and students if tourism is slow.

Before the pandemic, the average rent for an apartment in San Diego had been growing at 4% year-over-year (source: RentCafe). About 40% of the apartments can be rented for less than $2000, and 60% of the apartments can be rented for more than $2,000 per month. This shows that rent prices are very high in San Diego.

Homeowners vs Renters Statistics: According to the most recent 2020 American Community Survey census data, San Diego County has a renter percentage of 46.7% which is the second most renter percentage of all the counties in the greater San Diego County region. The homeowner percentage is 53.3%. The monthly cost of ownership for property owners in San Deigo is around $2,073.

The median gross rent is $1,658, which is the third most expensive among all other counties in the greater San Diego County region. Comparing rental rates to the United States average of $1,062, San Diego County is 56.1% larger. Also, compared to the state of California ($1,503), San Diego County is 10.3% larger.

San Diego Rent Prices 2022

As of October 3, 2022, the average rent for a 1-bedroom apartment in San Diego, CA is $2,545. This is a 21% increase compared to the previous year. Over the past month, the average rent for a studio apartment in San Diego remained flat. The average rent for a 1-bedroom apartment decreased by -5% to $2,545, and the average rent for a 2-bedroom apartment decreased by -5% to $3,295.

  • Two-bedroom apartment rents average $3,295 which is an 18% increase from last year.
  • Three-bedroom apartment rents average $4,070 which is a 13% increase from last year.
  • Four-bedroom apartment rents average $4,900 which is a 9% increase from last year.

San Diego Housing Market Is More Landlord Friendly For Short Term Rentals

We can’t say that California is landlord-friendly. However, specific cities are better for landlords and real estate investors than others. One reason to invest in the San Diego housing market over San Francisco or Los Angeles is the fact that San Diego is one of the few big cities that doesn’t have rent control. The city has groups fighting proposals to apply rent control to San Diego rental properties in addition to apartments.

San Diego has many tourist attractions. Balboa Park is home to the San Diego Zoo, the Air and Space Museum, the Natural History Museum, the Desert Garden, the local youth Symphony, a Japanese garden, and a golf complex. There’s a SeaWorld in San Diego, an MLB stadium, the USS Midway Museum, and the San Diego zoo safari park. On top of this is the mild weather and proximity to the beach. Any San Diego rental properties in easy reach of these attractions command a premium on rental sites like Airbnb.

Demand for rentals in the San Diego real estate market soars during Comic-Con, one of the biggest comic conventions in the country. The only limit on San Diego rental properties has been the fluctuating rules by the city council, such as a measure passed limiting rentals to primary residences that were rescinded a few months later in 2018. Yet permission for rentals is limited in many master-planned communities and condo developments, keeping rents for Airbnb and other short-term rentals strong.

San Diego Is A Great Place Place To Live In

San Diego is a great place to live which makes real estate investment a lucrative opportunity. It has nice sunny weather and impressive beaches. It has more than 300 parks, including Mission Trails Regional Park, and 40,000 acres of undeveloped open space. Balboa Park has the world-famous San Diego Zoo, Old Globe Theatre, and museums. San Diego Zoo is also one of the prettiest zoos in the world to walk around. U.S. News analyzed 125 metro areas in the United States to find the best places to live based on the quality of life and the job market in each metro area, as well as the value of living there and people's desire to live there.

San Diego, California was ranked:

  • #36 in Best Places to Live
  • #51 in Best Places to Retire
  • #3 in Best Places to Live in California
  • #5 in Most Expensive Places to Live
  • #9 in Best Places to Live for Quality of Life
  • #12 in Safest Places to Live

San Diego is home attracts millennials with its higher education opportunities and big-city amenities such as excellent restaurants, dive bars or clubs, and great nightlife. The craft beer scene in San Diego is one of the best in the world. North County is desirable for young families whereas millennials are moving downtown and to communities to the northeast as a result of gentrification and the diverse entertainment options centralized in those areas.

Best Places to Invest in Real Estate in San Diego

Are you looking for an investment property in the San Diego real estate market? In any property investment, cash flow is gold. San Diego offers an ideal mix of limited supply, high demand, and excellent income potential. San Diego's mild climate, miles of beaches, fun attractions, and great schools make the city one of America's best places to live.

