Why I Am Betting On Urban San Diego, Part II
by Jim Scott

Last month in this space I wrote a column entitled "Why I Am Betting on Urban San Diego." I discussed the growth of the suburbs in San Diego and the shift of political power away from the land development community. Part II follows below.

It's Not That Expensive

The price of most real estate in the urban core of San Diego will appreciate faster than the county average. This means close-in real estate is a relative bargain. There are several reasons why I believe this true.

First, we can continue to build all of the El Camino Del Rey Mar Vista Lake Estates we want in the suburban areas of the County. Developers have entitlements and only the limits of the marketplace will slow down the pace of development. As long as there are buyers, no amount of caterwauling about traffic and pollution will stop the process. The owners of these vast tracts of raw land have the right to develop the parcels and will be restrained only by the vagaries of the real estate market.Demand for the suburban lifestyle can be met with new development and therefore prices will be moderated by the reserves of thousand of yet to be built homes.

Second, we cannot build another Mission Hills, or North Park for that matter. Our urban housing and land stock is fixed and only demand, not supply, will rise. As the population of San Diego County increases, the number of people who want an urban lifestyle will increase in rough proportion to the general increase in the population. Since the supply of older urban homes is fixed (unlike the supply of the suburban properties which will grow), prices should increase at a faster rate in the urban core than in the suburban areas. Our future experience should mirror other American cities, such as Seattle and Baltimore, even those cities had relatively larger prewar populations and housing stocks. In 1940 there were only 120,000 souls living in San Diego. That fact speaks volumes about our limited supply of older neighborhoods in relation to the general housing and land stock. Yet those inner cities have already experienced price appreciation that far outstrips what we have seen during the past twelve months in San Diego. We will have more people bidding on a very limited supply of product, which will only increase as more 'new urban buyers' enter the marketplace.

Dorothy, This Isn't Kansas

The main reason behind the coming imbalance in supply and demand noted above is a shift in the demographics of the urban home buying population. This change bodes well for our neighborhoods and downtown. There are different kinds of people moving here today, bringing different ideas about housing, lifestyles and community. They may eventually end up living the suburban model but for now they want the urban lifestyle. This will bring a sea change to our neighborhood. More on that next month.

(Next month, Part III, The New Urban Buyer)

You can reach Jim Scott at his office, conveniently located in the heart of Mission Hills, at 1111 Fort Stockton Drive. Scott & Quinn is the oldest full service real estate firm in Mission Hills and is still locally owned and operated. Jim has been a homeowner in Mission Hills since 1976. He is married and has two boys. He can be reached at 296-9511. Scott & Quinn features professional property management as well as a sales division.