Goodbye to San Diego

[sdrealtor]

The Prof doth protest too much.

I Think….

I assume….

An unnamed news source…..

Data for CA…….

Opinions about St. george with no data…..

My water bill this month is $40

My electric bill is zero with favorable solar Net metering

I’ve never even see a sewer bill

Data showing SD real estate among the strongest in the country

Great schools

No complaints about government

Averaging two incredible concerts every week here and pro sporting events while Joe and Plumbers extend their gig the Bowl o Rama another week in St George

EP still trying to justify a long string of poor investments

That about sums it up

Hope your enjoying your retirement as much as I’m enjoying my semi retirement.

[EconProf]

sdr:  a long time ago you made some smart decisions that continue to save you money even today.

Congratulations.

But that in no way represents the situation of the average San Diegan, or, most likely, the average Piggington reader.  Which is why San Diegans are leaving, albeit at a slower pace than the other two big CA metropolitan areas (US Census data).

Perhaps other readers would like to weigh in on their property taxes, utility bills, state and local government policies, school quality, etc.  Or is everyone afraid the ever-so-touchy sdr will jump on them?

Demographics is destiny.

[sdrealtor]

Let me fix that

ep: over a long period I have and continue to make smart decisions that save me money today and far into the future. To the contrary you despite sitting in perhaps the best seat possible (econ prof/real estate license/general contractor/very long tenure here when things were wide open and cheap) have made a series of poor decisions and continue doing so that cost you and more importantly your family money today and far in the future.

Question for astute reader: in the face of contrary opinions from the above who are you going to look to for guidance?

Everything is cyclical. Historically people who did not make good decisions leave by choice or force when affordability gets strained here. It has never been more strained that I am aware of with possible exception of mid 80’s. They have also returned when affordability has gotten bette and return they will.

Everything is cyclical

FWIW, I met yet another person yesterday who was a lifelong resident before high tailing it out to Nashville with the unearned wealth CA provided provided them. They have been there a year. They are miserable and now wish they had stayed but dont think they can return. Everything is cyclical. Well except being able to come back here if you make poor decisions

[sdrealtor]

I’ll add that I am under no illusion that despite being spot on for a couple decades that I will be continue being such. I could be wrong but in life we have to make big important decisions and who we relie on for those is one of them. We can look to data also. Here’s the latest on your latest decision

Your market is stagnating. It is almost 15% below its April 2022 peak. Multiple offers are rare. Inventory is climbing. Houses sell in a month below asking

https://www.redfin.com/city/16751/UT/St-George/housing-market

The San Diego market is slower but stable. It is only 4% below the April 2022 peak. Many homes get multiple offers some with waived contingencies. Homes sell in 2 weeks or less above asking prices on average.

https://www.redfin.com/city/16904/CA/San-Diego/housing-market

This is not political complaining it is reality and it is data. It is not my data, it is not your data. It is third party data. We are both facing macroeconomic headwinds but we are powering through while you have already suffered a major reversal. There is nothing objective indicating either of those things will change

[evolusdv2]

[Hatfield]

It’s been years since I checked in and had to laugh that this was still going on.

[sdrealtor]

Your timing is exquisite as the new Case Shiller was just released! Long story short…. prices in blue states and cities are up and prices in red states and cities are down!

Especially here 🙂

https://www.sandiegouniontribune.com/business/story/2023-11-28/san-diego-home-prices-rising-2nd-fastest-in-the-nation

 

now, what was that thing about demographics and destiny?

[sdrealtor]

Time to update everyone’s favorite thread here.

 

On another forum I participate in here is some commentary from a local realtor in Southern UT (comments not my own)

At the end of 2022 we had 220ish homes on the market.

At the end of 2023 we are over 1600! I see articles saying builders cant keep up with demand. Yeah right

I am starting to see short sales hit the market in St George.

New listings starting to flood the market. Price reductions left and right!

Price discovery has come to rentals as desperate landlords need to get their places rented ASAP

 

Looks like all is not so well out that way. Of course, all entirely predictable. (This is my commentary 🙂 )

[EconProf]

sdr:  I’m sure you have heard of the idea that supply and demand determine prices.  San Diego house prices are high in comparison to other areas because of limited supply:  terrain, high labor prices, an intrusive and expensive government, etc.  People are fleeing to AZ, NV, Utah from CA (including San Diego) at increasing rates, and especially the high income people and firms.

In the rarefied atmosphere of La Jolla and coastal San Diego in which sdr operates, the old rich demographic will keep prices high.  Where people are moving to tend to have abundant land for new developments (which are exploding here in St. George)–same for other nearby areas…thus the vastly lower prices.  High prices may be a point of pride for sdr, but the average working family who must pay $3/4 million for a 45 year old Mira Mesa tract house with a one car garage….???  That amount will get you a house like mine:  3200 S.F., forever views, property taxes of under 1% of value, great schools, little crime or drugged out homeless, clean and lean government, utility rates 1/4 of San Diego’s, etc., etc.

Yes, interest rate hikes have softened our new home prices–mine fell from over $800,ooo to about $775,000 as a result (paid $550,000 3+ years ago).  New developments are exploding to meet the population influx, so prices retreating slightly due to interest rates and the increase of supply.  My three rental condos are still gaining in value, any vacancy is quickly filled, and I raise rents annually.

