Tom York on Business: American Home Market ‘Unrecognizable’ After COVID

House is for sale in San Carlos area.  Photo by Chris Stone
House is for sale in San Carlos area. Photo by Chris Stone

A recent report from residential real estate platform Zillow tells us what we already know about the market here — and confirms similar reporting from competitors. Home sales have gone bonkers over the past two years of the COVID-19 crisis.

Indeed, Zillow says the national housing market is virtually unrecognizable from its previous state, with only half the number of homes for sale and prices higher by one-third and rising.

And San Diego? Zillows monthly market report finds that the median home value has now soared above $880,000.

“We’ve seen strong demand for homes and prices rising at previously unfathomable rates, said Zillow economist Nicole Bachaud in a news release. “A wave of millennial and baby boomer buyers have depleted housing inventory that was never really replenished following the Great Recession.”

Lack of inventory is driving the historic price hikes nationwide. There were 730,000 houses for sale at one point in the United States last month, compared to 1.4 million in February 2020.

Looking ahead, Zillow economists expect annual home value growth to continue to accelerate through the spring, peaking at 22% in May before gradually slowing to 17.8% by February 2023.

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Meanwhile, Redfin, another residential real estate platform, says national home prices climbed 16% year over year to a new all-time high of $389,500 in February as the number of homes for sale fell to another new low.

The lack of inventory is holding back home sales, which were down 4% from January. This includes the situation in the San Diego market, where buyers are forced to compete fiercely for homes when they do manage to come up for sale.

“Virtually every home for sale gets multiple offers these days,” said San Diego Redfin real estate agent Ashley VanLeuven in a news release. “Most listings receive 20 or more offers, and the buyers who win are nearly always waiving contingencies and offering substantially above list price—sometimes by several hundred thousand dollars.”

Redfin says the median sales price here was $800,000 (about 10% less than the Zillow findings), a 3% gain month over month and a 17% gain year over year.

About 2,400 homes were sold in San Diego in February, a 10% decline from last year, most likely the result of a shrinking of inventory for desperate buyers.

“An acute shortage of homes for sale continues to stymie buyers in the current market,” said Redfin chief economist Daryl Fairweather. “Rather than dropping out of the housing market, homebuyers only seem to be getting even more voracious, driving prices up at a starting clip.”

In a separate report, Redfin found that the average rent in San Diego increased nearly 19%, to $3,500 a month from $3,100 a month through February.

Nationally, the average monthly rent increased nearly 16%. Interestingly, Austin, Texas, which has become something of a Mecca for Californians moving out of state, saw a year over year 40% increase in the average monthly rent.

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Inc. 500 CEO, and investor David S.Rose will keynote the fourth annual San Diego Angel Conference on March 24. The conference will feature six finalists from the health tech, alcoholic beverages, diagnostics, veterinary therapeutics and cleantech sectors vying for more than $1 million in funding.

The conference and program are run by the University of San Diego’s school of business.

Ninety startups applied for the fourth annual conference late last year.

The six emerging companies selected to compete for investment are:

  • BrainSpace – which seeks to provide neurocritical care for protecting the brain and spine after trauma, surgery, or neuro degeneration.
  • First Light Coffee Whiskey – which is making environmentally conscious spirits.
  • CARI Health – which is developing monitoring of medications remotely.
  • Hera Biotech – which is developing the first non-surgical test for endometriosis, which is a prime condition behind female infertility.
  • LiveEngine Animal Health Laboratories – which is transferring gene editing and cancer treatments in humans to dogs.
  • ReJoule – which is addressing the need for testing of effective second-life batteries.

“Our mission is to activate new investors, get deals done, and support the innovation ecosystem,” said conference founder Mysty Rusk in news release.

To date 415 companies have applied for funding, according to a spokeswoman. Altogether, they have raised from various sources a total of $101 million in the first three years of the program.

One company from the second year, runner-up ChargeNet Stationsa software platform that integrates electric vehicle fast charging, energy storage and solar power with a payment system, recently closed a $6.2 million seed round.

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Local eatery Enclave Café says it recently opened a location in Torrey Hills and acquired a 19-acre farm in Bonsall, where produce will be company grown.

Founder and CEO Lan Thai says her restaurant business combines culinary and healthcare industries to put the “fun” in nutrient-dense foods that have been OK’d by regional doctors.

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Nonprofit news of note…On March 24, Wounded Warrior Homes is set to host a ribbon cutting for a new cottage in North County.

The accessory dwelling unit is the agency’s fourth residence and will provide transitional housing for a veteran with post-traumatic stress and traumatic brain injury.

This addition brings the total number of veterans housed through Wounded Warrior Homes up to fourteen at a time.

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San Marcos’ massive mixed-used development North City has announced its newest tenant, Maya’s Cookies. The San Diego vegan cookie company said the site will be its second store.

Developer Sea Breeze Properties describes North City as a “city within a city” adjacent to the California State University at San Marcos. The project includes 3,400 units of housing and 345,000 square feet of retail.

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San Diego’s Plant Power Fast Foodwhich claims to be the country’s fastest growing 100% plant-based fast-food restaurant chain, has announced the opening of a new location in Hollywood.

Plant Power describes itself as a 100% vegan version of a traditional fast-food brand and features a menu ranging from burgers, fries, shakes and “chicken” nuggets to salads, fresh juices, a children’s menu and full breakfast selection.

Visit plantpowerfastfood.com for more details.

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Finally…good news for local termite exterminators!

San Diego comes in at No. 11 on a list of 50 cities in the need for extermination services. The list is based on treatment data from the metro areas where commercial pest control company Orkin performed the most first-time customer termite treatments from February 2021 to the end of January 2022.

The ranking includes both residential and commercial treatments.

San Diego was No. 12 on the list last year. Los Angeles has the dubious distinction of being No. 1 on the list this year.

Tom York is a Carlsbad-based independent journalist who specializes in writing about business and the economy. If you have news tips you’d like to share, send them to tom.york@gmail.com.

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