San Diego Real Estate Update – August 2019
San Diego Real Estate Update – August 2019
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. When we last provided an update, the reading was at 62, it has since increased to 66. Builder confidence for newly-built single-family homes is strong. It has maintained a rating of 64-66 the past four months.
“Even as builders report a firm demand for single-family homes, they continue to struggle with rising construction costs stemming from excessive regulations, a chronic shortage of workers and a lack of buildable lots,” said NAHB Chairman Greg Ugalde.
Last post, we noted that the Trump Administration imposed a 25 percent tariff on steel, which is having a big impact on the rising cost of construction projects. Since this time, the tariffs on steel have been lifted.
Southern California construction and labor costs are some of the highest in the nation. The latest chart from, the IHS Market PEG Engineering and Construction Cost Index report revealed that construction costs rose in July at an accelerated pace month-over-month to an index reading of 63.2 — up 7.6 points from June. It was the 32nd consecutive month of cost increases.
The report’s expected pricing in six months is expected to continue to increase. In turn, this cuts down margins developers plan on making as profit on their projects.
And what could be argued as most important to a project, the market for skilled labor has increased in price. Having competent employees and laborers is critical to living in a comfortable and properly functioning home.
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.