The Coronado market in the $600K-$1M range has really heated up, while inventory continues to pile at the upper end. Homes priced below $1M are likely moving due to the following factors:
1) Vacation home buyers from Arizona feel like now is the time to finally afford a beautiful Coronado condo. Condos which previously sold for $1M are selling now for $600K-$750K.
2) First time homeowners are buying condos or tear-down Coronado homes and taking advantage of Obama tax credits and/or FHA loans. TheObama tax credit gives first time home buyers an $8K tax credit. FHA loans are allowing buyers to put as little as 4% down on a loan up to $700,000. Thus, lots of homes are selling in the $715K range, with buyers putting only 4% down.
3) The domino effect…when homes are moving (largely due to reasons 1 and 2 above), prospective home buyers feel a sense of urgency. The urgency is either a) buy now before the best opportunities are gone; or b) buy now because prices are apt to rise with activity heating up.
Since October 2008, there has not been a single home sold in Coronado priced higher than $2.8M! That’s seven months of no sales at $3M, $4M, 5M, etc.! While the Coronado market tends to be slow in the winter, these are certainly unusual times. I have a friend who is an agent; she says her office salivates when they hear there is a buyer in town who is looking above $3M, just hoping the buyer will be interested in a showing of their listing. Crazy. Two years ago, new buyers at this price point were around town every week or two.
It is especially strange to have no Coronado homes being sold above $2.8M because homes in Coronado have an average selling price of around $1.6M. Thus, $2.8 is not an abnormally high price. There are lots of homes for sale above $2.8 and generally a fair amount of activity. It’s one thing to have scarce buyers at $2.8 in Carlsbad, or scarce buyers at $7M in Coronado, but in Coronado, $2.8M should be rocking and rolling!
It seems that the Obama incentives and FHA loans are motivating buyers beneath $700K, which is where the action is in Coronado. Unfortunately, $700K buys a mediocre condo and listings are scarce. The entry point for a tear-down Coronado home is about $1M, so Obama’s tax plan is not helping Corondo homes get sold. Hopefully the activity at the low end will at least trigger some momentum upwards. I know agents are hungry, and I can only imagine that Coronado home owners are frustrated if they are not even getting buyers through their door to have a look.
With the coming of Spring, the Coronado real estate market heats up with the weather. In the first few months of the year, there were very few transactions on the Island (I think 12 total in the first quarter!). That is changing fast. Not only are there significantly more buyers on the Island, but the internet traffic has doubled in April compared to January. In July, the traffic will double again from April, meaning a 400% increase due to seasonality.
There are still a number of Coronado homes and condos that have been sitting on the market since 2008. These properties should be first to sell, as buyers tend to associate value with original list price and will see the seller’s discounting to be an opportunity. Of course this is not necessarily logical. It will be interesting to see what happens to 924 5th Street, a modern style luxury Coronado beach home that went on the market just a couple weeks ago and quickly dropped price to $1,499,999. This is a screaming deal– will buyers leap at it, or will they go for the lesser property that was once listed for $2,000,000? Buyer behavior is not rational, but sometimes those most knowledgeable about the market will exploit these opportunities or help others to do so.
Whatever they choose, buyers of Coronado homes should be in good shape moving forward. The Anderson Real estate forecast just announced that San Diego property values are expected to increase by 50% between now and 2013. These are serious analysts of San Diego real estate– these guys predicted the fall in home values before the market dropped. In other words, they are a credible source! Buyers do the best you can and hold until the market swings; you are sure to make some good money over the next 3-5 years.
Today I took a tour through three Coronado homes on Olive Avenue, just a few short blocks from the Hotel Del. They were modern style but with an old Mexico feel at the same time. Interesting mix that worked, particularly on the middle townhome which I learned was inspired by a town in Mexico called San Miguel de Allende.
The architect has built 5 Coronado homes that I am aware of. Apparently he went to San Miguel de Allende with the real estate agent who was involved in the project from the beginning and currently owns the home next door. While in San Miguel, they felt inspired to build Coronado real estate projects with this old school, Mexican vibe. This middle townhome has an outer door that feels like the entrance to the house. It’s a very nice door. What’s nicer, though, is the surprise when it opens to a beautiful courtyard rather than the interior of the home, which has its own separate door. This courtyard space works incredibly well with the home. It feels like an extension of the great room when downstairs, and large doors slide open to make the indoor/outdoor space one large room. From the upstairs most rooms look down onto the courtyard so it is never lost.
It seems to me that this architect and development team are up to something special. They are building Coronado homes, townhomes and condos that are different from the typical beach styles you see around the island. I predict these will sell much more quickly than the average Coronado real estate property, which takes more than 100 days for the average listing since the market dropped in early 2008.