It is wrong to assume that a recession would cause San Diego house prices to fall.
Nominal home prices have only fallen twice in modern history in San Diego: 1990-1997 and 2007-2011. They went down in the mid 90’s despite the extremely strong national economy, and they went up quite rapidly during the 2001-03 recession. Finally, they were flat in the short but very intense 1982 recession (unemployment peaked at 10.8%, higher than our recent very long recession).
San Diego has a large number of well-paying jobs, is a favored place for the wealthy to vacation, have second homes, and retire, and has basically run out of nice locations to develop.
Historical valuation matrices don’t account for the fact that interest rates are extremely low. Rich put up a chart that does, and it shows that prices right now are extremely low taking this into account:
I also think it is only a matter of time before mainland Chinese buyers start branching out from their favored UTC-centered buying habits into other areas of San Diego.
