San Diego Housing Bubble News and Analysis

The San Diego real estate cycle has been ahead of the LA cycle for the past several years. The peak happened almost a year later in LA and the decline started in SD well ahead of LA. Shouldn't SD have already been seeing these declines ?

Maybe SD has experienced this already and perhaps I missed or have forgotten about it.

Very interesting. Hopefully a reporter will investigate the rents' trend in apartments vs. condos vs. SFHs, which I believe are different beasts.

Many Piggingtonians are biting the bullet and searching for a house to buy based on a favorable (or nearly neutral/favorable) rent vs. buy calculation. However, as the recession and deflationary environment get worse in 2009-2010, watch our for declining rents.

You may still find out that you grossly overpaid for a house if rents continue to drop substantially.

All the more reason for home prices to continue falling for several more years.

FSD, just because SD housing has been falling faster/earlier than LA, doesnt mean that it will be a direct corrolation to rental movements. Population characteristics and the underlying changes in them could easily account for the delay in SD rentals being behind LA rentals. I am not saying you are wrong, I am not saying that we will have the same here in LA. I am saying that they dont have to follow one another in perfect harmony.

I was just wondering out loud by what mechanism the OP thinks that SD rental market will follow LA's.

I couldn't think of any other than both are affected by the overall sucky economy.

I based the correlation between the two markets on the predictions from several magazines and other printed sources that San Diego housing prices will fall 20% - 25% in 2009. Since L.A. home prices are continuing to drop and rents are dropping there and the predictions about SD are correct, housing sales will increase in San Diego, forcing landlords to compete with a lower cost of ownership vs renting. Unless San Diego sees a huge population increase that eats up vacant rentals that will occur from increased home sale, it is likely that rents will begin to drop. How much, I don't have a clue but this scenario is a sure fire method to ignite a decrease in the rental market.

Rents are always the last thing to drop as people have to live somewhere. Usually, rents will decline when unemployment gets high enough, that people start to share housing to defray costs and then actually leave the area for work. CA tends to do this because it usually leads the nation in unemployment. So the temptation to leave the state for cheaper living and more jobs is a factor that should drive rents down.

My wife works in property management (about 1000 units in San Diego) and tells me that occupancy is down over the last few months and continues to fall. As this continues to occur, it's only a matter of time before rents follow suit.

Very interesting. I've been living in a med size apt complex near West LA. It's not dumpy enough that they can use 'Luxury' in the name of the apt complex. It's 50 unit complex and recently (within the past month) they put up a sign promising $300 for referring a friend to rent a unit in the complex.

I've been at this unit about 1+ yr and it was 1st time I saw the sign. During the first few months I've been living here, any place that opened up was rented out pretty quickly.

I know a person (think a student) moved out to live with her boyfriend. Probably to save $.

It's peculiar how rents could fall when demand is strong due to record breaking foreclosures. I'm in the eastern part of LA county and let me tell you rents here are certainly not going down. 1300 sq. ft. 45 yr. old POS still getting $2000 a month minimum. Sad.

I think the higher end areas are seeing softer rents than the lower end areas right now. But the lower end areas will eventually feel the pinch too.

I know of a 400+ unit development in Chula Vista that's got 3 vacant units. Rents are rising very modestly. This development is near - but not at - the bottom of the rental food chain. I think foreclosures are driving a lot of these folks into apartments. But eventually the foreclosures will get sold and many will be available for rental, which will impact overall rents in the area.

On the other hand, there aren't as many foreclosures at the higher end, and as medium-to-high end condos come on the market as rentals (from specuvestors and reconversions) - and there are a LOT of these right now - this market is affected.

I was driving around in West LA last week and noticed a preponderance of for rent or lease signs. This area is much more influenced by jobs than foreclosure refugees.