San Diego drastically outperforms Bay and LA on rents

[flyer]

Good to know wrt Dr. Bubble. Still, he does have a way with words.

We could never leave CA, since, as you mentioned, we also enjoy being in the thick of things with real estate and the entertainment industry.

As the article below references, my wife is involved in more productions than ever, since Hollywood is back, baby! The streaming services have become Hollywood gold.

Both industries are cyclical, but it’s fun to ride the wave while you can–as long as you also plan for the inevitable downside.

With Hollywood Production in Overdrive, the Soundstage Is a Hot Commodity

“The surge in new movies and TV shows has touched off a scramble for places to film. Empty office space, abandoned malls and even a shuttered Sears store—apparently all the world really is a stage.

There is one going up in Buffalo, and another planned for Missoula. The South Side of Chicago is getting one, and so are Seattle and Spokane. Oklahoma City just opened one, and Los Angeles is getting at least a half-dozen more.

In cities large and small, developers are building cavernous soundstages, rushing to fill a voracious demand for the space needed to make movies and TV shows. A scramble by studios and tech giants for programming to keep their streaming platforms fresh has touched off a building bonanza unlike any seen since the early days of the entertainment industry. Even abandoned malls are being eyed for the job.

“Developers are salivating,” said Tima Bell, a principal at Relativity Architects, a California-based firm. His team is building a soundstage in Canada and an entire campus in Atlanta—while also moving toward construction of six in Los Angeles. Approximately half of those sites were initially designated to be warehouses before investors pivoted toward soundstage use in the past year.

The capacity crunch is the result of a yearslong surge in production, but the stay-at-home orders that kept many people out of the office over the past year and a half increased the demand for content and kicked Hollywood into overdrive. The industry is now spending tens of billions of dollars to maintain a constant flow of movies and TV shows to keep subscribers hooked.”

[Coronita]

who is Dr Housing Bubble?

[sdrealtor]

He has a blog. Back in 2005/6 when I first started looking for places to talk to people about what I perceived to be a bubble it was the first thing I saw. I tried to talk to people intelligently but because I used sdrealtor as my username all they did was attack me and discredit what I was trying to say. Back then they saw what was obvious to everyone but when I tried to get down into the weeds with them about different markets they were doom and gloomers who expected to buy oceanfront homes for $250K at the bottom. I realized it was pointless and went looking again. Thats when i first found this place

[gzz]

When I made my first purchase in 2011, and lending was ultra tight, I was able to get a great rate and conforming loan with 5% down. And I was told I could even go a little lower. (I was prepared to put down 10-20%, but the 5% down made more sense.) FHA has long been 3%.

The difference between 3% and 0% isn’t nothing, but a full-doc loan with good income, I don’t see what the big deal is. The big problem with mortgage in the bubble was no-doc liar loans and the various flavors of negative amortization mortgages.

[Coronita]

[quote=sdrealtor]He has a blog. Back in 2005/6 when I first started looking for places to talk to people about what I perceived to be a bubble it was the first thing I saw. I tried to talk to people intelligently but because I used sdrealtor as my username all they did was attack me and discredit what I was trying to say. Back then they saw what was obvious to everyone but when I tried to get down into the weeds with them about different markets they were doom and gloomers who expected to buy oceanfront homes for $250K at the bottom. I realized it was pointless and went looking again. Thats when i first found this place[/quote]

Oh yeah, now I remember… $250k 4/4 del mar houses… ha ha ha

[sdrealtor]

I remember debating with a permabear here who left long ago about this parcel. He was convinced he was gonna buy it for $500k when all hell broke loose and I laughed at him.

https://goo.gl/maps/nFyPvo1LDyCBvW9u7

Part of it was developed into 9 new homes a few years ago. IIRC they started around $2m each. One recently resold close to $4m

[gzz]

I haven’t been to Dr. HB in 5+ years.

He’s pretty good still. I liked this comment I saw there:

I work in tech and my co-workers who moved to CA and now rent an apartment in CA are:
1) New college grads who were offered an enormous salary out of college.
2) Not married so they rent a one bedroom apartment.
3) They didn’t even have enough stuff to rent a Uhaul. I saw pictures of new hire who had packed his entire worldly possessions into his Toyota for the move.

The enormous salary is not enough to buy a house yet, but it comfortably rents a one bedroom apartment near the beach. You are only young once.

If they stay, gain experience, and job hop for higher salaries, then they may at least qualify to buy a house.

To buy a house in CA since the late 1980’s, a buyer has had to stretch and live frugally. This is not a new thing but it seems to me that more stretching is going on today than ever before.

Historically, if you stretched and purchased a house in the 1990’s and lived very frugally for 15 years, you are likely OK now. Actually, you are probably a millionaire with all of your equity tied up in the house. If you still live there, it would be hard to move to a cold/hot strange place that isn’t close to the beach.

