“If I had to guess, you fall into the group of people I described in my other post who have huge gains from prior purchases, so buying at today’s prices for you feels like paying with Monopoly money.”
That’s not my situation and i can understand what you are saying. But I do not believe believe that the average Joe is looking at his home the same way and investor studies CAP rate and NOI.
I too would be a first time homeowner and I sort of look at it like an elevator ride. What floor you get in on is extremely important.
But I also look at the housing situation from a historical perspective. Historically ciotes like NY, San Francisco, Los Angeles, and even San Diego have long outperformed other parts of the country.
Now the counter argument is that ther could be a long term regression to the mean but I don’t buy that argument.
Here’s a weird detail to look at. Where are elite college sports teams. Typically in the warmer climates. Why? Becasue kids want to play in nicer climates.
San Diego has some negatives. This is not a corporate town. The colleges in the area as a whole are average.
But there are certainly some positive. Climate is great. San Diego has Mexico to the South. Water to the west so land is limited. This is a destination city. San Diego is still attractively priced realative to Orange County.
This isn’t a pitch to go run out and buy now but it is to say that if I had a 250 K household income I probably would be in the market for a 500K place that I planned on holding for a perpituity. Why do I say this. Because I have parents in the east. So I could buy something and rather than having folks move in with me I could simply move up into a second home and let them have the first. They could pay rent to me and we keep money in the family. They have enough assets if needed that buying up wouldn’t be a problem. To me this is a fairly stable wealth building strategy.
I also think people are fooling themselves if they think interest rates are going to stay this low forever so loan notes and cash flow will impact overall long term costs.