Why is San Diego real estate still so expensive?

[CA renter]

[quote=AN]Do you have proof that for many people, their incomes haven’t gone up at all?

7-8 years ago, entry level software engineers were making $45k-50k. Today, according to salary.com, they should be making around $50k-$56k. That seems like a 10% increase in income to me. Also, 7-8 years ago, mortgage rate was in the high 5s, low 6s. Just the rates alone can give buyers more buying powers. Lets assume income haven’t gone up in 7-8 years and lets say people who make $200k/yr can afford $800k back then, they now can afford $900k and still have the same payment.

To those who say, due to cost of everything else going up over the last 7-10 years, cost for housing have to stay the same. Have you guys taken a look at rent over the last 10 years? 10 years ago, a 2bed/1bath on the west side of Mira Mesa was going for around 1000-1050. Today, the exact same apartment is going for 1250-1300. That’s an increase of 20-30% over 10 years.

sdcellar, mid 90s, we just came out of a big defense layoff, QCOM was tiny, Broadcom wasn’t here, etc. Take a look at how many people those 2 companies a lone employ and take a guess how many of those people are looking in the 600k-$1m range.

CAR, I know SD and LA are different. But LA is much bigger and more diverse. LA must have all the neighborhood that’s similar to SD but the opposite can’t hold true. That’s why I’m asking for comparable to those places in LA w/ those criteria.[/quote]

EPI data tracking income and wage patterns show that the majority of income growth has for decades gone to a startlingly small number of top earners, while other workers have suffered a persistent stagnation or even decline in real earnings. While many middle-income families have lost jobs, homes, and retirement savings during the latest recession, their economic woes date back much further.

http://www.epi.org/analysis_and_opinion/entry/a_long_and_persistent_middle-class_squeeze/
——————

“The slow economic strangulation of the Freemans and millions of other middle-class Americans started long before the Great Recession, which merely exacerbated the “personal recession” that ordinary Americans had been suffering for years. Dubbed “median wage stagnation” by economists, the annual incomes of the bottom 90 per cent of US families have been essentially flat since 1973 – having risen by only 10 per cent in real terms over the past 37 years. That means most Americans have been treading water for more than a generation. Over the same period the incomes of the top 1 per cent have tripled. In 1973, chief executives were on average paid 26 times the median income. Now the ­multiple is above 300.

http://www.ritholtz.com/blog/2010/08/ft-goodbye-middle-class/

[ocrenter]

The bottom line at least between OC and SD is we are looking at roughly $100k in difference in regard to comparable homes in comparable neighborhoods. And as the salary comparisons demonstrated, while LA metro do allow for slightly higher pay (probably mostly due to cost-of-living-adjustments), it still does not account for that 100k difference.

Let’s do some OC/SD comparisons.

I would say 4S Ranch/92127 vs Ladera Ranch/92694 are two very similar comparisons. Both were built in the middle of the bubble, both have a lot of homes in distress, both are about the same distance to the beach. Schools should be fairly comparable, but 4S may have an edge here. Both areas also have similar HOA/MR rates.

median household income is slightly higher in 92694, at $130k vs $103k.

on ziprealty, counting all SFRs above 3000 sqft, there are 8 homes in 92127 priced at less than 700k, 2 of which are short sales.

on ziprealty, there are NO homes in 92694 priced at less than 700k.

So we would have to move up to the 700k to 800k price range if you want a house in Ladera Ranch. But there’s a very limited selection at just 5 homes, all of which are short sales or foreclosures, which obviously have their issues.

meanwhile, if we move up to the 700k to 800k range in 92127, there’s a robust 15 homes for sale, of which only a couple are short sales/foreclosures.

for Ladera Ranch, we do not see decent selections until we head further up in price scale to the 800k to 900k range, where there are 12 homes for sale.

On a general scale, there are far more “4S Ranch” type nice neighborhoods with lower pricing in SD than LA/OC.

On a personal note, we are unlikely to have been able to get anything close to what we ended up purchasing here back in LA/OC. Again based on comparable location and scale of home, our home in LA/OC would be at least $400k to $600k above our purchase price here in SD.

