July 14, 2024

San Diego real estate San Diego home prices - 2016 San Diego Housing Forecast2016 San Diego Housing Forecast

Gains in new home construction and existing home sales are both expected to push total home sales to the highest levels in years. The new home construction market is expected to see the most gains in 2016, with Realtor.com® forecasting a 12 percent year-over-year increase in housing starts and a 16 percent year-over-year growth in new home sales. The gains in existing home sales are expected to be more moderate, with expectations of a 3 percent year-over-year gain.Total sales for existing and new homes are expected to reach 6 million for the first time since 2006 next year.

2016 San Diego Housing Outlook

For my readers I’d like to caution you to take the above 2016 real estate forecast with a grain of salt. One should keep in mind that the residential real estate industry is in reality, a sales organization. I would venture to say that there is no one out there who can ever recall a negative real estate appreciation report put out by the industry. Certainly, they totally missed the mark in calling the real estate bubble bust of 2005!

In my opinion, the San Diego residential real estate market will remain flat or at best see 1 to 2% increase in appreciation for 2016.

My reasoning for predicting flat appreciation for residential real estate in 2016 is because of the double-digit home appreciation San Diego and California has experienced during the last few years combined with the high probability of increasing mortgage rates (and thereby making qualifying more difficult without a huge down payment) and San Diego’s and Californians eroding taxpayer disposable income (again making mortgage qualifying more difficult) due to new hikes in water rates, electric rates, gasoline taxes and California taxes.

Sure, we all realize that if you live in San Diego or California we pay a premium (also called a sunshine tax) for the privilege of living in one of the best weather climates in the world. But, I would venture to say that most don’t realize how high that sunshine tax really is!

Just a few weeks ago here in San Diego, water rate increases were approved. Yes, over the next couple of years San Diego residents will see their water rates compound increases hit approximately 40% from what they are today!

Water rates are set to increase by 9.8% in January 2016 and then jump up again on July 6 by 4%. In July 2017 the San Diego water rates are again scheduled to increase by another 6.4% and then jump 5% in July 2018, and lastly jump 7% in July 2019!

 Also, this year the California Public Utilities Commission approved changing the current four tier electric rates structure to a two-tier structure, thereby ensuring the majority of California electric users will be paying more. In addition to this, the commission also approved  Edison, PG&E and SDG&E residential customers moving to “time-of-use” electricity rates starting in 2019. Under those rates, the cost of electricity will depend on the time of day — and time of year — that you use it.

In August, a California State Senate committee voted to approve legislation that would increase the state’s approximately 42 cents-per-gallon gas tax by 12 cents.

The new California fuel levy, will be on top of an 18.4-cents-per-gallon federal gas tax that is charged to all drivers in the nation to fill the federal government’s transportation funding coffers. 

The American Petroleum Institute says the gas tax increase will bring the total amount of money that drivers in California are charged at the pump to more than 72 cents per gallon.

At the moment, this new California gas tax is being hidden by the drop in oil prices. Currently, the nationwide average gas price is $2.027, while the California average gas price today is $2.68

2016 San Diego real estate forecast

To wrap things up, in light of San Diego and California residents facing ever-increasing utility and tax increases which reduce their disposable income and make it more difficult to qualify for home mortgages combined with the very high probability that home mortgage rates will be increasing, and we already have had double-digit appreciation in residential resales over the last couple of years, makes me feel that 2016 at best will be flat for residential home price appreciation with perhaps an outside chance of a 1 to 2% increase.

2016 San Diego Housing Forecast

7 thoughts on “2016 San Diego Housing Forecast

  1. Right On! Did you see where Toyota North America is moving its corporate headquarters from Torrance, Calif., to Plano, Texas? The reason for the move . . . calculated that the cost of housing in the Dallas-Fort Worth area is about a third the cost of housing in Los Angeles County. The overall cost of living is about 30 percent cheaper, according to CNNMoney.

  2. San Diego Tax Fighters, asked San Diego Gas & Electric to reveal its rates for certain inland customers, representing the bulk of the City of San Diego. The local utility charges a whopping $336 per 1000 kilowatt hours. “That’s 29 percent higher than the highest utility on the [Jacksonville] list — [Southern California Edison],” says Rider.

  3. California is a great state if you don’t mind giving up all of your freedom. If you want a nanny, California is the place you ought to be.

  4. The weather is unbeatable, but the cost of living, housing is too high, your paycheck goes to support government employees with outrageously high salaries, free health care and pensions

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