Over 4,000 units opening in San Diego in '24
If you’re sick of your roommate, there will be new options this year.
There are more than 4,000 new apartments opening across San Diego County in 2024, with the vast majority downtown. Yet it isn’t just where you expect new complexes to be: Zoning changes and a push for housing mean projects spread all over the county.
There are roughly 50 housing complexes opening from National City to Oceanside, with many planning to command high rents. San Diego’s pace of residential building hasn’t increased — it remains about the same number of apartments opened last year — but is notable because the building pace is steady in an era of rising prices and higher borrowing costs.
Zillow senior economist Orphe Divounguy, who was in San Diego recently for a conference, said rent growth over the past few years has motivated developers to continue pushing ahead with projects.
It’s also possible many of the projects got started before interest rates started rising.
“Despite rent growth slowing, rents are still much higher than the were when many projects started,” he said. “That provides builders plenty of incentives to continue to bring apartments on the market.”
San Diego rent growth has stalled recently, but it is still up considerably over the last few years. Average San Diego County monthly rent was $2,404 in early February, said real estate tracker CoStar, a roughly 4.5% increase since the first quarter 2022.
It is up 23% from first quarter 2020.
Pushed on by historic rent increases throughout the pandemic and a nationwide push for housing, apartment construction in the United States hit a 36-year-high in 2023, said an analysis from RealPage. There were 444,000 apartments constructed last year.
Divounguy said it’s actually more surprising there aren’t more apartments opening.
“The fact San Diego is bringing home multifamily apartments at the same pace as a year ago,” he said, “actually means San Diego is kind of lagging relative to the rest of the country.”
Toll Brothers sees `meaningful uptick'
Luxury homebuilder Toll Brothers Inc. said it’s optimistic about its prospects for a key selling season.
Since mid-January, “We have seen a meaningful uptick in demand that has continued through this past weekend,” Chief Executive Officer Doug Yearley said in an earnings call Wednesday.
The builder lifted its outlook for home deliveries in its fiscal year. Shares climbed 6.1% to $109.61 at 10:09 a.m. Wednesday, the biggest intraday jump since the middle of December.
Buyers have turned more to builders as shoppers grapple with a lack of listings for previously owned homes. That has benefited companies such as Toll, which reported that orders in the three months that ended Jan. 31 jumped 40% from the same period a year earlier.
Toll’s comments signal a solid start for the builder’s typically busiest season. Few of the company’s buyers are choosing to accept a mortgage rate buydown option, which has been popular with other builders given that rates are more than double what they were at the start of 2022.
Toll’s more affluent buyers are taking other incentives instead because they don’t need lower rates to qualify for a mortgage, Yearley said.
The company has been shifting from its traditional build-to-order model by offering more “spec” homes, meaning it starts construction before buyers are lined up. The company said half of orders in the quarter were to buyers who signed contracts after the foundation was poured. With the tight existing home inventory, this gives buyers an opportunity to buy houses closer to being complete and, depending on the stage of construction, to also pick their finishes.
Home Depot sales drop again
Home Depot Inc. reported a fifth straight comparable sales decline, underscoring a drop in demand for house improvement due to high mortgage rates and a slowdown in construction.
Though mortgage rates have come down from October’s 23-year high, they continue to impact home sales and construction. In January, new-home construction sank by the most since the onset of the pandemic, indicating that any pickup in housing demand will be delayed until borrowing costs come down further.
Comparable sales fell 3.5% in the fiscal fourth quarter, Home Depot said Tuesday. That was slightly better than the 3.6% decline analysts had forecast before the report. The sales decline in the quarter is in line with a report recently from the Commerce Department, which showed a pronounced drop in retail sales at building materials stores.
“Some of this is down to a continued reset as consumers turn away from spending on the home, but much is now being driven by an unfavorable economic backdrop,” Neil Saunders, an analyst at GlobalData Plc, said in a note. “Fortunately, there is some evidence that the housing market will pick up slightly in 2024.”
This year, the retailer expects comparable sales to decline about 1%, an improvement from last year but below what analysts had estimated. While consumers are still spending on smaller home projects, they are deferring big-ticket purchases, Home Depot executive vice president of merchandising Billy Bastek said on a call with analysts.
“We still expect pressures to our business in 2024,” Chief Financial Officer Richard McPhail said on the call. “We’re planning for a year of continued moderation.”
Despite current signs of weakness, analysts remain confident in the long-term success of Home Depot. In January, analysts at Wedbush Securities upgraded their rating of the retailer from neutral to outperform, pointing to “a rebounding industry environment with healthy Pro and general employment, solid wage growth and homeowner spending power from continued home-price appreciation.” and see how the evidence comes in — or to see how a jury will come out — before stepping in to take charge of the outcome,” Williams said in an email.
The defense rests
Caldwell banker’s attorneys rested their case without calling any witnesses, then made a motion for a directed verdict, court minutes show.
Recio, who has been on the bench for six years, granted the motion, then dismissed the jury.
Recio had sided earlier in the trial with three former managers accused of violating “nonsolicitation” agreements after leaving First Team. The agreements banned the managers from recruiting agents to Coldwell Banker for two years after their resignations.
California courts long have held that such “noncompete” or nonsolicitation clauses are unenforceable