If you’re going to invest in California, it needs to be in San Diego. Good cash flow from San Diego investment properties means the investment is, needless to say, profitable. On the other hand, a bad cash flow means you won’t have money on hand to repay your debt.

Therefore, finding the best investment property in San Diego in a growing neighborhood would be key to your success. The three most important factors when buying real estate anywhere are location, location, and location. The location creates desirability. Desirability brings demand. You should focus on neighborhoods with relatively high population density and employment growth.

Both of them translate into high demand for housing. There should be a natural and upcoming high demand for rental properties. Demand would raise the price of your San Diego rental property and you should be able to get a good return on your investment over the long term.

The neighborhoods in San Diego must be safe to live in and should have a low crime rate. The neighborhoods should be close to basic amenities, public services, schools, and shopping malls. A cheaper neighborhood in San Diego might not be the best place to live in.

A cheaper neighborhood should be determined by these factors – Overall Cost Of Living, Rent To Income Ratio, and Median Home Value To Income Ratio. It depends on how much you are looking to spend and if you are wanting smaller investment properties or larger deals in Class A neighborhoods. The inventory is low, but opportunities are there.

Some of the popular neighborhoods in or around San Diego are Carmel Valley, Rancho Bernardo, Point Loma, Pacific Beach, Mission Valley, Mira Mesa, Rancho Penasquitos, Bonita, Del Cerro, North Park, La Jolla, 4s Ranch, Mission Hills, Otay Ranch and Rancho Santa Fe.

As we write this, the asking price of single-family homes for sale in San Diego (on Realtor.com) starts from $132,000 for a 3-bedroom house and can go up to $37M for a luxury 10-bedroom house located in the Northern San Diego neighborhood.

You can get a beautiful 3-bedroom new construction single-family house for around $379,000 in the Southern San Diego neighborhood — which is quite an affordable entry price as San Deigo home prices are some of the most expensive in all of the United States.

Here are some of the best neighborhoods in San Diego where you can buy an investment property.

Encanto is one of San Diego’s most affordable neighborhoods if you want to buy an investment property. According to Neighborhood Scout Encanto’s median real estate price is $469,345, which is cheaper than 71.3% of California neighborhoods and 21.5% of all U.S. neighborhoods. Encanto is a hilly neighborhood located in the southeastern part of San Diego, California. The neighborhood of Encanto is split into two sections, North Encanto (which lies north of Broadway), and South Encanto (which lies south of Broadway).

The name Encanto usually refers to the neighborhood of Encanto, but it can also refer collectively to the neighborhoods of the Chollas Valley planning area, which consists of Chollas View, O'Farrell, Lincoln Park, Emerald Hills, Valencia Park, Broadway Heights, Alta Vista, Rosemont, as well as Encanto. The citizens' community planning group that represents these eight neighborhoods in accordance with the City of San Diego Council Policy 600-24 is named the Chollas Valley Community Planning Group.

The Encanto Neighborhoods Community Plan is designed to expand the existing retail, commercial and light industrial areas along the main transportation corridors and the villages surrounding the trolley stops at 47th and Market streets, and Euclid Avenue and Market Street. Its cultural heart is the Market Street Village, situated along Chollas Creek, and the trolley stop at the intersection of Euclid Avenue and Market Street.

With its proximity to San Diego Bay just 2 1/2 to 5 miles away, temperatures tend to be mild. The area offers excellent opportunities for infill development, including commercial, transit-oriented mixed-use along the main corridors, and view lots for single-family residential in the surrounding hills.

Nestor is another relatively affordable neighborhood in San Deigo having a median real estate price of $579,106, which is more expensive than 42.9% of the neighborhoods in California and 84.6% of the neighborhoods in the U.S. The average rental price in Nestor is currently $1,881, based on NeighborhoodScout's exclusive analysis. Rents here are currently lower in price than 77.6% of California neighborhoods. Nestor is a residential neighborhood in the southern section of San Diego, and part of the Otay Mesa-Nestor community planning area. According to Zillow, Nestor's home values have gone up 29.4% over the past year.

It neighbors Palm City and Otay Mesa West to the east, Egger Highlands to the north, San Ysidro to the southeast, and the Tijuana River Valley to the south. Major thoroughfares include Coronado Avenue, Saturn Boulevard, Hollister Street, and Tocayo Avenue. According to Areavibes.com, the cost of living in Nestor is 19% lower than the San Diego average and 13% higher than the national average. On their livability index, it ranks better than 42% of areas in San Diego.