[ocrenter]

The bottom line at least between OC and SD is we are looking at roughly $100k in difference in regard to comparable homes in comparable neighborhoods. And as the salary comparisons demonstrated, while LA metro do allow for slightly higher pay (probably mostly due to cost-of-living-adjustments), it still does not account for that 100k difference.

Let’s do some OC/SD comparisons.

I would say 4S Ranch/92127 vs Ladera Ranch/92694 are two very similar comparisons. Both were built in the middle of the bubble, both have a lot of homes in distress, both are about the same distance to the beach. Schools should be fairly comparable, but 4S may have an edge here. Both areas also have similar HOA/MR rates.

median household income is slightly higher in 92694, at $130k vs $103k.

on ziprealty, counting all SFRs above 3000 sqft, there are 8 homes in 92127 priced at less than 700k, 2 of which are short sales.

on ziprealty, there are NO homes in 92694 priced at less than 700k.

So we would have to move up to the 700k to 800k price range if you want a house in Ladera Ranch. But there’s a very limited selection at just 5 homes, all of which are short sales or foreclosures, which obviously have their issues.

meanwhile, if we move up to the 700k to 800k range in 92127, there’s a robust 15 homes for sale, of which only a couple are short sales/foreclosures.

for Ladera Ranch, we do not see decent selections until we head further up in price scale to the 800k to 900k range, where there are 12 homes for sale.

On a general scale, there are far more “4S Ranch” type nice neighborhoods with lower pricing in SD than LA/OC.

On a personal note, we are unlikely to have been able to get anything close to what we ended up purchasing here back in LA/OC. Again based on comparable location and scale of home, our home in LA/OC would be at least $400k to $600k above our purchase price here in SD.

[ocrenter]

The bottom line at least between OC and SD is we are looking at roughly $100k in difference in regard to comparable homes in comparable neighborhoods. And as the salary comparisons demonstrated, while LA metro do allow for slightly higher pay (probably mostly due to cost-of-living-adjustments), it still does not account for that 100k difference.

Let’s do some OC/SD comparisons.

I would say 4S Ranch/92127 vs Ladera Ranch/92694 are two very similar comparisons. Both were built in the middle of the bubble, both have a lot of homes in distress, both are about the same distance to the beach. Schools should be fairly comparable, but 4S may have an edge here. Both areas also have similar HOA/MR rates.

median household income is slightly higher in 92694, at $130k vs $103k.

on ziprealty, counting all SFRs above 3000 sqft, there are 8 homes in 92127 priced at less than 700k, 2 of which are short sales.

on ziprealty, there are NO homes in 92694 priced at less than 700k.

So we would have to move up to the 700k to 800k price range if you want a house in Ladera Ranch. But there’s a very limited selection at just 5 homes, all of which are short sales or foreclosures, which obviously have their issues.

meanwhile, if we move up to the 700k to 800k range in 92127, there’s a robust 15 homes for sale, of which only a couple are short sales/foreclosures.

for Ladera Ranch, we do not see decent selections until we head further up in price scale to the 800k to 900k range, where there are 12 homes for sale.

On a general scale, there are far more “4S Ranch” type nice neighborhoods with lower pricing in SD than LA/OC.

On a personal note, we are unlikely to have been able to get anything close to what we ended up purchasing here back in LA/OC. Again based on comparable location and scale of home, our home in LA/OC would be at least $400k to $600k above our purchase price here in SD.

[ocrenter]

The bottom line at least between OC and SD is we are looking at roughly $100k in difference in regard to comparable homes in comparable neighborhoods. And as the salary comparisons demonstrated, while LA metro do allow for slightly higher pay (probably mostly due to cost-of-living-adjustments), it still does not account for that 100k difference.

Let’s do some OC/SD comparisons.

