Kent Williams, regional manager of Marcus & Millichap's San Diego office, says "The housing crunch continues to plague the county as the area remains one of the least affordable in the nation.
"This lack of affordability, combined with positive job growth, will allow rents in many parts of the county to increase over the next year, albeit at a more moderate rate. Healthy market conditions will keep investors active in the market, despite the economic downturn."
San Diego's diversified economy is expected to remain relatively healthy during the national recession. The unemployment rate rose to 3.8%, a level not seen in almost four years. While job growth is significantly down from previous years, it is anticipated to remain positive, Williams says. The county is expected to add only 9,000 non-farm jobs over the course of the year.
Developers will complete only 3,300 units over the next year. As has been the case over the last few years, nearly all the new units hitting the market in 2002 will be of the luxury type.
Developers have been compelled to build these high-end luxury apartment complexes in order to compensate for the rapidly rising land and materials cost. While there are organizations in the county attempting to build 2,000 affordable housing units over the next two years to ease the housing crunch, they are not expected to greatly impact the market.
Current estimates place housing demand at roughly 8,800 units next year, which equates to excess demand of nearly 5,500 units.
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