San Diego Real Estate Update
San Diego Real Estate Update
Our team at The Naumann Law Firm wanted to share with you some interesting developments in the San Diego real estate market. Developers are getting back into the game in San Diego. There is a very high demand for housing, however, the cost to build is extremely high for developers and not enough units are being created. As a result, there is a chance that some developers may “cut corners” on the back end, to save on costs, which can lead to construction defects.
The National Association of Home Builders (NAHB) Housing Market Index (HMI) gauges builder opinion on the relative level of current and future single-family home sales. A reading above 50 indicates a favorable outlook on home sales, while a reading below 50 indicates a negative outlook. The latest reading in March was 62, which was the same for February 2019. In short, if builder confidence is high, construction should increase.
Builders say the market is stabilizing following a slowdown at the end of 2018, according to NAHB. The NAHB predicts spring 2019 to be a good home-buying season. See the chart below which shows the HMI since 1985:
Inventory in San Diego County is starting to open big.
- Detached homes up 21.1% year over year.
- Attached homes up 57.1% year over year.
- The number of single-family homes for sale from February 2018 to February 2019 has risen 12.6% for all price ranges and 38.1% increases for condos/townhouses.
Southern California construction and labor costs are some of the highest in the nation. In September of 2018, the IHS Market PEG Engineering and Construction Cost Index report revealed that construction costs rose at an accelerated pace month-over-month to an index reading of 62.1 — up 3.2 points from August. It was the 23rd month straight of cost increases. The report said costs should continue to rise for the next six months (into March 2019).
According to the report, the subcontractor labor marked its 14th consecutive month of cost increases with a month-over-month reading up 5.5 points, and the material/equipment cost experienced a 2.2-point rise.
It is believed that the number will land at 79.8, the highest it will ever be since the index began in 2012.
The 25 percent tariff on steel is also having a big impact on the rising cost of construction projects. In 2018, steel rose 31 percent from January to September.
With these rising costs and demands for housing, developers may “cut corners” to be sure they can grow their margins and make profits for shareholders and investors.
If your developer “cuts corners” and you find yourself with a construction defect, do not wait to report it. You may be able to pursue and claim damages. To learn more about this topic, click our construction defect litigation page.
If you are a homeowner, association or commercial owner seeking representation in construction defect litigation, our team at The Naumann Law Firm in San Diego can help. We have more than 38 years of experience handling significant construction cases with complex issues. Call us to set up a consultation.
To contact us, call 844-492-7474 or visit our San Diego construction defect contact page.
We also do Los Angeles construction defect litigation, Orange County construction defect litigation, Riverside construction defect litigation, and San Bernardino construction defect litigation.