San Diego Multi Family Updates and Thoughts
After spending 5 years in the electric bike business and running one of the most successful private dealers in the country, I've found it important to stay flexible with expectations. It was difficult to not continue to think that our Covid boom would continue but following trends always helps keep us grounded. As I migrate my career to commercial real estate I try to utilize the same thought process when I look at sales volume vs market demand and contributing factors like price and availability. Here is what we are seeing in the 2-4 unit space (data pulled from the MLS).
2-4 unit sales are still behind compared to 2020, and even if we look back to 2019 we still had 59 sales compared to 2023’s May with 26. We could potentially look at investors saying “this doesn’t pencil” as the sold count drops and price points have changed from $853,645 (2019) to $1,140,769 (2023) on average per sale.
Neighborhood Scout’s report shows the annual San Diego appreciation rate at 5.27%. When we look at the appreciation rate from 2019 to 2023 (21.08% combined) compared to average sale price (2019 to 2023) we see an increase of the average sale price increase to 33.65%. That means price has outpaced inflation by 12.57%.
When it comes to 5+ unit sales (data from CoStar) we are almost in the identical place we were in 2020. It would seem that the market for 5+ has just reset. Pricing hasn’t changed with inflation and we should potentially see this start to see slight growth in regards to average sale price but not in the volume we saw in 2022 (62 sold).
Overall, the numbers below are there to paint a picture of where the market is at. When pricing your property for sale, depending on your urgency, you’d be better suited to price the 2-4 unit property off 2019 comps then add proper inflation. For 5+ you can safely assume the average price point should be compared to May 2020 with moderate inflation increases. When it comes to purchasing it is important to run realistic rent surveys and make sure you aren’t overpaying in a market that is resetting in volume but skyrocketing in price.
See data below for 2-4 units and 5+ units.
MLS Updates 2-4 units
Average days on market - 15
Average sale price: $1,140,769
Total sold price: $29,660,000 (list $29,244,299)
Average days on market - 27
Average sale price: $1,361,496
Total sold price: $84,412,763 ($84,899,399)
Average days on market - 21
Average sales price: $1,399,855
Total sold price: $449,353,486 ($441,858,232)
Average days on market - 32
Average sales price: $1,298,738
Total sold price: $227,279,236 ($230,731,586)
Jump back to 2020
Average days on market - 34
Average sales price: $941,955
Total sold price: $230,779,050
Average days on market - 34
Average sales price: $961,652
Total sold price: $63,469,070
CoStar 5+ Date
Average sales price: $3,256,664
Total sold price: $65,133,282
Average sales price: $8,084,996 (127 mil outlier removed)
Total sold price: $388,079,817
Average sales price: $7,380,988
Total sold price: $730,717,782
Average sales price: $10,361,318
Total sold price: $1,906,482,528
Jump back to 2020:
Average sales price: $6,149,618
Total sold price: $731,804,600
Average sales price: $3,550,757
Total sold price: $67,464,381
Opinions in this article are solely the thoughts of the author. Our blogs are provided on selected topics and should not be relied upon as a complete report of all new changes of local, state, and federal laws affecting property owners and managers. Laws may have changed since this article was published or may have been misinterpreted. Before acting, be sure to receive legal advice or consult a licensed CPA.