BostonandOC is right, housing prices are set primarily by supply of new homes and demand from wage earners (how ‘nice’ a place is has very little to do with it). In the case of supply, SFO (the city proper) is almost 100% built out — the only way to add supply is to build upwards, which is tough to do given their building codes. And there is very strong demand in SFO from people making good money in high tech, finance (now dozens of successful hedge funds up there), and media. SD has far fewer high paying jobs than SFO or NYC or London, and a quick drive along highway 56 or through the eastern part of Carlsbad or around the ballpark will show you we have LOTS of new supply coming online…so prices fall. Sure, we have nice weather and good beaches, but that’s always been the case. If good weather and nice beaches were the primary determinants of housing prices, Cabo San Lucas would be more expensive than SD…
