REReport - July

July 2005

Carlsbad Business Journal

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Review: Half Year Review

Tyson Lund

Real Estate Business Analyst

Carlsbad commands a premium price to live in the city. As a resort destination with miles of beaches, a variety of housing options, terrific shopping and great schools, Carlsbad has attracted attention as the golf capital of the world and home to an international theme park. The average price-per-square foot for Carlsbad property is around $340, much different than the figure in 1997 at around $170.

Will this upward trend continue?

Carlsbad has seen first hand in how supply and demand can drive prices. In 2004, a dearth of available property drove properties to appreciate $100,000 and more. And without trying the readers patience and listing every reason why Carlsbad is and will continue to appreciate, realize that the factors of supply and demand will weigh heavily on the future investment potential of the city. Currently, Carlsbad is made up of close to 40,000 residences. According to the city, existing and future development cannot exceed 54,600 dwelling units.

Growth Management Plan In Carlsbad

In 1985 and 1986 the nation was hitting a high point of the economic cycle. Carlsbad experienced a surge in development activity growing by 11% from the completion of 2,036 homes in 1985. During 1986 the city grew another 12% by completing construction on 2,565 more new homes. Fueled by fears of overdevelopment, Carlsbad citizens adopted several growth management plans that are aimed to preserve Carlsbad and assure 40% of the city remains undeveloped.
According to Maslow, just after food and water is shelter; included in “safety needs” and considered one of the most important areas of a person’s life. It has been shown that people will pay a disproportionate amount of their income on their home. And we are not alone. Those who chose to live in New York will pay near $900 a sq.ft making our $340.00 seem inexpensive in comparison. Residents wanting a 1000 sq.ft condominium in Hong Kong would have to pay around $1.2 million. In Carlsbad, the same condo would sell for around $400,000.

This month we will take a moment and reflect on the 2005 real estate market. San Diego analysts continue to pen cautiously optimistic articles that warn of a possible correction in home prices, while in the very next paragraph reporting the high number of sales and strong sales prices of North County homes. MarketPointe, a san Diego based data analysis company, stated in their 1st quarter review that in 2005, San Diego has realized the second highest net sales for a first quarter on record, trailing only the number of units sold in the first quarter of 2004. And although Carlsbad market is very active, the data shows a flat level of appreciation.

Strong Market Pace

In Carlsbad, the number of single family homes, sold in 2005, has closely resembled last years record performance. From January to May, 838 homes sold within Carlsbad for 2005, compared to the 866 that were sold during the same time period during 2004. However, this does not mean that the rapid appreciation seen in 2004 has also occurred. Sales prices have been fluctuating slightly as sellers try to remain competitive. With an increasing number of resale homes entering the market and the 43 new

construction developments currently selling in the North County coastal

area, home-buyers have a large number of options and are carefully choosing their dream home.

Market Time

The average time for a property to be on the market before selling has been fluctuating around 50 days.

Inventory Levels In Carlsbad

As of June 14th, there are around 367 detached and 219 attached properties currently on the market: a number that has been increasing since March. The current inventory levels are around the same as they were in August of 2004, where the average sales price for Carlsbad dropped from an average of

$710,000 in July to $650,000 by October due primarily to increased

competition.

Summary

The real estate market is moving. Buyers have a number of housing choices and are weighing their options carefully in an uncertain market. Sellers are faced with an enormous amount of competition and are having to price their homes accordingly. Although the amount of appreciation has leveled, Carlsbad property is retaining its value and, as stated in the June issue of the CBJ will continue to do so.

For more information Email Tyson at Tyson@LundTeam.com or Call (760) 431-3338