SAN DIEGO—The 1% decline in Downtown San Diego condominium prices reported by the Mark Co. in October is not uncommon in the fall, even in strong market conditions, the firm's senior director of research Erin Kennelly tells GlobeSt.com. A recent report from the company showed that its Downtown San Diego Condominium Pricing Index decreased last month to $644 per square foot, although it remained 6% higher than one year ago. Also, the average price for resale condominiums in Downtown San Diego decreased, falling 4% to $525 per square foot, and now stands 2% lower than the same month last year. There are only 188 active resale condominium listings in Downtown San Diego, according to the report.

We spoke exclusively with Kennelly about the report's findings and what the outlook is for the condo market in Downtown San Diego for the future.

GlobeSt.com: What does the slight decrease in Downtown San Diego condo prices indicate about the market here?

Kennelly: The decline is mostly attributable to a seasonal slowdown. It is not unusual to see moderate month-to-month decreases in the fall, even in strong market conditions.

GlobeSt.com: Where do you think the sector is headed now that this market is seeing more multifamily properties completed?

Kennelly: Rental rate increases are likely to moderate with the increased new supply. Condominium prices are poised to increase due to very low supply, but may not see marked appreciation until the completion of Pacific Gate.

GlobeSt.com: What is the primary demographic for purchasing a condo in Downtown San Diego?

Kennelly: It is split between the "empty-nester" group and younger Gen X/Y buyers without children. The older buyers tend purchase more expensive, larger condominiums as they downsize from a single-family home, while the younger demographic is more value oriented and requires less space.
GlobeSt.com: What else should our readers know about the Downtown San Diego condo market?

Kennelly: When mortgage interest rates eventually increase, many potential buyers will be motivated by a strong fear of missing out. In the long run, rising interest rates will depress home prices, but in the short run, buyers who have watched from the sidelines for the last decade will want to get a foot in the door of homeownership while rates are still extremely low.