Rents are up.

[Anonymous]

A few observations:

1) San Diego hosts a good populations of retirees. Translation: baby boomers with money.

2) Also, the industry here is pretty diverse. True a lot of the manufacturing jobs are going elsewhere. But they are being replaced by other industries. I believe biotechs are growing here. And i believe typically, these people can command these salaries. We also have our plethora of lawyers here. and our plethora of doctors.

3) The defense industry here is doing well (thank you mr bush. Not!)

4)You still have a shitload of qualcomm millionaire here that won’t leave, because they can afford to live here

5)Intuit has a huge office here and isn’t leaving anytime soon. And they are doing well.

6) You have a lot of unnamed wireless startups, despite the nokia/TI shakeout.

7) San diego has a decent tourist industry, and as such supports a lot of jobs in this area that won’t go away anytime soon.

8) Marines base is here. These people can’t easily leave

9) Camp Pendelton is here. These people can’t easily leave

10) Did I mention that a lot of rich old people live in Rancho Santa Fe, Del Mar, and La Jolla who are immune to economic downturns? They probably keep the local mom/pop shops alive.

11) A lot of clothing distributors are here

12) The chinese and indian have discovered this place isn’t bad relative to LA, and have started setting up shop here. Huawei Technologies http://www.huawei.com/ (cisco’s nemsis) for example has shop here now. Motorola has shop here also.

The thing is, a lot of companies are here. You just don’t hear about them.

[sdcellar]

I’ve read several comments regarding the increases in rents and all I can say is it must have been _great_ before. We’ve been actively looking and we’ve seen plenty of nice 3- or 4-bedroom houses for $2000-$2500 a month. If you have to live in a “million dollar home” you can for $3000 a month.

[davelj]

Rents are definitely up over the last few years. I’m very familiar with a condo complex in Carlsbad where rents were $1200/month three years ago and today they’re $1500/month, or about an 8% annual increase over the period. I know of another complex in the UTC area where rents were $1350/month three years ago and today they’re $1600/month, or about a 6% annual increase over the period.

[powayseller]

Great data point, davelj. You have a very good memory. I’m envious…

Here’s the last update from the Tenants Legal Center: “According to a recent MarketPointe Realty Advisors survey, rents in San Diego County increased by 3.81% in the last year (September to September) Our rents are 2.47% higher in September than they were in March 2006. The apartment vacancy rate has dropped to 1.84% from 3% only six months ago. This survey looks at complexes of 25 units or more.” – Tenants Legal Center

An article in the U-T Friday explained that the higher rents are caused by the record low vacancy rate, which is caused by the loss of 9,500 apartment units that were converted to condos in the last 3 years. Although some are now offered as rentals, the new owners are charging more money for the condos than they charged for the apartments.

[sdsundevil]

Rents never go down …

… and they are not likely to level off any time soon. Additionally, any predictions that SD real estate will decrease by 50% are assinine since the rent vs. PITI curves will intersect before then making it a better choice to own than rent. This was essentially the case in the 1995-96 time frame. It was less expensive as a whole to own than rent, therefore a huge housing boom occurred.

Once prices start dropping (and it can be argued that they already have), the question is when to get in if you are waiting. What if you wait too long?

Rents never go down, while owning has relatively fixed costs (thanks to Prop 13’s cap on property taxes), so in the long haul owning is simply the right answer. I would have to agree that renting is the right move at this exact moment, but then you are stuck having to decide when the right moment is to buy. If you’re committed to a house/condo/etc, then just buy it and be done with it. In 20 years, it will be worth more than what you paid for it – probably significantly more.

[sdcellar]

Rents never go down…

Actually, I don’t think that has been or will necessarily continue to be the case, either here in San Diego or elsewhere.

Following this thread, I can see that apartment rents are on the rise. But, with the current condo glut, I wouldn’t be tremendously surprised to see a reversal as large numbers of these unsold condos get returned to rental market inventory. I think you’ll see the same thing with homes that people can’t afford (I certainly am now).

While the owning over the long haul theory certainly has merit, it happily ignores the issue of buying overpriced assets. Waiting can be a very prudent decision and could definitely mean the difference between a house being worth significantly more than you paid for it and probably significantly more.

Also, I don’t think anybody that might be in the market for a home right now would be saying thanks to Proposition 13.

[sdrealtor]

When the boys come back
From the boondoggle in Iraq

Vacancies will drop to the floor
And rental rates will soar

[lendingbubblecontinues]

Yeah, because none of those guys live on base;) None of those guys left behind wives and children in North County, either, who might already be occupying dwellings.

Come home, Marines…and save San Diego County from the housing bubble!

USMC renters for everyone!!

[sdrealtor]

Never said it would save housing, just that it would grearly increae demand and thereby increase rents.

In case you didn’t know, thousand of “those guys” live off base. Additionally, when hubby/daddy goes off to war the wife and kids very often go back home to their parents.

[Anonymous]

Rents go down. Look at the rents index for San Diego in the CPI:

http://data.bls.gov/PDQ/outside.jsp?survey=cu

In section 1, scroll down to West urban and select San Diego

In section 2, scroll down to Housing/shelter/rent of primary residence

At the top, expand the table to include all available years.

Note the drops in the index from '92 to '93 and '93 to '94.  Rents fell during the last San Diego recession, and they'll fall again during the upcoming recession/depression as the exodus from the county continues, then accelerates, as all heck breaks loose.

Repent now!  Or, at least, rent now!

But don't make your lease too long, so you can take advantage of falling rents.

[sdrealtor]

The last drop occurred because of massive job losses (i.e. 60K in a matter of 2 or 3 months). This drop will be for other reasons. I see no reason for a mass exodus from the county.

If I had a nice rental, I would lock it in for the next couple of years so you know where you’ll be living and how much it will cost. It’s the prudent thing to do. Just ask PS.

[Anonymous]

I believe that we’ll see cumulatively massive job losses: in construction, retail, tourism, first. Next, in technology/biotechnology as exits for venture-capital backed startups tank.

The impetus, this time, for a fall in the economy is different: crash of the housing bubble vs. outmigration of defense contractors. But the result will be the same, I think.

[PerryChase]

Humm…, sdrealtor, I know that a large portion of the San Diego economy is military dependent. You make a good point about the boys coming home from Iraq needing a place to live. I wonder when that might be….

jd, good job on all the real estate analysis. I don’t agree with you on God and Iraq, but I’m with you on real estate.

[an]

That’s a big unknown. No one knows when they’ll be back. It could be several years from now. By then, it might be cheaper to buy than rent, who knows. That and all the condos high rises in downtown and condo conversion sitting empty right now should be more than enough to accommodate the troops.

[(former)FormerSanDiegan]

jg – In the link you posted the rents fell about 1%. Unemployment at that time in So Cal was double digits (10-12%). Seems like it should have been much worse.

[Author]

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