I’ve stated this opinion previously a couple of times. I think that SD residential RE will generically trade at a higher premium relative to the rest of the US today (and going forward) than it has in the past. The reason is that until the mid- to late-90s San Diego was basically viewed as a big beach town. A very pleasant place to live, to be sure. Today, however – and setting housing prices aside – San Diego is viewed as one of the more desirable places to live in the US (A “glamour city” in Robert Shiller’s parlance). [I’m not going to debate whether this view is “right” or “wrong” – I’m just stating that it’s a fact.] Given this change, it makes sense that housing in SD should trade at a higher premium relative to US housing prices on the whole than it has in the past. Don’t get me wrong, I think that the mid- and high-ends in SD are a bit overvalued, but there are mitigating factors that might buffer the downside. And while the “Everybody Wants to Live Here” meme is clearly silly… there is probably a “Helluvalotta People Want to Live Here if Housing Prices are Not Insane” meme that does apply. And while still pricey in lots of places, housing prices generically are no longer looney in SD… at the moment, that is.
