Why do people complain that SD is expensive? (San Diego: sale, apartments)
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Ah, the memories...I lived in different parts of SD (including La Mesa) long ago...and when I first moved there my furnished, utilities-included studio was...$195/month.
Of course this was waaay longer than 25 years ago, but still nice to remember
Yeah, I had family living in North County and I saw housing prices in the mid 1970's going up on each new phase $5,000.00 every 3 months. At the end of the year a $20,000.00 increase in a $35,000.00 dollar house at the beginning of the year and it kept going up and up for each phase the next year and people were in line for houses before the next phase started.
We bought our house in spring valley 7 years ago. It is a 3 bedroom, 2.5 bath, 1,000 sq ft house with an ok view on top of the hill on an 1/8th of an acre (typical suburban lot). We bought it for 320k. It is now worth 600k. Our property taxes have gone up each year accordingly. When we bought they were about 3k per year. They are now a bit over 5k per year.
We just purchased a house in Maine about a half hour outside of Bangor. It is a 6 bedroom, 5 bathroom, 5,500 square foot house with a view on 24 acres. Our offer was accepted for 450k. Our property taxes will be about what we are paying now on our tiny house on our tiny lot. They will go DOWN instead of up because after 1 year we can get the Homestead tax exemption. I can also apply for a tree growth, and farmland exemption as well which will reduce it even more. On top of that, Maine sales tax is a measly 5.5% as opposed to the 8.5% it is here. Income taxes are also significantly lower as is the overall cost of living. Gas is $1.20 cheaper per gallon as well.
Cost of living index in Maine is 117 (still slightly above the national average of 100) which is a full 60 points lower than San Diego which comes in at a COL of 177.
Broken down even more. National average is 100.
Groceries in CA come in at 121.4
Housing in CA 227.3
Transportation costs in CA 138.9
Energy bills at 117.7
Oh yeah, and California ranks number 35 on the safest states to live in index (bottom half)
I realize that the word "expensive" as used here applies to a dollar-cost comparison. But in economic terms, nothing is "expensive" as long as there is a market of ready buyers and sellers at that price. It is simply priced according to market. And the market in SD and LA states that prices (let's go with per square foot for this discussion) are higher (not more expensive) than, say Alabama. A crappy car costs less in sheer $ than a nice one. That doesn't make the nice car expensive, otherwise the people driving those nice cars would be stupid. And I'd be willing to bet that most of them didn't make their money being stupid.
To overstate the obvious, people want to live here. For weather, jobs, family, etc. and are willing (and able) to pay for it. Tons of people outside CA love to deride the state, heap abuse on it ("Have you seen how much it costs to live there? Ridiculous!") and generally bad-mouth it. Yes people leave. And still it stays higher priced than everywhere but probably NYC (speaking USA).
I've lived in Dallas and Atlanta, and more recently in LA and now SD. I'd go back to TX or GA only if my finances suddenly took a serious beating or if personal circumstances absolutely dictated it, and even then I'd fight like hell not to. I'd eat less, I'd go without a car, I'd shop at Goodwill and dollar stores, I'd take a reverse mortgage... all before I'd leave CA for those "less expensive" areas. Because to me, what I pay in social structure, in climate, in natural beauty, also must be figured into the cost of living. And those costs are higher elsewhere than in CA.
Now... I wouldn't go back from SD to LA. Well if you offered me say 3x the salary... maybe. LA does pay more but the stress of living there is more than I'm willing to pay for say 50% more pay. It was fun for 2 years or so but each time I get on the freeway here and average 60mph vs the LA average of 20mph (my anecdotal numbers of course), I am SO glad I am in SD.
SD is less exciting than LA from a man-made POV. Nature-wise, SD has a bit of an edge IMO. When trying to enjoy that nature, that edge turns into a big advantage. At this age, I'll take nature, which includes cleaner air and probably food and water though I don't know that for sure.
...I wouldn't go back from SD to LA. Well if you offered me say 3x the salary... maybe. LA does pay more but the stress of living there is more than I'm willing to pay...
Yup - spent the highschool years in Los Angeles, discovered San Diego via UCSD afterwards and never looked back. The quality of life just doesn't compare between the two - the skies aren't brown, you don't get the feeling of jammed-together massed humanity, the freeways aren't crowded (by comparison), and you can be at the beach within 15 minutes.
It’s definitely a when did you arrive and invest in the local community kind of picture. If you came to SD in the mid-eighties to around 2000 local RE was still “only” about 1.3 to 1.5 times the average of the major cities in the country and SD, while not having the salaries of the Bay Area or LA, still was amongst the higher of its peers allowing many to carve a niche here that has worked out fine.
Specifically because of the Prop 13 property tax implications there is a haves and haves-not situation with many of us having grabbed a piece of the pie when it was still very much attainable even with modest salaries that adjusted for inflation have not even kept up with soaring housing costs. So there are thousands of us who don’t have the high housing costs associated with the region since we bought long ago with those modest incomes and still have over time been able to capture a slice of those upper tier salaries. Today though RE has gone through the roof compared to just about anyplace else while salaries have only mostly just kept pace.
