SAN DIEGO—Buyers interested in top-tier condo product are sitting on the sidelines waiting for something new, while those interested in resales are not willing to set new price records for homes that were built six to 10 years ago, the Mark Co.'s senior director of research Erin Kennelly tells GlobeSt.com. As we recently reported, according to a recent report from the firm, which recently added Downtown San Diego to its trend sheet, the condominium pricing index for Downtown San Diego decreased 2% in August from the previous month to $644 per square foot, but rose 3% compared to the same month one year ago. We spoke exclusively with Kennelly about the condo market here and what he expects to see in the near future.

GlobeSt.com: How would you characterize the state of the condominium market in San Diego?

Kennelly: The San Diego condominium market is in suspended animation. Buyers who are interested in top-tier condominium product are sitting on the sidelines waiting for something new, while buyers interested in resales are not willing to set new price records for homes that were built six to 10 years ago. The result is mild year-over-year appreciation.

GlobeSt.com: The market here has been deemed by some experts as not quite ready for condo development and that lenders are hesitant to finance them—would you agree with that?

Kennelly: Nobody wants to be the first one back in to an untested market. The exception is Nat Bosa, who has been extremely successful being the first to build during this business cycle in San Francisco and Seattle. He is also well underway in San Diego and will be the first to re-enter that market. I wouldn't bet against him.

GlobeSt.com: Where do you see condo prices heading in San Diego as the market continues to recover?

Kennelly: I expect mild appreciation for the rest of 2015, followed by a stronger upward trend in early 2016. Once Pacific Gate (Bosa's next development) establishes new condominium values in San Diego, the slightly older developments from the last cycle will appear to be a great value alternative. This will further spur general market appreciation.

GlobeSt.com: What else should our readers know about San Diego's condo market?

Kennelly: San Diego is the last city on the West Coast where you can find a contemporary, upper-floor, waterfront condominium with a view of the ocean for less than $1,000 per square foot.