Like the sun, the luxury housing market always seems to shine in San Diego County. After totaling just under $50 billion in luxury sales last year, total dollar volume has remained strong. Now, as we look to the second half of the year, what does the future hold?
For that insight we talked to Willis Allen Real Estate president Andy Nelson, who says that housing market projections are more complicated than they may seem. “You can’t fully make predictions—that’s the strength and weakness of our market.”
Born in Del Mar, California, the veteran realtor—both literally and figuratively, Nelson served in the United States Navy—has more than 40 years of experience working in San Diego luxury real estate and has held the position of owner of Willis Allen Real Estate for more than 25 years. During that time, Willis Allen has grown to become one of the premier agencies in the county, with eight offices and more than 200 agents.
In my continued coverage of the global real estate scene, I spoke with Nelson about the current state of San Diego’s luxury market and how the successes of the previous year will affect 2022. His comments have been edited for clarity.
SE: The first half of the year saw a number of high-end sales across San Diego County close for well over initial asking prices after being listed for just a few weeks—what factors led to such an enthusiastic luxury market?
AN: There are a lot of different ingredients. First, the demand has continued to be high in the luxury marketplace. Many of the applicants out there are those who are looking for a luxury property—they want an upgrade from what they previously lived in.
We sell a product, sure, but we also sell emotion. People make choices because they walk into a space and make a connection. I once sold a one-bedroom house to a family with three kids, but they just loved the space from the moment they walked through the front door. Emotion dictates a lot of our market choice.
SE: How is a lack of inventory going to affect the second half of the year?
AN: I think right now, the second half is probably going to see a little slowdown, nothing major. Part of the reason there is such low inventory is the area has older residents who have so much capital gain in their property. Rather than market their house, they’re staying and thus they’re not bringing inventory to fuel a rising demand.
But it’s not just inventory, it’s a combination of things. A lot of people who made money in the stock market have lost a little bit, and not that they’ve lost enough to make a compounding problem, but enough to create a perception that they might need to be a little more cautious.
SE: Are new homes being constructed?
AN: Yes, but it’s more complicated now than ever … the cost of materials, the slowness of the application and building permit process. You used to be able to build a nice house in the $450 per square foot range, now it’s closer to $700 to $900. New construction is certainly still in demand as people want their perfect home, but finding a house that already exists and doing renovations is going to be cheaper and faster.
SE: What are the hottest price points in San Diego currently?
AN: Anything around $1.5 million in a good area easily gets four to six offers, sometimes even up to 12. And people are paying a premium above the asking price.
Let me ask you real quick, do you own or rent?
SE: I rent.
AN: You got to buy something! That’s what I’m telling everyone, buy something. It might be too expensive and you’re going to have to feed it, but in five years you’re going to think, “Wasn’t I the smartest son of a gun?”
Willis Allen Real Estate is an exclusive member of Forbes Global Properties, a consumer marketplace and membership network of elite brokerages selling the world’s most luxurious homes.