The Otay Mesa-Nestor community planning area is located in the southern region of the City and is bounded on the north by Chula Vista, on the east by the community of Otay Mesa, on the south by the Tijuana River Valley and the San Ysidro community, and on the west by Imperial Beach. Twenty percent of the planning area consists of schools, parks, transit, and other public facilities, while vacant, undeveloped, agricultural, and mineral extraction and processing uses comprise the remaining 15 percent.

Emerald Hills is a fairly good neighborhood in San Diego to invest in real estate. It is a calm neighborhood with many green spaces nearby for residents to visit. Most areas in this neighborhood are quiet, as noise from the streets and other parts of the city is rarely an issue. It is bordered by Oak Park and California State Route 94 on the north, Chollas View and Euclid Avenue on the west, Encanto on the east, and Valencia Park and Market Street on the south. Major thoroughfares include Kelton Road and Roswell Street.

Most houses for sale in this neighborhood are located in places that are not very suitable for walking since carrying out daily needs is sometimes difficult. The typical home value in Emerald Hills is $659,983, up 33.0% over the past year.

Another urban area that is great for investment is the Downtown/City Center. It is one of the best places to live in California. It offers residents a dense urban feel and more than 70% of the residents rent their homes. So it is a great neighborhood to buy rental properties due to high demand. Downtown's public schools are above average. It offers good nightlife with restaurants, bars, and entertainment venues. Niche.com ranks it #25 among the best neighborhoods to live in San Diego.

Highest Growing San Diego Neighborhoods Since 2000 (List by Neighborhoodscout.com)

  1. Mountain View Southeast
  2. Logan Heights West
  3. Logan Heights
  4. Barrio Logan
  5. Golden Hill South
  6. Grant Hill West
  7. East Village
  8. Sherman Heights
  9. Mountain View East
  10. Barrio Logan East

The cheapest or most affordable neighborhoods to rent in San Diego are Alta Vista, where the average rent goes for $1100/month, Broadway Heights, where renters pay $1100/mo on average, and Emerald Hills, where the average rent goes for $1100/mo, Encanto, where renters pay $1100/mo on average $1,383, Jamacha Lomita with an average rent of $1100, and Skyline, where the average rent price is 1100. In all of these areas, the asking prices are below the average San Diego rent.

San Diego Rental Market
Graph Credits: RentCafe.com

Apart from San Deigo, you can also invest in several other real estate markets in California. California has the 6th largest economy in the entire world. This is largely driven by its innovative production, the heavy tech sectors in the state, and more. Apart from the San Diego real estate market, you can also invest in another hot market in San Jose. San Jose is part of Silicon Valley, a place where $100,000 a year or higher salaries from competing tech firms have driven up the cost of real estate.

But what about the San Jose housing market itself? San Jose is the third-largest city in California, home to roughly a million people. It has the highest cost of living in any area in the U.S., and it is one of the most expensive housing markets in the country. If you want to invest in San Jose real estate, you may not need to buy and renovate. Instead, if you know of industrial or commercial properties near major employers they may need to convert to employee housing, which you could buy now and hold until it sells.

If that doesn’t happen, you could still turn it into a co-working space. In January 2018, Redfin ranked the ten hottest neighborhoods in the United States. Nine of the ten were in San Jose. When single home prices fall from 1.2 million to 1 million, homes now sit on the market for several days instead of being snapped up immediately.

The other good place for real estate investment in California is Sacramento. Sacramento is an island of sanity in an overpriced, over-regulated, and overheated West Coast housing market. It reflects the California ideal that most of the state has lost, and that’s we recommend it to investors over the “hotter” California metro areas. These are the same factors causing many Californians themselves to vote with their feet and move here instead of moving out of the state altogether.

If you’re considering Sacramento real estate investment, the diverse rental market is a definite plus. Being a state capital, it is home to several universities. This allows you to rent to the relatively large student market in addition to the local population. There is, of course, the University of California campus in Sacramento, but you could own investment properties by American River College and other, smaller schools in the area, too.

