Is the San Diego Overpriced? (Chula Vista, Escondido: foreclosures, renters, loan)

[shannon94]

Originally Posted by JohnAlt

A couple years ago, folks making $100,000 (WAY above average income) couldn't afford a home either. But they could afford to rent. Why was that?

Sure, San Diego attracts a disproportionate share of folks with money (compared to Cleveland for instance).

That doesn't mean a 1,000 square foot bungalow in North Park should sell for $500,000. But with easy credit and bubble mania ("prices only go up") it happened.

A correction was in order and has already partially happened.

Prices will fall to historical affordability levels for San Diego.

Exactly!! And even when prices drop...it will be interesting to see how many people will actually qualify with new lending standards and all.

500k is a large chunk of change....it USE to be the kind of principle that was typically awarded to well educated professionals with a solid income, money in the bank and a good chance that their income level will maintain. Doctors. laywers, executives,... etc. Teachers, cosmetologists, grocery store clerk, etc????.... not so much. (no offense to the professions)

[f_m]

Originally Posted by shannon94

No...not true. San Diego was always more expensive than say other places but it certainly wasn't so unaffordable that the majority couldn't afford to buy. I was born and grew up in SD....everyone in my family ...mom dad...aunts and uncles.....grandparents.....friends ..etc...were/are homeowners. I didn't know anybody who lived in an apartment when I was growing up!

San Diego didn't become anymore desirable than then either!

I would agree, as I had compared SD to LA area and SD appeared to be lower than LA about 10+ years ago. However, the things that have happened in the last 10 years are significant though. Tons of hi-tech jobs in the SD/North County area due to cell phone, biotech, and computers. Which is where places like Carmel Valley (and everything along the 56) come into play. And part of why they even exist. Those jobs in that area are high paying for many people, and that helped drive the price in the area. Some of those people wanted to live in other areas and could afford higher prices in SD.

[LeftHook]

Originally Posted by sdurbanite

I don't think so. Can you imagine what this place would be like if we were priced like any city in Texas or some other Southern city? This place would be a mess! It's a good way to keep the riff raff out!

YOU CANNOT BE SERIOUS!!!....all the inflated housing costs are doing is just bringing in "wealthy white trash and wealthy black and Asian and Hispanic trash. Pulllleeezee!

[shannon94]

Originally Posted by f_m

I would agree, as I had compared SD to LA area and SD appeared to be lower than LA about 10+ years ago. However, the things that have happened in the last 10 years are significant though. Tons of hi-tech jobs in the SD/North County area due to cell phone, biotech, and computers. Which is where places like Carmel Valley (and everything along the 56) come into play. And part of why they even exist. Those jobs in that area are high paying for many people, and that helped drive the price in the area. Some of those people wanted to live in other areas and could afford higher prices in SD.

no...I don't think so.....not good enough.

[f_m]

Originally Posted by shannon94

no...I don't think so.....not good enough.

Not sure what you mean, so if all those jobs were blue collar jobs instead, Carmel Valley and the like would still have as many costly luxury homes?

Heck in the LA area I lived in the South Bay, and the middle class neighborhood with very good schools is still 500K+ today for a house. All the rich people lived by the ocean. So Carmel Valley is somewhat similar in price, but it is not a middle class area.

[JohnAlt]

Originally Posted by f_m

I would agree, as I had compared SD to LA area and SD appeared to be lower than LA about 10+ years ago. However, the things that have happened in the last 10 years are significant though. Tons of hi-tech jobs in the SD/North County area due to cell phone, biotech, and computers. Which is where places like Carmel Valley (and everything along the 56) come into play. And part of why they even exist. Those jobs in that area are high paying for many people, and that helped drive the price in the area. Some of those people wanted to live in other areas and could afford higher prices in SD.

OK, but take a look at this graph comparing historical home prices to historical incomes in San Diego. Notice the peak around 2005?

This Just In: San Diego Homes are Overpriced | Piggington's Econo-Almanac | San Diego Housing Bubble News and Analysis


By your explanation, all those hi-tech jobs would keep the ratio close to the historical average because of all that income in the economy driving the sky high prices. Doesn't seem to be the case does it?

Incomes never supported the prices. That's why it's called a bubble.

[kettlepot]

While good-paying jobs can and certainly do contribute to housing inflation, don't forget the most basic reason of all -

There are twice as many people in San Diego county than there were 35 years ago.

1970 - 1.357m
2000 - 2.813m

you can extrapolate from today's 3m+ to when in the 1970s SD County had 1.5m - my guess is 1973.

Even if real wages didn't go up at all, prices for a closer in 3/2 house would rise, as the limited space and growing population would force more and more people into apartments and condos. Not everyone wants to make the 75 minute drive from Temecula.