 

 

[sdrealtor]

This could be the most poorly constructed case you’ve ever come up with.

So high prices here are a problem but $800K there is not?

Have you been here lately? The economic expansion going on is mind boggling. Drive around the economic cores of SD (Golden Triangle, Downtown and College area) and things are booming. There are so many massive construction projects going on you cant count them all. There are cranes everywhere around UCSD, UTC and Sorrento Mesa. The airport expansion is masive and remarkable! Those who have not driven up to terminal 1 past what will become the new airport are in for a shock. It is massive! SDSU is expanding all over the place too.

If you see a 25K builder price reduction on houses like yours what you are not seeing is at least another $50K decline hidden via interest rate buy downs, free upgrades and more. The absolute last thing they do is drop prices! Things must be even worse than I thought!

The average working family buying in MM is working at UCSD, a tech company or in the life sciences core. They are buying a modest size home remodeled to current standards on an extremely valuable piece of land. When prices rise here it is the land component that appreciates not the house. In St George for a house to appreciate 250K where land is abundant and virtually unlimited they are paying that extra for a rapidly depreciating house. That is a horrible situation for someone that “I’m sure has heard of the idea that supply and demand determine prices” It is a recipe for a crash of the worst magnitude

The best paying jobs Jobs there are building homes which is entirely unsustainable. When that slows look out below. There is no long term economic engine there. Its just not economically viable

Sure we are losing some residents due to high prices but that pendulum always swings back here because we have a location people covet and a massive economy fueled by the most vital and sustainable industries (tech, medicine, biotech, telco etc) and the military!

People dont need 3200 SF. They dont need forever views of emptiness. They need a livable home and good jobs the later of which SG lacks.

Finally, you mention our property prices will stay high because we have so much more demand than our limited supply. Even if you want to live there its just not prudent to invest in such a fragile situation with endless supply. Its not a safe investment. Diversification!

 

[EconProf]

sdr:  At least we agree on one thing:  the shortage of buildable land in San Diego compared to the abundant land in southern Utah (and Phoenix and Las Vegas and Texas and….) strongly influences prices.  Beyond that are many other factors propelling the exodus:  utility costs, taxes, poor schools, homelessness, etc.  You mention construction and seeing cranes everywhere.  Yeah, we got them too.  Anecdotes prove nothing.  I prefer hard data, like US Census Bureau.  CA, and lately San Diego, is losing population.  Furthermore, the population leaving is now higher income, and, of course, businesses.  Try renting a U-Haul truck in San Diego.

Demographics is destiny.

[sdrealtor]

You talk about data but never provide any. You present arguments that make no sense.

Pro Tip: Higher income folks dont rent U-hauls

Here is some data

https://www.bls.gov/regions/mountain-plains/summary/blssummary_stgeorge.pdf

Wages 34% below national average

Top Employment sectors

Transportation (trucking)

Education and Health Services (non profit much of it government!!)

Leisure and hospitality (low wage waiters, cooks, busboys and dishwashers)

Government (more government!!)

Mining (digging holes)

Noticeably absent – Financial, Tech/Info services, Manufacturing

 

And nice of you to mention Phoenix, Las Vegas and Texas which are the 3 markets showing soft real estate markets in the country

People leave, people come. Ive been reading that same “everyone is leaving CA” article that gets dragged out periodically for the last 30 years. Prices are high so some cant hang and others who didnt plan take the money to fund a retirement. The winners stay and more come. The truckers, miners and dishwashers are heading to St George where wages are almost 34% below the national average with no growth industries. Moving there is a dead end. Give it a few years and you’ll have all the things you fled in spades

And you refuted none of what I said with data because you cant

 

[an]

Go here for your San Diego data: https://datasurfer.sandag.org/dataoverview.  You can narrow it down by zipcode too.  For 92126, the inflation adjusted income went from ~$80k (in 2010) to ~$85k (in 2021).  So, that tells me the people who are moving in are wealthier than the ones who left.  On top of that, rent for a 1/1 was around $1100-1300 for your typical 1/1 condo in 2011.  Today, the same unit will rent for $2k-2200. Even adjusting for inflation, it would be higher than $1100-1300. Renting has no tax benefit, so rent is purely driven by supply and demand.

So, my thesis is, yes, net migration might be negative, however, the people moving here are wealthier than the people who are leaving.  Those people who leave wouldn’t be able to afford to buy anyways, so they wouldn’t affect the housing price.  So, that’s why even though you have outward migration, you still have rising housing price.

[sdrealtor]

This is a simple case of laziness by Econ prof. He throws out the rich people are leaving because a few high profile billionaires like Elon musk, and some Hollywood types stomped their feet on the way out. But of course the data like that you provided paints a very different story. He likes to throw around threats of data, but he has none to prove his case. All he has is his lazy rhetoric based on his political footstomping

[Coronita]

Speaking of renting.

I just rented my 1/1 Mira Mesa condo out for $2150/month. I was in a hurry so I priced it lower than I would have liked.

I think I paid around $140k for it during the crash.

The first year I rented it out for $1350/month.

Took about 2 weeks to rent out in the last week of December right before New years.

[Author]

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