Why is San Diego real estate still so expensive?

[CA renter]

[quote=jstoesz]Caveat…I did not read all the posts, its a sunday, and because now I actually work and cannot post all I want.

Move away!

Maybe the shine has not yet warn off, but Northern california certainly has greener grass!

You can make half as much and have twice the standard of living with more content people around you to boot!

The half as much is a myth by the way, because a comparable job in sacramento is making more than san diego at least from my limited data point.

The housing market down their is screwed, and without 1 in 2 mortgage owners declaring bancruptcy (which they should given their DTI) the market will not realize gravity, or at least not for another 10 years. Sun and clement weather has a way of denying gravity.

So move away or constantly be pissed at living responsibly…people do live cheaper in other states and markets. Or maybe I just moved to a place with fewer smart people, either way, I don’t care. Because everything feels better up here.

I may have a less of a poke the bear response to follow. But that is just my initial impression from my first week in sacramento.[/quote]

Glad to hear you’re already getting settled into your new home in Sacramento. 🙂

Hope you are doing well, and that you enjoy all the benefits of cheaper housing and a better lifestyle. You probably already know this, but I’ve heard they have some fantastic bike paths up there that run along the river, etc. Sounds awesome!

Let us know how things go as you get more acquainted with things.

[sdduuuude]

While it seems we are close to historical norms in price-to-rent and price-to-income ratios, I have some doubts that this tells the right story.

Does the reported average or median income take into consideration all the people making $0? i.e.
if 90 people are making $50K and 10 are making $0, do they report an average of $45K or $50K. Do they average in the “0” values or do they just take the average salary of the people who are working? Hmmmm.

Secondly, are we really at historical norms with unemployment as high as it is ? I mean – we may be at an average price/income ratio, but these are not average times. The last time unemployment was this high, what was the price/income ratio or price/rent ratio ?

Would be nice to see a scatter-plot of local unemployment vs. price/rent ratio to see if we are in the ballpark.

To me, this suggests prices are higher than they “should” be. I have to point to bank behavior as the cause. The bailout and stimulus money has completely shielded the housing market from the unemployment situation and has completely shielded banks from their own stupid decisions and has given owners who would otherwise have to bail a chance to hold on. Couple this with municipal borrowing to prop up wages of city workers and you have yourself a housing-market-life-support-system.

One thing to keep in mind – even if pain is not felt in the higher demographic areas, eventually the substitution effect will bring pain from the lower-end to the higher-end markets

But given the low-end is still being bailed out, it will be a long time before it is seen in sdr’s neighborhood.

Another recession should make these prices move a bit, but the bailout money has a significant dampening effect on dramatic movements in price.

[sdduuuude]

While it seems we are close to historical norms in price-to-rent and price-to-income ratios, I have some doubts that this tells the right story.

Does the reported average or median income take into consideration all the people making $0? i.e.
if 90 people are making $50K and 10 are making $0, do they report an average of $45K or $50K. Do they average in the “0” values or do they just take the average salary of the people who are working? Hmmmm.

Secondly, are we really at historical norms with unemployment as high as it is ? I mean – we may be at an average price/income ratio, but these are not average times. The last time unemployment was this high, what was the price/income ratio or price/rent ratio ?

Would be nice to see a scatter-plot of local unemployment vs. price/rent ratio to see if we are in the ballpark.

To me, this suggests prices are higher than they “should” be. I have to point to bank behavior as the cause. The bailout and stimulus money has completely shielded the housing market from the unemployment situation and has completely shielded banks from their own stupid decisions and has given owners who would otherwise have to bail a chance to hold on. Couple this with municipal borrowing to prop up wages of city workers and you have yourself a housing-market-life-support-system.

One thing to keep in mind – even if pain is not felt in the higher demographic areas, eventually the substitution effect will bring pain from the lower-end to the higher-end markets

But given the low-end is still being bailed out, it will be a long time before it is seen in sdr’s neighborhood.

Another recession should make these prices move a bit, but the bailout money has a significant dampening effect on dramatic movements in price.

[sdduuuude]

While it seems we are close to historical norms in price-to-rent and price-to-income ratios, I have some doubts that this tells the right story.

Does the reported average or median income take into consideration all the people making $0? i.e.
if 90 people are making $50K and 10 are making $0, do they report an average of $45K or $50K. Do they average in the “0” values or do they just take the average salary of the people who are working? Hmmmm.

Secondly, are we really at historical norms with unemployment as high as it is ? I mean – we may be at an average price/income ratio, but these are not average times. The last time unemployment was this high, what was the price/income ratio or price/rent ratio ?

Would be nice to see a scatter-plot of local unemployment vs. price/rent ratio to see if we are in the ballpark.

