Is San Diego overpriced or is it just corrected?

[Alex_angel]

San Diego has always been recognized as one of Americas nicest cities, the best weather etc… but real estate was cheap. It was viewed as a military city and a lot of people liked to vacation here but not live here due to the lack of high paying jobs. During the tech boom, companies started to pop up everywhere, run-offs from Silicon Valley took they big IPO profits and moved here. Once the .com busted a lot of rich folks from the Bay area left and headed to areas like San Diego and Arizon. Biotech during that time started to move here as well. Sony just announced that they are making San Diego their North America Electronics Headquarters which means either they will hire or move down a lot of rich execs,sales and marketing people.
Going back to 2000 when you compared real estate in San Diego to that of orange county or the bay area it was dirt cheap.
Now all San Diego did was catch up to those cities. Everyone expects a meltdown but the same has been said for years about San Francisco and Seattle, yet they stayed high and went even higher during the recent real estate boom. In San Jose you still can’t buy a fixer upper for less than $800k if you’re lucky. Beach areas that were affordable are now completely out of reach but really that is the case in almost any coastal community in the US. In my opinion San Diego is slightly overpriced but I believe that it corrected to match up with comparable cities. You can see corrections happen in two ways, one to lower or to raise to match the real value. I sort of believe that it has been raised to match the real value. Investors always saw San Diego as a desirable place with affordable housing and started to pour money in here running the price way up, but only up comparable to the OC, SF, silicon Valley, Seattle etc…
People finally see this city more than just a vacation destination/military city but as a high tech city with lots of high paying jobs, good communites, nice weather etc…
A recent article showed a lot of new high tech buildings going up in the Rancho Bernardo Corridor whcihc means a lot more jobs moving in wich means more people with money to spend.

[(former)FormerSanDiegan]

I sort of believe that it has been raised to match the real value.

Maybe, but I sort of know that prices have already started coming down.

[(former)FormerSanDiegan]

I sort of believe that it has been raised to match the real value.

Maybe, but I sort of know that prices have already started coming down.

[(former)FormerSanDiegan]

I sort of believe that it has been raised to match the real value.

Maybe, but I sort of know that prices have already started coming down.

[mixxalot]

While the weather is nice in San Diego, it still is overpriced for real estate.

Corrections are in process. I saw some Ocean Beach condos listed 20k less than six months ago.

[mixxalot]

While the weather is nice in San Diego, it still is overpriced for real estate.

Corrections are in process. I saw some Ocean Beach condos listed 20k less than six months ago.

[mixxalot]

While the weather is nice in San Diego, it still is overpriced for real estate.

Corrections are in process. I saw some Ocean Beach condos listed 20k less than six months ago.

[Bugs]

As I read it you are basically making two arguments here:

1 – People with money are moving to town; and

2 – Great jobs are being added that will support that pricing structure.

However, neither of these suggestions are borne out by the data. The U-Haul test only shows 1 household coming in for every 4 households that leave. The breakdown of employment that Rich posts every month shows that the distribution of employment is migrating away from the higher paying jobs toward the lower paying jobs.

Not only that, but the data for sales volume, foreclosures, and pricing all indicate that this area is indeed not disconnected from the rest of the region nor is it in any way immune from the same trends that are happening in other overextended markets. Indeed, SD is running faster into decline than LA or the OC.

So far, we have seen no data that indicates that this time it is different or that SD is now so special that it will somehow escape its own historical trends. All the data we’ve seen shows SD is well on its way to repeating it’s pattern.

Maybe it is Seattle and the Bay area that will correct to their wage and population trends.

[Bugs]

As I read it you are basically making two arguments here:

1 – People with money are moving to town; and

2 – Great jobs are being added that will support that pricing structure.

However, neither of these suggestions are borne out by the data. The U-Haul test only shows 1 household coming in for every 4 households that leave. The breakdown of employment that Rich posts every month shows that the distribution of employment is migrating away from the higher paying jobs toward the lower paying jobs.

Not only that, but the data for sales volume, foreclosures, and pricing all indicate that this area is indeed not disconnected from the rest of the region nor is it in any way immune from the same trends that are happening in other overextended markets. Indeed, SD is running faster into decline than LA or the OC.

So far, we have seen no data that indicates that this time it is different or that SD is now so special that it will somehow escape its own historical trends. All the data we’ve seen shows SD is well on its way to repeating it’s pattern.

Maybe it is Seattle and the Bay area that will correct to their wage and population trends.

[Bugs]

As I read it you are basically making two arguments here:

1 – People with money are moving to town; and

2 – Great jobs are being added that will support that pricing structure.

