Real estate advisor Gary London spoke to our club at the March 21, 2101 meeting about the issues surrounding the real estate market in San Diego county. London has over 35 years of experience in the San Diego market, and from a personal side, his family was one of the first to move into Carmel Valley in the early 1980s (he’s also a Rotarian, calling Club 33 his home club). He has consulted on several large projects in the area, including the Del Mar Plaza and One Paseo in Carmel Valley.
London said that we are now in the longest post-recession recovery in modern times, although the recovery hasn’t been robust with an annual GDP growth of around 2%. His clients at London Moeder Advisors feel that the economy will likely shift in the near future, in part due to the Federal Reserve’s decision not to change the benchmark interest rate and record low capitalization rates with high risk and low rates of return.
Real estate is also affected by changing needs of society. In the commercial real estate sector, the square footage of office space per employee is falling and the retail sector is changing, as more consumers elect to make purchases online rather than in brick and mortar stores. From a demographic perspective, the Baby Boomer generation is reaching retirement while the Millennial generation, those born between 1981 and 1996, are dealing with student debt and entering the housing market later.
Unlike previous generations, the past is not prologue for the current real estate market. London’s firm conducted a survey of local employers that effectively asked: “What keeps you up at night?” The most common answer was their inability to find suitable employees. The housing market in San Diego is contributing to that concern: the median house price is $650,000 (compared to the nationwide average of $250,000) and San Diego is adding only around 10,000 housing units annually when the need is closer to 15,000-20,000 units. Moreover, the type of housing that is being built isn’t where the jobs are and is more likely to be apartments rather than single family homes for young families.
Overall, London said that politicians and residents alike need to take greater responsibility to promote adequate land use and intelligent growth of the San Diego community.