To me, this suggests prices are higher than they “should” be. I have to point to bank behavior as the cause. The bailout and stimulus money has completely shielded the housing market from the unemployment situation and has completely shielded banks from their own stupid decisions and has given owners who would otherwise have to bail a chance to hold on. Couple this with municipal borrowing to prop up wages of city workers and you have yourself a housing-market-life-support-system.

One thing to keep in mind – even if pain is not felt in the higher demographic areas, eventually the substitution effect will bring pain from the lower-end to the higher-end markets

But given the low-end is still being bailed out, it will be a long time before it is seen in sdr’s neighborhood.

Another recession should make these prices move a bit, but the bailout money has a significant dampening effect on dramatic movements in price.

[sdduuuude]

While it seems we are close to historical norms in price-to-rent and price-to-income ratios, I have some doubts that this tells the right story.

Does the reported average or median income take into consideration all the people making $0? i.e.
if 90 people are making $50K and 10 are making $0, do they report an average of $45K or $50K. Do they average in the “0” values or do they just take the average salary of the people who are working? Hmmmm.

Secondly, are we really at historical norms with unemployment as high as it is ? I mean – we may be at an average price/income ratio, but these are not average times. The last time unemployment was this high, what was the price/income ratio or price/rent ratio ?

Would be nice to see a scatter-plot of local unemployment vs. price/rent ratio to see if we are in the ballpark.

To me, this suggests prices are higher than they “should” be. I have to point to bank behavior as the cause. The bailout and stimulus money has completely shielded the housing market from the unemployment situation and has completely shielded banks from their own stupid decisions and has given owners who would otherwise have to bail a chance to hold on. Couple this with municipal borrowing to prop up wages of city workers and you have yourself a housing-market-life-support-system.

One thing to keep in mind – even if pain is not felt in the higher demographic areas, eventually the substitution effect will bring pain from the lower-end to the higher-end markets

But given the low-end is still being bailed out, it will be a long time before it is seen in sdr’s neighborhood.

Another recession should make these prices move a bit, but the bailout money has a significant dampening effect on dramatic movements in price.

[sdduuuude]

While it seems we are close to historical norms in price-to-rent and price-to-income ratios, I have some doubts that this tells the right story.

Does the reported average or median income take into consideration all the people making $0? i.e.
if 90 people are making $50K and 10 are making $0, do they report an average of $45K or $50K. Do they average in the “0” values or do they just take the average salary of the people who are working? Hmmmm.

Secondly, are we really at historical norms with unemployment as high as it is ? I mean – we may be at an average price/income ratio, but these are not average times. The last time unemployment was this high, what was the price/income ratio or price/rent ratio ?

Would be nice to see a scatter-plot of local unemployment vs. price/rent ratio to see if we are in the ballpark.

To me, this suggests prices are higher than they “should” be. I have to point to bank behavior as the cause. The bailout and stimulus money has completely shielded the housing market from the unemployment situation and has completely shielded banks from their own stupid decisions and has given owners who would otherwise have to bail a chance to hold on. Couple this with municipal borrowing to prop up wages of city workers and you have yourself a housing-market-life-support-system.

One thing to keep in mind – even if pain is not felt in the higher demographic areas, eventually the substitution effect will bring pain from the lower-end to the higher-end markets

But given the low-end is still being bailed out, it will be a long time before it is seen in sdr’s neighborhood.

Another recession should make these prices move a bit, but the bailout money has a significant dampening effect on dramatic movements in price.

[sdduuuude]

[quote=permabear]The problem is it was owned by a smoker and reeks. Don’t tell me “new carpet, new paint” – my parents bought an ex-smoker house and after gutting the entire thing: paint, flooring, vent and pipes, furnace, it STILL smells like smoke.[/quote]

The keys to this problem are 1) ammonia and 2) oil-based primer.

Our house was nasty when we bought it. The aluminum windows were YELLOW from smoke stains. I tried cleaners, bleach, solvents (laquer thinner, acetone, etc.). Nothing worked. Until I tried ammonia. It was like magic. Took that smoky film right off. Smoke-film on the walls will seep right through water-based primer, too.

Just have EVERYTHING wiped down w/ an ammonia solution and use a very expensive, very smelly oil-based primier and you are good-to-go. Of course, the carpets have to go also.

[sdduuuude]

[quote=permabear]The problem is it was owned by a smoker and reeks. Don’t tell me “new carpet, new paint” – my parents bought an ex-smoker house and after gutting the entire thing: paint, flooring, vent and pipes, furnace, it STILL smells like smoke.[/quote]

The keys to this problem are 1) ammonia and 2) oil-based primer.

