What kind of decisions are you making in the current San Diego real estate market?
How are you deciding on rental rates, upgrades, and investment strategy?
We’re talking about the current market trends today, and how they’re impacting what you do as a rental property owner and investor in San Diego. This has always been a strong and competitive market. Even when things begin to dip and tumble elsewhere, the San Diego market manages to remain resilient. We have a strong tenant pool, a flourishing local economy, and an established military presence. All of these things ensure there’s always a need for housing.
There are also financial trends that influence the market. Interest rates are still high, making mortgages expensive. How does that impact what you’re buying, selling, and renting out?
Let’s dive into this discussion.
What are the Main Market Trends in San Diego?
Before property owners can effectively make decisions, it’s critical to understand the specific market trends that are influencing the San Diego real estate market. Key factors that all of us are talking about right now include:
- Housing availability
- Mortgage interest rates
- Tenant demands and requirements
The rents have been rising steadily in San Diego, and consumer confidence has been strong enough to support those increases. And property prices have been high in the sales market, too, thanks to an increased housing demand over the last few years and a supply of homes for sale that has not quite met that demand.
Real estate investors will want to analyze the impact these trends could have on their portfolios before making any decisions about their investments.
- Property Value Fluctuations
The value of San Diego properties doesn’t remain static. Upward or downward trends in the market can significantly affect property values, influencing owners’ equity and their decision on whether to sell, hold, or refinance. The trend now is high prices and high values. Sales have been slowing for a number of reasons, but the prices have not come down in order to encourage faster home sales. The average home value for a San Diego property in January 2024 is higher than the value was a year ago.
- Rental Income Adjustments
Market trends also impact rental prices.
A surge in demand might enable landlords to increase rents; however, during a downturn, retaining tenants might require keeping rents stable or even reducing them.
There are also the rent stabilization laws to consider when you’re deciding whether to raise your rent or by how much you will be raising your rent. Setting a rental price for a vacant property is one thing; establishing a renewal rate for a tenant who is occupying your property is a decision that includes many things. There’s not only the strength of the market to consider but also any legal restraints that might be in place.
- Investment Strategy Shifts
A lot of investors might rethink their strategies based on trends. For instance, some may lean towards investing in property types or areas that are forecasted to thrive, while others pull back and focus on fortifying their current assets. Maybe you’re thinking about shifting into short-term rentals because those have been earning so much money and there’s such a high demand.
We support making adjustments as necessary. Remember to follow your investment goals, however, and don’t go chasing every trend. There’s a lot of success to be found with stability and staying the course, especially when it’s a profitable course.
Tenant Trends San Diego Property Management Professionals are Watching
You cannot have a successful investment property without a good tenant in place. Here are some of the tenant trends that are getting a lot of our attention, and should impact the decisions you’re making about your property and your portfolio.
- Remote Workers are a Big Part of the Tenant Pool
The impact of remote work on the real estate market in San Diego cannot be overstated. Remote work has made a huge difference in where people live, how homes are priced, and even what kinds of features are offered now in homes for sale and for rent. A lot of the tenants looking for a rental home in San Diego are remote workers. This is good news for San Diego rental property owners who have a well-maintained, well-located home to offer those workers. It comes with challenges, too. For example, when people work from their homes, they tend to use the systems and functions of their homes more. You may find that there are more maintenance requests. Toilets get flushed more frequently. Appliances are used daily.
San Diego’s rental market has benefited from the remote work trend, and as long as you can make your property attractive to the tenants who are working remotely and choosing to live in San Diego, you’ll be able to leverage this trend and enjoy profitable, long-term tenancies.
- Tenants Want Smart Home Tech
Technology is a big part of leasing, managing, and maintaining your property. Not only do we need it for showings and marketing and lease renewals and rent collection, tenants are expecting it in their homes. They want smart home tech, and it’s becoming a big expectation for the renters who are currently in your tenant pool. It might seem like this type of tech is expensive – and some of it is. But, when you make smart investments and improvements that reflect the rising demand for technology, you’re setting your property apart from all the others on the market, and you’re attracting and retaining great residents.
Start with some small features, such as a digital keypad, a smart thermostat that can be programmed from an app, and a video doorbell, which allows tenants to see who is at the door before they answer it. Investing in these types of technologies is not only good for your tenants, but will also add value to your property and assist you with a smoother turnover process when it is time to prepare for new tenants.
- Tenants Want Sustainability
Another tenant trend that’s hard to ignore is the trend of going green. Tenants are increasingly intolerant of wasted resources. They’re environmentally-minded, and they’re looking for rental properties that reflect their values. Make some eco-friendly adjustments when you’re deciding where to make improvements and updates. This is one market trend that isn’t going away; so it makes financial sense, too. Consider LED lighting, low-flow toilets and faucets, native landscaping, and appliances with Energy-Star ratings.
Strategies for Property Owners
To successfully navigate the market’s ups and downs and constant shifts, we work with San Diego property owners and real estate investors to embrace several strategies:
- Market Research
We are constantly collecting data, analytics, and property insights to help you stay informed about local real estate dynamics. Regular market analyses help in making data-driven decisions and timing investment moves effectively.
- Diversification
Consider diversifying your portfolio across different property types (residential, commercial, industrial) and locations to mitigate risk associated with market fluctuations. This is easy to do in San Diego, where our neighborhoods, property types, and tenants are diverse.
- Networking
You’ll want to surround yourself with professionals who know what’s coming and how to position themselves and their properties to benefit. Building a robust network with other investors, real estate agents, and market analysts can grant access to insider knowledge, enabling more strategic decision-making. Leverage the relationships you have in place.
- Long-Term Planning
Adopt a long-term perspective when evaluating your investment properties, focusing on sustainable growth and consistent returns rather than short-term gains. It’s easy to chase new trends, as we said earlier, but that’s not always the best way to grow a portfolio and increase profitability. Think about what you want to accomplish now and in the long term. This may change how you make decisions.
In the end, savvy property owners in San Diego understand that market trends will inevitably shape their investment decisions. By staying informed and responsive to these trends, investors can not only shield their portfolios from potential negative impacts but also uncover opportunities that others might miss.
Market trends will always be a crucial factor for those owning rental property in San Diego. While investors and property managers cannot control the market, we can control how we respond to it. By adopting flexible strategies and maintaining an informed outlook, property owners in San Diego can make the most of market trends and continue to thrive in this competitive and pricey real estate scene.
If you are a San Diego property investor or considering becoming one, we’d love to talk with you about your investment goals and how we can help you achieve them. We can talk to you about the market and its opportunities and also about what you could be doing to prepare for future trends and changes.
Please contact us at Chase Pacific Property Management & Real Estate Services. We are your best resource and partner when it comes to managing properties and real estate in San Diego.