If you are just entering the workforce it is a very challenging environment that most would likely be more successful in achieving their goals elsewhere in perfectly fine cities and regions with far better COL to salaries ratio than could be achieved here. But there are plenty of high salaried individuals for whom SD still seems like a bargain compared to where they are from, specifically other areas in CA and a handful of other exceptionally high COL regions.
For most it is quite expensive but for plenty of others it still seems an area where the costs are commiserate with its benefits and for many more it just plain doesn’t cost us that much once you’ve long settled in.
It’s definitely a when did you arrive and invest in the local community kind of picture. If you came to SD in the mid-eighties to around 2000 local RE was still “only” about 1.3 to 1.5 times the average of the major cities in the country and SD, while not having the salaries of the Bay Area or LA, still was amongst the higher of its peers allowing many to carve a niche here that has worked out fine.
Specifically because of the Prop 13 property tax implications there is a haves and haves-not situation with many of us having grabbed a piece of the pie when it was still very much attainable even with modest salaries that adjusted for inflation have not even kept up with soaring housing costs. So there are thousands of us who don’t have the high housing costs associated with the region since we bought long ago with those modest incomes and still have over time been able to capture a slice of those upper tier salaries. Today though RE has gone through the roof compared to just about anyplace else while salaries have only mostly just kept pace.
This is an important reality for the would-be relocator to understand. Another factor is that rents historically were below-market, and then shot up much later, especially in the last 5 years. Along with the redevelopment of modest apartments into large luxury complexes, rents have risen fast.
The net affect is that middle income homeowners are cashing out, being replaced by much wealthier people who are less tied to local economic factors. At the same time the lower-middle class service economy folks (which includes most of the new arrivals) are spending more an more of their incomes on rent.
So you have widening gap between haves and have nots, and that gap gets faster each year. The catch-22 is that improvement in the local economy (more tech and biotech jobs) is only making it worse, as it attracts upper-middle class newcomers who typically wouldn't have considered San Diego due to it's historically weak job market.
Long story short, if you are not making a signigificant income, you aren't getting into the real estate market, and will face rising rents. It's a recipe for poverty later in life if you stay too long and never own.
^^^
Yeah, we rented for years here before we bought in ‘96 and that last rent was $775/mo. for seven years for a large 2br/2ba six room Folk Victorian with a yard, enclosed front porch in Hillcrest off the Georgia St. Bridge. We were living like kings making sh*t money haha. Those days are long gone, even with inflation that adds up to all of $1300 today and what does that get you?
It is not expensive in fact it can be beneficial than most places.
1. Good job or jobs (dual earners needed here unless you are a high level executive). Employers can squeeze you here but if you have the right degree, certification and or experience not that hard.
2. And if you have #1...Buy a home. Your home can be a second retirement fund and assuming you spend retirement elsewhere you can go all cash in about 90% of this country in a home you can spend your retirement years in. So no house payment during your retirement years.
It is not expensive in fact it can be beneficial than most places.
1. Good job or jobs (dual earners needed here unless you are a high level executive). Employers can squeeze you here but if you have the right degree, certification and or experience not that hard.
2. And if you have #1...Buy a home. Your home can be a second retirement fund and assuming you spend retirement elsewhere you can go all cash in about 90% of this country in a home you can spend your retirement years in. So no house payment during your retirement years.
I agree in theory (I've doubled down, and think your advice holds true if you have a primay residence + a rental property + retirement savings). I don't think it's as realistic for the current croup of new homeowners without assistance from the bank of mom n' dad. It assumes a few things:
- you either got in early enough or put down enough that your mortgage balance is low enough to return a cash home + retirement savings. A LOT of people are buying with 5% down or even less nowadays.
- Assumes you are still able to contribute to 401k or have some other form of retirement savings, A LOT of people stretch as hard as they can so there is nothing left over.
- Houses in any even somewhat desirable area are going up, if you look at what 300k range buys you even in desert cities, AZ, UT, NV it's going to be pretty basic. So do you really want to give up the CA amenities to move to the Southeastern US or OK / KS / MO? A lot of people just really dont want to move there esp if have no connection to the area.
So you can easily see a situation where the person owes 200k on a 800k house, less selling costs and capital gains, they cash out and buy for a 450-500k house elsewhere, they are going to be left with 200k in retirement to last 20+ years. They'd be better off just living in the SD house until it's paid off, rent out a room and work a PT job assuming physically able.
People gotta complain about something. (It makes them "feel better about themselves.")
San Diego weather? Yeah, right.
San Diego opportunity? Yeah, right.
San Diego COL? Well, there's that.
So, WHY is San Diego so expensive? (No, it's NOT about the number of houses/apartments.)
The simple answer is "quality of life." Yup, people want a better quality of life. Here, they get that.
This equates to DEMAND.
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