However, neither of these suggestions are borne out by the data. The U-Haul test only shows 1 household coming in for every 4 households that leave. The breakdown of employment that Rich posts every month shows that the distribution of employment is migrating away from the higher paying jobs toward the lower paying jobs.

Not only that, but the data for sales volume, foreclosures, and pricing all indicate that this area is indeed not disconnected from the rest of the region nor is it in any way immune from the same trends that are happening in other overextended markets. Indeed, SD is running faster into decline than LA or the OC.

So far, we have seen no data that indicates that this time it is different or that SD is now so special that it will somehow escape its own historical trends. All the data we’ve seen shows SD is well on its way to repeating it’s pattern.

Maybe it is Seattle and the Bay area that will correct to their wage and population trends.

[Allan from Fallbrook]

Bugs: I cannot speak for Seattle, but the SF/Bay Area has always seemingly had the ability to defy gravity when it came to pricing. It apparently still does: Mountain View (right outside Palo Alto) just set a record for home sales. There are properties throughout Los Altos and Palo Alto that are in the nosebleed range and staying there.

As to whether that market will correct or not is anybody’s guess. It did following the NASDAQ bust, and viciously.

I agree wholeheartedly with your assessment as to the underlying economics of the San Diego area. While it certainly has a tech/biotech core, it represents nothing even close to what the Silicon Valley has in terms of both high wage employment and the number of large and very profitable companies domiciled there. One of the explanations regarding Mountain View’s recent surge is that Google is on a hiring tear.

[Allan from Fallbrook]

Bugs: I cannot speak for Seattle, but the SF/Bay Area has always seemingly had the ability to defy gravity when it came to pricing. It apparently still does: Mountain View (right outside Palo Alto) just set a record for home sales. There are properties throughout Los Altos and Palo Alto that are in the nosebleed range and staying there.

As to whether that market will correct or not is anybody’s guess. It did following the NASDAQ bust, and viciously.

I agree wholeheartedly with your assessment as to the underlying economics of the San Diego area. While it certainly has a tech/biotech core, it represents nothing even close to what the Silicon Valley has in terms of both high wage employment and the number of large and very profitable companies domiciled there. One of the explanations regarding Mountain View’s recent surge is that Google is on a hiring tear.

[Allan from Fallbrook]

Bugs: I cannot speak for Seattle, but the SF/Bay Area has always seemingly had the ability to defy gravity when it came to pricing. It apparently still does: Mountain View (right outside Palo Alto) just set a record for home sales. There are properties throughout Los Altos and Palo Alto that are in the nosebleed range and staying there.

As to whether that market will correct or not is anybody’s guess. It did following the NASDAQ bust, and viciously.

I agree wholeheartedly with your assessment as to the underlying economics of the San Diego area. While it certainly has a tech/biotech core, it represents nothing even close to what the Silicon Valley has in terms of both high wage employment and the number of large and very profitable companies domiciled there. One of the explanations regarding Mountain View’s recent surge is that Google is on a hiring tear.

[GoUSC]

Outside of a limited amount of biotech, tech & sporting goods (aka golf) companies San Diego has little high paying industry. The majority of the high wage earners in this town are doctors, lawyers, a few of us RE developers, and some chosen people at the select companies above. Like our airport we are a destination locale, not a center of industry. Drive north to Irvine and you can see what a true industry center is like. The only way we will become competitive is for home values to come down significantly and our government to offer tax incentives similar to what Texas and Florida offer.

My buddy moved to Texas 6 months ago. He is working for the same company as he was here, makes the same salary (little more actually) and bought a brand new 2600 sq. ft. house for $180,000 just outside Dallas. He had the choice of raising his kids in an apartment here, or a house in Texas. Which would you choose? REALLY.

We can’t compete with that, sunshine or not. The majority of people want a safe, good place to raise their families where they aren’t chained to a mortgage.

[GoUSC]

Outside of a limited amount of biotech, tech & sporting goods (aka golf) companies San Diego has little high paying industry. The majority of the high wage earners in this town are doctors, lawyers, a few of us RE developers, and some chosen people at the select companies above. Like our airport we are a destination locale, not a center of industry. Drive north to Irvine and you can see what a true industry center is like. The only way we will become competitive is for home values to come down significantly and our government to offer tax incentives similar to what Texas and Florida offer.

My buddy moved to Texas 6 months ago. He is working for the same company as he was here, makes the same salary (little more actually) and bought a brand new 2600 sq. ft. house for $180,000 just outside Dallas. He had the choice of raising his kids in an apartment here, or a house in Texas. Which would you choose? REALLY.

We can’t compete with that, sunshine or not. The majority of people want a safe, good place to raise their families where they aren’t chained to a mortgage.

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