[quote=deadzone]Not necessarily. You need data from further back than 1995 to really prove that point. To be of value, you need to compare the rate of change of rent differential (san diego vs. rest of US).
For example, hypothetically from 1980-1995 if San Diego rents were increasing at 5% clip vs. 2% for US, then the relative attractiveness of living in San Diego vs. rest of U.S. actually went down since 1995.
In other words, if in the years leading up to 1995 the SD rent was already increasing at a much faster rate than the rest of the country, then the fact that it continued this trend from 1995-2010 says the relative attractiveness just stayed the same.
Bottom line need to use data points for some years prior to 1995 and compare the relative rates of change (sd vs us) for some standard time period (say 5-10 years) leading up to 1995 and then leading up to 2010.[/quote]
Arguably, you’re confusing your derivatives here. If San Diego rents increased by 5% vs. 2% for the US from 1980 to 1995, and then *only* increased by 4.5% vs. 3.1% from 1995 to 2010, then San Diego was STILL increasing at a faster rate than the US as a whole (and, by implication, gaining in attractiveness relative to the US) from 1995 to 2010. The SECOND derivative may have turned negative, but the relative increase – the first derivative – was still positive. Having said that…
Since the data are available, there’s no need to speculate, so let’s go to the tape. From 1981 to 1995 rents in the US increased 4.3% annually. Over the same period, San Diego rents increased 4.4% annually. So rental increases were almost equal over the period you’re questioning. Consequently, the rental increase outperformance was (roughly) in the period 1995 – 2010 (actually to 2006, to put a finer point on it).
