Ocean-view Tijuana townhomes attract San Diego buyers

By PAUL WILLIAMS, Mexicana Properties
Thursday, November 16, 2006

A new generation of Mexican homebuilders is developing homes with features and amenities unavailable in the United States at any price. Leveraging the lower land, labor and wholesale material costs, developers are offering buyers priced out of the north-of-the-border market affordable, quality homes in gated, landscaped neighborhoods that more resemble Tierrasanta than Tijuana, and customers are buying.
By perching his Playas Diamante Residential development (www.playasdiamante.com) on the cliffs overlooking Playas de Tijuana ("Beaches of Tijuana"), one builder is banking that his 350 three-bed, 2.5-bath townhomes priced from the mid-$100,000s to low $300,000s are an easy sell. He's right. Shoppers experiencing the sticker-shock of San Diego home prices are finding irresistible the large, high-quality residences that feature unobstructable Pacific Ocean views offered at less than half the price of a single-bedroom Santee condo.
"I'm from Monterrey (Mexico) and absolutely fell in love with these magnificent Pacific Ocean views and the fresh, salt-air breeze," said Joel Gamez Martinez, the developer. "Here in Tijuana, I knew I could build the best of the best yet still keep prices reasonable. But I wanted something really exceptional. With this location, I knew I had found my diamond."
With more than 80 percent of the first phase selling out literally before the Mediterranean White paint dried, it's clear Gamez Martinez was wise to follow his instincts.
For the price, American buyers might expect to find the builder cutting corners, and he did -- in all the right places. By employing modern "eco-intelligent" architecture emphasizing energy and water efficiency, both household and community maintenance costs are cut substantially. Eschewing "sticks and stucco" homebuilding, the structures are built using super-reinforced cinder block walls, totally insulating residents from virtually all exterior noises and temperatures changes (not that the La Jolla-like beach climate pushes the mercury around much). Off-the-grid solar-powered LED lights brightly illuminate walkways, driveways and the lush landscaping that is efficiently nourished using state-of-the-art automated grey water recycling technology. Residents can even separate their plastics, paper and green waste in a recycling program coordinated with a local middle school environmental program.
Not only are Playas Diamante Residential homes "green," they're "smart," too. Homes feature sophisticated alarms and lighting control that are automated or controlled via the owner's cell phone. Connecting the home intercom with the manned 24/7 front gate ensures convenience doesn't lessen the security of living in a gated community. Since all the homes have integrated high-speed cable, owners have the option to upgrade, allowing them to control their home lighting, security, air conditioning and even the window blinds remotely via the Internet.
At least one home shopper seemed impressed. "These are beautiful. The floor plans are smart and roomy. We never thought we could own a home that has a big balcony off the master bedroom with this view of the Pacific Ocean. So, we're really excited," said Adriana Comparan as she walked through a recently finished unit with her husband and their two elementary school-aged kids in tow. Judging by the number of children playing in the neighborhood, it's clear many families didn't pass up the opportunity to have a breathtaking ocean view themselves.
"Now, we're about to offer our best value -- the Diamante 'Crown Jewel' Penthouses. Given the great response, we have every expectation to close escrow on every unit by the end of January," said Gamez Martinez. With the security of U.S. title insurance combined with liberal financing and onsite property management, many investors and prospective homeowners frustrated with San Diego housing prices that have flattened at the top are seeing incomparable buying opportunities in Baja California, and savvy Mexican developers are building more affordable, quality housing to meet this dynamic shift in market demand. One look at Playas Diamante Residential is proof enough that the San Diego housing market now includes the beaches of Tijuana.

County's growth falls to 2.9%

Area drops below state, national figures
By Dean Calbreath
UNION-TRIBUNE STAFF WRITER

November 2, 2006

For the first time in six years, San Diego County's economic growth is lagging the rest of the state and nation, according to a report released yesterday by the Greater San Diego Chamber of Commerce.

San Diego's gross regional product is growing by an estimated 2.9 percent this year, the second-slowest growth rate in the past decade. In comparison, the report said, California has shown 3 percent growth this year and the United States 3.2 percent.

Next year's growth will be even slower, although San Diego will resume its position of outperforming the state and nation, the chamber predicts. The forecast projects that next year the county's economy will grow 2.5 percent, compared with 2.4 percent for California and 2.1 percent nationwide.

“San Diego has really been the harbinger for the state and national economy,” said economist Kelly Cunningham, who prepared the forecast.

“For the early part of this decade, San Diego led the nation in growth and now we are leading the nation in seeing our growth slow down.”

One of the chief culprits for the slowdown is the decline in home construction and growing softness in prices. In San Diego County, median home prices have dropped 4.4 percent since last year, according to the latest figures from DataQuick Information Systems.

Cunningham – who once worked full time for the chamber and now works as a consultant – predicted that prices could decline an additional 5 percent over the next year.

“The biggest declines will come in condominium prices,” he said. “We're really overbuilt in condos. And I'm concerned about the growth of condo conversion.”

Cunningham noted that the weakness in home prices may have led to a cutin consumer spending. After adjusting for inflation, retail sales have been close to flat since the end of 2004, he said. He estimated that the sluggishness will continue through at least mid-2007.

Jon Haveman, co-founder of Beacon Economics, a forecasting and research firm, said, “I hate to be bearish, but I have to be.” With a decline in home prices and a rise in foreclosures, “Consumers are going to start cutting back their spending, and if they cut back too dramatically, it could lead to a recession.”

On the other hand, Haveman said, a good omen for California is that all of the state's regional economies – except for the areas around Santa Rosa and Fresno – are still growing relatively well. And if California businesses increase their spending, they might make up for pullbacks from consumers.

“Corporations are sitting on pretty large war chests right now,” Haveman said.

James Hamilton, economist with the University of California San Diego, said there are signs that housing may be bottoming out. Since July, he said, mortgage rates have dropped by almost half a percentage point, which could be enough to bolster the market.

He noted that it typically takes up to 16 weeks for home prices to reflect changing interest rates, which means that the market could improve soon.

However, there are several factors that could keep prices declining, he said. A spike in loan defaults and foreclosures “could give us a much uglier scenario.” And home buyers might be slow to enter the market, hoping that the longer they wait to buy a house, the cheaper it will get.

“I think it's a little more likely than not that we have reached the bottom (in housing prices),” he said. “But there's still a very significant possibility – maybe 30 or 40 percent – that things could get much more frightening.”