Buying or selling real estate, for a majority of investors, is one of the most important decisions they will make. Choosing a real estate professional/counselor continues to be a vital part of this process. They are well-informed about critical factors that affect your specific market areas, such as changes in market conditions, market forecasts, consumer attitudes, best locations, timing, and interest rates.

NORADA REAL ESTATE INVESTMENTS has extensive experience investing in turnkey real estate and cash-flow properties. We strive to set the standard for our industry and inspire others by raising the bar on providing exceptional real estate investment opportunities in many other growth markets in the United States. We can help you succeed by minimizing risk and maximizing the profitability of your investment properties.

Not just limited to San Diego or California but you can also invest in some of the best real estate markets in the United States. All you have to do is fill up this form and schedule a consultation at your convenience with our team to see if San Diego makes sense as a place to invest today.

We can help build you a custom portfolio of turnkey properties located in some of the best markets in the United States. By researching and structuring complete turnkey real estate investments, we can help you succeed by minimizing risk and maximizing profitability.


Sources:

  • https://car.sharefile.com/share/view/s2a8899fc081428a8
  • https://journal.firsttuesday.us/san-diego-housing-indicators-2/29246
  • https://www.rentcafe.com/average-rent-market-trends/us/ca/san-diego
  • http://worldpopulationreview.com/us-cities/san-diego-population
  • https://www.sandiegouniontribune.com/business/real-estate/sd-fi-rent-control-20180703-story.html
  • https://www.mashvisor.com/blog/airbnb-san-diego
  • https://www.sandiegoreader.com/news/2018/mar/07/city-lights-airbnb-forcing-you-out
    https://www.niche.com/colleges/search/best-colleges/m/san-diego-metro-area
  • http://worldpopulationreview.com/us-cities/san-diego-population
  • https://www.sandiego.org/articles/east-county/san-diego-east-mountains.aspx
  • https://www.cnbc.com/2019/02/27/spring-housing-market-could-be-coolest-in-recent-years-realtorcom.html
  • https://www.sandiegouniontribune.com/business/real-estate/sd-fi-corelogic-home-20180724-story.html
  • https://www.sandiegouniontribune.com/business/tourism/sd-fi-airbnb-regulations-council-20181022-story.html
  • https://www.10news.com/news/making-it-in-san-diego/making-it-in-san-diego-slowing-housing-market-could-create-buying-opportunity

Filed Under: Real Estate Investing, Real Estate Investments Tagged With: Is San Diego Real Estate a Good Investment, san diego, san diego real estate, san diego real estate investment

Absorption Rate and Months of Inventory in Real Estate

December 6, 2022 by Marco Santarelli

Absorption rates and months of inventory in real estate. What are they, and why are they significant? This information is useful since it represents the liquidity of a market. As a real estate investor, you can help maximize your profits by knowing the liquidity of a given real estate market. By knowing the liquidity of a market, you will better understand that market and therefore be able to take advantage of the various buying strategies afforded by it.

One of the measurements frequently used to gauge the liquidity of a given market is the absorption rate. This is basically the rate at which a specific segment of a real estate market sells in a given time frame. These segments are usually categorized by price range but may also be categorized by property type. The absorption rate can assist sellers to determine the optimal price for a property. The absorption rate is useful information for buyers as well because it indicates the extent to which a seller may be willing to lower their asking price or make other concessions.

Absorption Rate Formula

The easiest way to understand absorption is to put it in more tangible terms and measure it in “Months of Inventory”. In other words, we take the number of active listings and divide it by the total number of sold transactions within the same month to give us the months of inventory.

To calculate the months of inventory for any given market:

  • Find the total number of active listings on the market last month.
  • Find the total number of sold transactions for last month.
  • Divide the number of active listings by the number of sales to determine the number of months of inventory remaining.

Supply-DemandAs a general rule, 5 to 6 months of inventory is considered to be a normal or balanced market. Over 6 months of inventory and we have a buyer’s market. If it is less than 5 months and we have a seller’s market. The smaller the available inventory, the tighter the market is. Keep in mind that these are simply guidelines and will differ from market to market.

For example, let’s say there were 8,000 active listings last month and 1,000 closed transactions. That leaves us 8 months of inventory remaining on the market and also tells us that we are in a buyer’s market.

If you are in the market looking to buy, calculating the months of inventory can give you an indication of how negotiable sellers might be. A large number, say 12 months or more, would mean that sellers have a high level of competition and will probably be more flexible on their sales price and terms.

