[quote=deadzone]
All the arguments that “everybody wants to live here” and “people will always pay a premium to have an ocean view” held just as true in 1995. Why then was there almost no sales activity happening in 1995 and today there are countless offers at prices much higher than 1995 (adjusted for inflation)?[/quote]
We’ve discussed this issue many times before. Personally, I think San Diego is a very different city from the one it was in 1995. In 1995, San Diego would best be described as a sleepy beach city (well, Ron Burgundy aside). Today, in Robert Shiller’s vernacular, it’s one of the U.S.’s “glamour cities.” While NOT “everyone wants to live here,” I would bet that a much larger portion of the high-end socioeconomic demographic would prefer to live in San Diego today as compared with 1995. So, I can see San Diego’s market premium expanding relative to the median market since 1995. How much expansion is warranted is another issue entirely. I thought SD housing prices were about right, in aggregate, when they hit their lows in March of last year, so by definition I think they’re a bit high again now. But the building of new high-end homes has really slowed down over the last few years – after massive overbuilding, of course – so the fact that there’s a fair amount of demand for certain high-end homes doesn’t shock me too much.