No one seems to think it odd that people in NYC live in SROs, apartments, condos, and houses with no yards that are outrageously priced because of the limited space, but for some reason people think there's an unlimited supply of buildable coastal area land in Southern California for 1/8 acre tract ranch houses for as far as the eye can see. Well, there isn't. There's an ocean; and mountains; and an international border; and a military reservation; and lots of parkland and national forest land. And those things aren't going away. Probably only 1/4 of the county is or ever will be buildable. This isn't Kansas City! And that's why the single family detached home closer to the coast has been, and will over the course of real estate cycles to come, continue to appreciate - just so long as the population continues to increase. And those population numbers need to include Temecula, Hemet, and Murrietta not just the county itself, as the population and housing price pressure there are a direct result of San Diego County prices.

Yes there was a bubble, and yes, prices have been coming down - about 15% to 20%. Some areas will surely drop a bit further. And certain individual properties may be available as great bargains because of distress sales, but some areas have already stabilized. We are very close to the end of this housing bear market in San Diego (18 months perhaps). If you are waiting for these mythical 50% price drops you'll have a very long wait indeed.

(Disclaimer - barring tsunami, earthquake, plague, famine, or nuclear attack)

- your single family detached home may glow at night but yes, THEN it will be 50% off!

[JohnAlt]

Kettlepot,

We agree on one thing. There is a bubble. That's about it though.

If the population doubling since the 70's is the main reason for the high prices, how come most of the appreciation took place between 1997 and 2005 when the average price TRIPLED? Did we all of a sudden run out of land? How come rents didn't soar like that if it's a land issue?

We have twice the population of the 1970's and also more homes to accomodate the increase. Places like Eastlake and Carmel Valley weren't inhabited back then. Even Rancho Bernardo didn't go up until the 1970's I think.

Real estate cycles run 5-7 years. This one won't be finished in another 18 months.

[SurfinTurf]

I just moved back to San Diego from Indianapolis. You can buy what I would call a mansion in Carmel IN (an upscale suburb of Indy) for $400k. What you get for that money is a very nice, big structure. But it's in a place that, in my opinion, sucks. So as far as I'm concerned, Indianapolis is overpriced. On the other hand I absolutely love San Diego, and for more reasons than just the beach and the weather. So while San Diego is very expensive, to me it's money well spent. I left San Diego because I thought it was overpriced, and I came back because my values got a graphic reality check when I spent a few years somewhere else.

Chris

[NYSD1995]

Originally Posted by JohnAlt

If the population doubling since the 70's is the main reason for the high prices, how come most of the appreciation took place between 1997 and 2005 when the average price TRIPLED? Did we all of a sudden run out of land? How come rents didn't soar like that if it's a land issue?

We have twice the population of the 1970's and also more homes to accomodate the increase. Places like Eastlake and Carmel Valley weren't inhabited back then. Even Rancho Bernardo didn't go up until the 1970's I think.

Like I said earlier, San Diego is only overpriced if you can't afford it. Compared to LA, SF, NYC, I'd say it's not so bad at all. Ever take a look at what 500k buys you in NYC?

In 1975 a water-close house in San Diego cost less than a house in a dumpy, far-flung NYC suburb. No one cared about San Diego, it was nowhere. Dusty border town, Navy town. In 1975 many people in this country didn't even know San Diego existed. That's not the case anymore. That's why you can't keep trying to tie home prices to some fundamental basis. The fundamentals left town years ago.

It's a global situation - San Diego just another city with home prices detached from local incomes, nothing special or unique about that. Bubble blogger theories and population graphs still don't explain NYC, Boston, London, Washington DC, LA, SF, all having the same basic situation - high home prices. There is no formula, no chart or graph that can explain people and where and how they choose to live.

You are looking for a reason where there is no reason. The reason is that people want to live here. People are irrational and unpredictable and won't act consistently with ratios and guidelines. There's no statistic or metric you can use to quantify that. You live here long enough, it's easy to forget that. But there are tens of thousands who would be here in a hot second could they afford it. I grew up 3000 miles away and even I knew that Southern California was expensive.

Face it, we missed the boat. Born too late. Boomers snatched up all the cheap housing in the good locations in the pre-immigration, pre-technology boom days and now they are gonna drop dead in those houses. It's a done deal and that's that. We have to move to Vegas or Pheonix to get what they did.

Isn't it better to accept that reality and make a plan than to spend your life bitter and complaining? You have to let go of the past, the San Diego as it was, and accept the San Diego as it is. I know you guys don't think anything's changed since the late 90's, but to me, so much has changed. The sleepy, open, cheap San Diego is gone now, replaced with a crowded, fast-pased, expensive place.

I don't quite understand this "agenda" you guys have. What's in it for you if home prices collapse? I suspect a lot of this is sour grapes about not being able to afford the property you want at the price you want. The fact that anyone would invest so much time in attempting to convince others that it's not worth buying a home here.... it just reeks of frustration and desparation. This internet "bubble movement" looks more like a spam campaign for Rich Toscanos Web Site than anything else.