Our house was nasty when we bought it. The aluminum windows were YELLOW from smoke stains. I tried cleaners, bleach, solvents (laquer thinner, acetone, etc.). Nothing worked. Until I tried ammonia. It was like magic. Took that smoky film right off. Smoke-film on the walls will seep right through water-based primer, too.

Just have EVERYTHING wiped down w/ an ammonia solution and use a very expensive, very smelly oil-based primier and you are good-to-go. Of course, the carpets have to go also.

[sdduuuude]

[quote=permabear]The problem is it was owned by a smoker and reeks. Don’t tell me “new carpet, new paint” – my parents bought an ex-smoker house and after gutting the entire thing: paint, flooring, vent and pipes, furnace, it STILL smells like smoke.[/quote]

The keys to this problem are 1) ammonia and 2) oil-based primer.

Our house was nasty when we bought it. The aluminum windows were YELLOW from smoke stains. I tried cleaners, bleach, solvents (laquer thinner, acetone, etc.). Nothing worked. Until I tried ammonia. It was like magic. Took that smoky film right off. Smoke-film on the walls will seep right through water-based primer, too.

Just have EVERYTHING wiped down w/ an ammonia solution and use a very expensive, very smelly oil-based primier and you are good-to-go. Of course, the carpets have to go also.

[sdduuuude]

[quote=permabear]The problem is it was owned by a smoker and reeks. Don’t tell me “new carpet, new paint” – my parents bought an ex-smoker house and after gutting the entire thing: paint, flooring, vent and pipes, furnace, it STILL smells like smoke.[/quote]

The keys to this problem are 1) ammonia and 2) oil-based primer.

Our house was nasty when we bought it. The aluminum windows were YELLOW from smoke stains. I tried cleaners, bleach, solvents (laquer thinner, acetone, etc.). Nothing worked. Until I tried ammonia. It was like magic. Took that smoky film right off. Smoke-film on the walls will seep right through water-based primer, too.

Just have EVERYTHING wiped down w/ an ammonia solution and use a very expensive, very smelly oil-based primier and you are good-to-go. Of course, the carpets have to go also.

[sdduuuude]

[quote=permabear]The problem is it was owned by a smoker and reeks. Don’t tell me “new carpet, new paint” – my parents bought an ex-smoker house and after gutting the entire thing: paint, flooring, vent and pipes, furnace, it STILL smells like smoke.[/quote]

The keys to this problem are 1) ammonia and 2) oil-based primer.

Our house was nasty when we bought it. The aluminum windows were YELLOW from smoke stains. I tried cleaners, bleach, solvents (laquer thinner, acetone, etc.). Nothing worked. Until I tried ammonia. It was like magic. Took that smoky film right off. Smoke-film on the walls will seep right through water-based primer, too.

Just have EVERYTHING wiped down w/ an ammonia solution and use a very expensive, very smelly oil-based primier and you are good-to-go. Of course, the carpets have to go also.

[sdrealtor]

When did you move from LA to SD? Salaries have come up quite a bit in SD relative to other places in the last 10 to 15 years. The “temperature tax” while still out there has gone down a bit.

Glad you are enjoying Sacramento. It is pretty up there and Tahoe is a pretty short drive away. Prices are very depressed up there because the bubble and eventual busrt up there was one of the largest in the country. Anyone memba Casey Serrin? That was his hometown.

[sdrealtor]

When did you move from LA to SD? Salaries have come up quite a bit in SD relative to other places in the last 10 to 15 years. The “temperature tax” while still out there has gone down a bit.

Glad you are enjoying Sacramento. It is pretty up there and Tahoe is a pretty short drive away. Prices are very depressed up there because the bubble and eventual busrt up there was one of the largest in the country. Anyone memba Casey Serrin? That was his hometown.

[sdrealtor]

When did you move from LA to SD? Salaries have come up quite a bit in SD relative to other places in the last 10 to 15 years. The “temperature tax” while still out there has gone down a bit.

Glad you are enjoying Sacramento. It is pretty up there and Tahoe is a pretty short drive away. Prices are very depressed up there because the bubble and eventual busrt up there was one of the largest in the country. Anyone memba Casey Serrin? That was his hometown.

[sdrealtor]

When did you move from LA to SD? Salaries have come up quite a bit in SD relative to other places in the last 10 to 15 years. The “temperature tax” while still out there has gone down a bit.

Glad you are enjoying Sacramento. It is pretty up there and Tahoe is a pretty short drive away. Prices are very depressed up there because the bubble and eventual busrt up there was one of the largest in the country. Anyone memba Casey Serrin? That was his hometown.

[Author]

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