On the other hand, if you are a seller trying to sell your property, the months of inventory will give you an indication of the level of competition you will face. Selling in a buyer’s market will require you to put some serious thought into your pricing strategy and any incentives you may want to offer.

Filed Under: Economy, Housing Market Tagged With: Housing Market, housing supply, Investment Properties, Investment Property, Real Estate Investing, Real Estate Investment, Real Estate Market

Property Taxes by County: Where do People Pay the Most and Least in 2022?

December 6, 2022 by Norada

An unavoidable truth in life is taxes. If you’re a homeowner, you’re no exception. But, what you pay can vary significantly depending on where you live. So, the question is: where do people pay the highest property taxes and where do people pay the least?

With that in mind, our team at House Method conducted a study to dig into property taxes across the United States. Using the most current Census data from the American Community Survey, we compiled the median annual property tax in each U.S. county and compared it to five years ago. We also looked at the effective tax rate (the property tax divided by the value of the home) and the 5-year change for that rate. 

Here are some of our most interesting findings:

  • The average property tax increase over 5 years was 18%.
  • 8 counties pay $10,000 or more in property taxes.
  • Of the top 20 most expensive counties, 55% are in New Jersey.
  • 93% of all counties saw an increase in taxes over the last 5 years with 11 counties seeing more than double.
  • All 6 of the counties with the highest effective property tax rate are in New York or New Jersey
  • 5 counties saw their effective property tax rate double in the last 5 years.

For our full findings, check out our report below. Our study has a number of interactive maps to show our data on all 3,128 counties analyzed. You can hover over each county to view the data or use the search function on the upper-left side by typing in the county’s name.

Property Taxes by County

The interactive map above shows a visualization of how median property taxes in counties compare across the United States. The darker colors are higher dollar amounts and the lighter colors are lower amounts. 

The Counties with the Highest Property Taxes

Eight counties are tied as the most expensive with at least $10,000 in median annual property taxes Note that the Census only tracks up to $10,000:

  • Bergen County, New Jersey
  • Essex County, New Jersey
  • Union County, New Jersey
  • Nassau County, New York
  • New York County, New York
  • Rockland County, New York
  • Westchester County, New York
  • Falls Church City, Virginia

Our data showed that California's northeast and Bay Area have the highest concentration of the highest property taxes. In fact, 11 of the top 20 most expensive counties are in New Jersey. New York has 6 and Connecticut has 1, bringing the northeastern part of the country to 18 of the 20 most expensive. Falls Church City in Virginia and Marin County in California are the other 2 in the top 20. Every county in the top 20 has a median annual property tax of at least $7,700.

The Counties with the Least Property Taxes

Conversely, the south and parts of the midwest come in as the least expensive. Louisiana and Alabama came in as two of the states with a number of counties in the bottom 20 least expensive counties. Out of the 20, Louisiana has 10 and Alabama has 3. 

There are five counties tied for the county with the least amount of property taxes. Each of these has a median amount of $199 a year. 

  • Choctaw County, Alabama
  • Northwest Arctic Borough, Alaska
  • Avoyelles Parish, Louisiana
  • East Carroll Parish, Louisiana
  • Madison Parish, Louisiana

Next, let’s see how these taxes have changed from five years ago. 

The 5-Year Change in Property Taxes

Because home values have been soaring in recent years, we also analyzed property taxes over five years. The map above visualizes the percent change in annual property taxes. When you hover over each county, you can see the actual dollar change (which is also listed in the table at the end of this study). 

The average percent increase was 18% which equals about $225. 301 counties (9.7%) saw an increase of $500 or more.

One of the most interesting findings is that 11 counties more than doubled in five years, and many of them are in Texas. These are the 11 counties:

  • Terrell County, Texas (167%)
  • Grant Parish, Louisiana (125%)
  • Upton County, Texas (121%)
  • Borden County, Texas (121%)
  • Petroleum County, Montana (115%)
  • Zavala County, Texas (111%)
  • Kent County, Texas (110%)
  • McMullen County, Texas (108%)
  • Webster County, Georgia (104%)
  • Garfield County, Montana (104%)
  • Stevens County, Kansas (101%)

Of the 3,128 counties analyzed, 93% saw an increase in property taxes with 5% having an increase of 40% or more. 6% of all counties saw a decrease and 1% had no increase.

