''Scarcity Value Dissipates' For San Diego Condos

The Voice of San Diego has this report on condos. "The number of condos placed on the market in downtown increased 17 percent in the first month of 2006 to a record high of 530. Southern California's analysts aren't particularly surprised by the spike in downtown inventory hitting the market this month. They said it is further evidence of what they have been saying for months: the downtown condo market is over-saturated, condos are taking longer to sell and a buyer's market is emerging." "Edward E. Leamer, director of the University of California, Los Angeles, Anderson Forecast, said this month's upsurge in inventory is indicative that the 'scarcity value' of downtown condos is starting to dissipate. 'What you'd expect to see happening is exactly what is happening. There's a temporary scarcity value in the condo market as the condo market heats up, then that scarcity value is competed away by new building,' Leamer said." "That would make sense in San Diego, where high-rise condos have sprung up all over the 92101 ZIP code in the last few years. Even more are in the works. Russ Valone said there are currently 52 residential projects underway in downtown San Diego, comprising a total of 11,000 condo units either being planned or under construction. That figure dwarfs the total amount of inhabited condos in downtown at the moment. Valone estimates downtown hosts 7,500 condos currently." "There are now seven times as many properties listed downtown than there were in the same week in 2003. Leamer, who many in the business regard as the most influential real estate economist in Southern California, said what is going on in San Diego's market is watched closely by real estate professionals all over the country. He said San Diego led the rest of the nation in an upsurge in the real estate market and now it's starting to lead the country into a market downturn." "'San Diego is the canary in the coal mine,' he said. Asked how that canary is looking in January 2006, Leamer had a grim prediction. 'It's definitely coughing,' he said. 'In fact, it might be lying down in the coal mine. It's time for the rest of us to get out of the coal mine.'"