50+ Housing e-Source - 08/21/2009 (Plain Text Version)Pat Kelley View Graphical Version | Subscribe
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Editor... In this issue: Market Snapshot: San DiegoSan Diego County borders Tijuana, Mexico, on the south and is bordered on the north by Orange County, Calif. It is home to miles of beaches, a mild Mediterranean climate and 16 military facilities hosting the United States Navy, the United States Coast Guard and the United States Marine Corps.
Demographic Highlights Population: The population in the San Diego MSA is projected to grow by 176,462 people (6%) from 2008 to 2013. The majority of the growth will take place among those 55 to 74 years of age. The 55 to 74 age group is projected to grow by 99,597 or 20%. This age group represents 56% of the total growth for the MSA. The projected growth rate for the entire U.S. for the 55 to 74 age group is 19%.
(Source: Claritas) Households: Consistent with the projected population growth, households headed by someone 55 to 74 years of age will represent the majority of the household growth in the San Diego MSA, and the U.S. over the five year period from 2008 to 2013.
(Source: Claritas) Migration Data: Over the past two years for which migration data are available, San Diego County lost a total of 8,879 households (.9%) to other areas in the state, to different states and foreign countries. Net out-migration to other areas in the state and to other states totaled 13,462 households over the two year period. These data suggest that some households may be moving from San Diego County to areas with lower priced homes. The majority of in-migration has been among military households .
(Source: Internal Revenue Service) Median Household Income: In 2008 median household income among the active adult target market (households 55 to 74) was comparable to the median income among all households in the San Diego MSA. In 2013, the median household income of the target market is projected to be slightly higher than the income levels among households of all ages.
(Source Claritas) Employment Highlights Employment Decline: Between 2008 and May 2009, the number of employed individuals in the San Diego MSA has decreased by more than 47,000 jobs (3.2%). The employment decline in San Diego MSA is slightly better than seen nationally for over the same period (3.6%) during the same time period.
(Source: Bureau of Labor Statistics - Metropolitan Area Employment and Unemployment Report) Unemployment: The unemployment rate in the San Diego MSA was 9.1% in April of 2009. This rate was slightly better than the unemployment rate for the entire U.S. which stood at 9.4 percent. The unemployment rate in the state of California in April 2009 was 11.1%.
(Source: Bureau of Labor Statistics – Metropolitan Area Employment and Unemployment Report) Housing Highlights According to Peter Demmehy, Senior Vice President with Sullivan Group Real Estate Advisors, “Existing SFD sales are up 34% in the first six months of 2009 vs. the same period of 2008, and actually '08 year-end sales increased from ’07. Price reductions are bringing buyers out and the state and federal tax credits help. Resale listings also are at their lowest levels in a few years, and the days on market number is better. Inventory on market is largely “need to sell” and priced accordingly and is selling well. I am not sure if we should call it “bottom” — but it is better. New sales are improved — but still weak and generally higher priced than resales." Home Sales: Based on home sales for the first two quarters, annual home sales for the San Diego MSA are projected to rebound in 2009 to the highest level (42,035) in the last five years.
(Source: National Association of REALTORS; Economy.com) Median Existing Sales Price: The median sale price of homes sold in May 2009 was $307,786. This represents a 50% decline from 2005.
(Source: National Association of REALTORS; Economy.com) Home Price Index: The Federal Housing Agency’s Home Price Index suggests that sale prices in the San Diego MSA peaked in 2006 and, as of the end of the first quarter of 2009, are 35% below the 2006 index.
(Source: Federal Housing Finance Agency) Median Time on Market: In May 2009, homes for sale in the San Diego MSA were on the market for an average of 41.6 days. This represents the shortest period of time in the past 12 months.
(Source: National Association of REALTORS; Economy.com) Housing Starts (Privately Owned): Housing starts for the San Diego MSA are at a four-year low and have decreased significantly each year since 2006.
(Source: U.S. Census — Housing Units Authorized by Building Permits Report) Supply Active Adult: According to the San Diego County Planning and Land Use Department, there are no new active adult communities currently selling single-family homes in San Diego County. According to the department personnel, there have been no active adult developments offering single-family detached homes for sale approved since 2004. Ocean Hills in Oceanside (right) is advertised as the premier 55+ community in San Diego County. The gated community has a golf course, a 7,000 sq.ft. clubhouse and community center, and includes approximately 1,600 attached and detached homes. The first homes built in Ocean Hills were built in the late 1980s. The newest neighborhood was completed in 1998 and has detached homes that range in size from 1,750 to 2,150. According to the community's Web site, re-sales are priced from $500,000 to $750,000. The Web site http://www.beautifulcaliforniahomes.com/ lists 14 homes for sale in Ocean Hills. The average size of the units for sale is 1,964 square feet and the average list price is $521,945 for a per square foot list price of $272.780. The average days on the market for homes for the 14 homes they currently on the market is 168 days, with the shortest time on the market six days and the longest being 541 days. Service Enriched: The newest community in the market is Paradise Village (left – currently under construction). The community, which will have 409 independent living units and 92 assisted living units, was projected to open August 1, 2009. Wesley Palms, an existing CCRC in San Diego, is planning to renovate their campus, possibly adding new independent living apartments and/or single family homes. The San Diego MSA has 146 service-enriched age-qualified communities, with a total of 6,445 independent living units, 4,358 assisted living units and 8,278 nursing beds. The occupancy rate among all communities peaked in the first quarter of 2007 at 92.7%, and has been declining since. In the first quarter of 2009, the average occupancy rate was 88.5%. The largest decline in occupancy has occurred in independent living. (Source: NIC MAP - 2009) Demand Using their proprietary demand model, ProMatura Group estimates the annual number of prospects for new active adult housing. Combining U.S. Census demographic data with a proprietary consumer research results data for propensity to purchase estimates, the ProMatura Demand Model suggests that there is a market for 866 for-sale active adult housing units in the San Diego MSA in 2010. Forecast for the 50+ Market The number of households headed by someone in the 55-to-74 year age group in the San Diego MSA is expected to continue to grow through 2013. The projected growth rate of this age group is higher than that of the U.S. as a whole. Households in the MSA headed by someone 75+ years of age are projected to decline slightly through 2013. Incomes for the 55-to-74 households are expected to increase at an annual rate of 3.0% which exceeds the national rate (2.2%) and is faster than the income growth for all households in the metro area (2.4%). Unemployment rates are expected to continue increasing through the end of 2009, but at a slower rate than in the first half of 2009. This trend is expected to continue into 2010, with an anticipated reversal in the trend by mid-2011. Existing home sale prices are expected to begin stabilizing by the third quarter in 2010, as inventories continue to be absorbed and residential foreclosures moderate. RealtyTrac.com listed 2,770 homes for sale in San Diego, of which 24% were in default of their mortgage. These trends indicate growing opportunities for new 50+ housing developments in late 2010 to early 2011, especially in the area of maintenance-free lifestyle communities and rental housing for people 62+ years of age. Absorption of 75+ service-enriched housing will likely continue to be sluggish through 2011. This is an excellent time for builders to start the planning and entitlement process for new product which they should expect to bring on line in mid-2011. Providers of service-enriched housing for the 75+ market should plan for the introduction of new product in late 2011 and early 2012. -------
Bryon Cohron is a Senior Analyst at ProMatura Group and has completed scores of feasibility studies for developers interested in building age-qualified communities. His areas of expertise include financial feasibility, market demand analysis, site analysis, product research, product and community design, marketing and sales consulting and data base management. For more information or to contact us directly, please visit www.NAHB.org | ©2009, National Association of Home Builders |