Effective Property Tax Rate by County

Next, we looked at how home values played into how much counties pay in property taxes. What we analyzed is the median property tax divided by the median home value to calculate an effective tax rate. As in, this is how much of the home’s value are residents paying in taxes each year. 

The Counties with the Highest Effective Rates

We found that the states and areas with the highest amount of property taxes also had some of the highest effective tax rates. It means homeowners in New Jersey and New York are likely to both pay the most dollars but also pay the highest rates. Here are the highest 22 counties (9 are tied for the final position):

  • Camden County, New Jersey (3.5%)
  • Orleans County, New York (3.2%)
  • Allegany County, New York (3.2%)
  • Monroe County, New York (3.1%)
  • Salem County, New Jersey (3.0%)
  • Gloucester County, New Jersey (3.0%)
  • Cortland County, New York (2.9%)
  • Passaic County, New Jersey (2.8%)
  • DeKalb County, Illinois (2.8%)
  • Atlantic County, New Jersey (2.8%)
  • Cattaraugus County, New York (2.8%)
  • Winnebago County, Illinois (2.8%)
  • Onondaga County, New York (2.8%)
  • Schenectady County, New York (2.7%)
  • Lake County, Illinois (2.7%)
  • Cheshire County, New Hampshire (2.7%)
  • McHenry County, Illinois (2.7%)
  • Kendall County, Illinois (2.7%)
  • Sullivan County, New Hampshire (2.7%)
  • Sussex County, New Jersey (2.7%)
  • Warren County, New Jersey (2.7%)
  • Broome County, New York (2.7%)

The Counties with the Lowest Effective Rates

Looking at the counties who are taxes the least on the value of their homes, there are 6 all with a 0.1% rate. Two are in Louisiana, 2 are in Alaska, 1 is in Nevada, and 1 in North Dakota.

  • Concordia Parish, Louisiana
  • Eureka County, Nevada
  • East Feliciana Parish, Louisiana
  • Denali Borough, Alaska
  • Sioux County, North Dakota
  • Northwest Arctic Borough, Alaska

After that, there are a whopping 42 counties all with a 0.2% effective property tax rate. 18 counties (43% of the 42 counties) are in Louisiana and 15 are in Alabama (36%).

The 5-Year Change in Effective Property Tax Rates

Similar to how we analyzed how the median amount of property taxes changed over the last five years, we looked at how the effective property tax rates alternated over the same period. The map above visualizes the percent change. If you hover over each county, you can see the numerical change as well (the current rate minus the old rate).

There are 5 counties with a percent change of over 100%:

  • Garfield County, Montana (230%)
  • Catron County, New Mexico (214%)
  • McPherson County, Nebraska (213%)
  • Stevens County, Kansas (174%)
  • Loup County, Nebraska (110%)

Unlike how almost every county saw an increase in the amount of property taxes in dollars, most counties saw a decrease in effective real estate tax rates. Of the 3,128 counties analyzed, 1741 (56%) saw a decrease in their rates. 1,274 (41%) saw an increase and 100 (3%) saw no increase. 

Below is a table with our full data set. The table is both sortable by clicking on any of the column headers and searchable by typing in the box in the upper left.

 

Final Thoughts

Our study shows that property taxes vary significantly from state to state and county to county, both the amount paid and the effective rate. The northeast and parts of California, Texas, and Illinois all have some of the highest. The south and parts of the midwest tend to be on the lower end. Additionally, there have been significant changes in the past 5 years as home values have risen.

However, if you’re a homeowner, no matter where you live you’ll still have a tax bill to pay! We hope our study helps our readers understand how where they live stacks up against the rest of the United States.

Methodology

We analyzed data for every county in the U.S. Census American Community Survey from 2020 and 2015 (5-year averages). The 2020 dataset was used as that is the most current dataset available. Using that data, we analyzed:

  • Median property (real estate) taxes paid by homeowners with and without mortgages
  • Median home value of homes with and without mortgages

Using the data, we were able to compile an effective property tax rate by dividing the median property taxes paid by the median home values. Note that the Census does not give the specific median for any property taxes over $10,000 in a county.


Originally posted on: https://housemethod.com/blog/property-taxes-by-county/

Filed Under: Real Estate Investing, Taxes

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