If you rented for the entire time, you are likely poor and have to move due to rising rents.

I went to high school in S. CA in the 1980s. All of my classmate’s parents who purchased a house in the 70’s and 80’s are still there and aging in-place. The parents who rented in the 80’s have long moved away to cheaper places.

If I was just married, in my 30’s, wanted kids, and had no college education and flipped burgers for a living, I would leave also to somewhere where I could qualify for a house.

[sdrealtor]

Ive seen that happen countless times since the mid 90’s. To some degree it is my life story also

[EconProf]

Allow me to get back to the original theme of this thread: rent trends in various US cities, in which San Diego fares better than LA or the Bay area.
A closer look at the location of the the cities with the biggest rent growth shows them to be immediately outside of the three west coast states: Phoenix, Tucson, Las Vegas, the various cities of Idaho, Utah, Montana. One odd exception to this rule is Santa Ana. Another is Spokane, perhaps escapees from Seattle who want to stay in a zero income tax state.
Is this not more evidence that people are leaving the high cost, poorly governed locations for a lower cost of housing (and everything else), lower taxes, and, dare I say it, lifestyle?
The fact that San Diego rents are doing better than LA and San Francisco may simply mean that we are the lease crappy CA city left.

[sdrealtor]

It simply means two things. One work from home now allows people to live anywhere rather than being tied to a physical location and says nothing about politics. Two you won’t let an opportunity pass to kick the place that provided you everything you’ve got on the way out.

BTW, when you look at rents in previously unlovable places with little rent demand and small populations a small increase in demand can have an outsized impacts on the stats.

Rent going from $500 to $600 is 20%. Rent going from $3000 to $3500 is less than 20% but a case isn’t hard to make its a hotter better rental market

And SD / Orange County population dwarves the combined population of Utah, Idaho and Montana combined

[sdrealtor]

Was out on broker caravan today in my hood. Struck up a conversation with a buyer looking at the house. Moving down from Silicon Valley with family. He is also bringing his Fintech company and his employees. And he is hiring. I asked him why not move to Utah or Idaho? He laughed. I laughed.

[gzz]

The Western USA has had faster population and economic growth than the rest since the Mexican Cession.

California has been such a success that it has become as expensive or more so than the ancient centers of civilization and commerce like Peking, Paris, London, and Rome.

Some people want to be as close to the center of the action as they can, others as far away as they can.

I feel SD is the happy and blessed middle, as do millions of others who live here or would do so in a heartbeat if they had the money.

One reason I like OB is that I don’t have to choose between walkable, bike-friendly, and car-friendly. It’s all three, with mild clean ocean breezes 99.5% of the time.

The “compromises” I make are a pittance compared to the benefits. The places you say are “well run” are monotonous and living there is a far bigger compromise.

[EconProf]

sdr, thanks for making my point. Working from home means people are choosing to live away from the big cities and are moving into exurban areas, or entirely different states. Thus the move out of CA to neighboring states while keeping their job and “checking in” at the home office weekly or monthly.
Your comment that people moving “says nothing about politics”…? For many people,it might be fully explained by politics of the two areas.
Here in St. George are two trends that prove that. Direct flights from LA to little St. George were recently introduced to accommodate such workers. Housing developments near our airport are exploding. And if they spend 51% of their days here, they escape CA taxes. Second, many Californians have second homes here, and due to the COVID lockdowns in CA are spending more of their time in Utah where our schools and universities stayed largely open. Enrollment in the local university during COVID jumped about 10% while CA universities went to useless distance “learning”.

[EconProf]

sdr, one additional point. You often accuse me of ungratefully criticizing SD, the place where I made my money. When I came to San Diego and invested there, it was indeed the golden state: two-party government, reasonable taxes and regulations, good schools, etc. Now I’m supposed to feel guilty because I see better opportunities elsewhere? I fully appreciate the advantages of San Diego, especially for the uber-rich. But for an increasing number of people, the exodus from CA is real, and I expect it will eventually happen in San Diego, which, as you have pointed out, is benefiting from people fleeing the LA and Bay area.

[flyer]

Having been in real estate for many years, we have seen just about every cycle imaginable. Previous generations of the family, among other things, spent their time hauling water from downtown by wagon to build their housing developments around town. They felt they had found their paradise, and they were going to make the most of it.

Fast forward a hundred years or so, it’s extremely interesting to watch the current incarnation that is pushing our property and rental values through the roof, thanks to the good folks who are just now discovering our beautiful San Diego.

edit: EP, just read your comments, and completely understand where you’re coming from, and yes, I agree having homes in more tax friendly states is a good idea. That said, we’ll continue to live much of the time in CA, regardless of what the future holds, but for many, we also understand that may not be an option. Hopefully, everyone will find their own paradise and be happy with the choices they’ve made.

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