I would say 4S Ranch/92127 vs Ladera Ranch/92694 are two very similar comparisons. Both were built in the middle of the bubble, both have a lot of homes in distress, both are about the same distance to the beach. Schools should be fairly comparable, but 4S may have an edge here. Both areas also have similar HOA/MR rates.

median household income is slightly higher in 92694, at $130k vs $103k.

on ziprealty, counting all SFRs above 3000 sqft, there are 8 homes in 92127 priced at less than 700k, 2 of which are short sales.

on ziprealty, there are NO homes in 92694 priced at less than 700k.

So we would have to move up to the 700k to 800k price range if you want a house in Ladera Ranch. But there’s a very limited selection at just 5 homes, all of which are short sales or foreclosures, which obviously have their issues.

meanwhile, if we move up to the 700k to 800k range in 92127, there’s a robust 15 homes for sale, of which only a couple are short sales/foreclosures.

for Ladera Ranch, we do not see decent selections until we head further up in price scale to the 800k to 900k range, where there are 12 homes for sale.

On a general scale, there are far more “4S Ranch” type nice neighborhoods with lower pricing in SD than LA/OC.

On a personal note, we are unlikely to have been able to get anything close to what we ended up purchasing here back in LA/OC. Again based on comparable location and scale of home, our home in LA/OC would be at least $400k to $600k above our purchase price here in SD.

[ocrenter]

The bottom line at least between OC and SD is we are looking at roughly $100k in difference in regard to comparable homes in comparable neighborhoods. And as the salary comparisons demonstrated, while LA metro do allow for slightly higher pay (probably mostly due to cost-of-living-adjustments), it still does not account for that 100k difference.

Let’s do some OC/SD comparisons.

I would say 4S Ranch/92127 vs Ladera Ranch/92694 are two very similar comparisons. Both were built in the middle of the bubble, both have a lot of homes in distress, both are about the same distance to the beach. Schools should be fairly comparable, but 4S may have an edge here. Both areas also have similar HOA/MR rates.

median household income is slightly higher in 92694, at $130k vs $103k.

on ziprealty, counting all SFRs above 3000 sqft, there are 8 homes in 92127 priced at less than 700k, 2 of which are short sales.

on ziprealty, there are NO homes in 92694 priced at less than 700k.

So we would have to move up to the 700k to 800k price range if you want a house in Ladera Ranch. But there’s a very limited selection at just 5 homes, all of which are short sales or foreclosures, which obviously have their issues.

meanwhile, if we move up to the 700k to 800k range in 92127, there’s a robust 15 homes for sale, of which only a couple are short sales/foreclosures.

for Ladera Ranch, we do not see decent selections until we head further up in price scale to the 800k to 900k range, where there are 12 homes for sale.

On a general scale, there are far more “4S Ranch” type nice neighborhoods with lower pricing in SD than LA/OC.

On a personal note, we are unlikely to have been able to get anything close to what we ended up purchasing here back in LA/OC. Again based on comparable location and scale of home, our home in LA/OC would be at least $400k to $600k above our purchase price here in SD.

[permabear]

[quote=AN]Wasn’t 2000 the peak of the .com bubble? Or did you get paid that much after the .com crash? Were 6-7 years experience s/w engineers making that much after the .com crash?[/quote]

Yes and yes. SD got hit by the dot-com bust but 100k for a senior programmer was about the same back then as now. Although looking at your figures I bet if I did the math on total comp I could buy a 10% increase. But that would still mean salaries haven’t even kept pace with the woefully-understated CPI. ($90k in 2000 is $112k today, a 25% jump)

Louis Vuitton… hahaha. We have paid-off cars and shop at Target. But a large chunk of my income goes to savings… guess I’m old-school in that way. It’s tough trying to be fiscally responsible in our current credit-orgy economy. Other people spending 100% of their income pushes prices of everything to stupid levels.

[permabear]

[quote=AN]Wasn’t 2000 the peak of the .com bubble? Or did you get paid that much after the .com crash? Were 6-7 years experience s/w engineers making that much after the .com crash?[/quote]

Yes and yes. SD got hit by the dot-com bust but 100k for a senior programmer was about the same back then as now. Although looking at your figures I bet if I did the math on total comp I could buy a 10% increase. But that would still mean salaries haven’t even kept pace with the woefully-understated CPI. ($90k in 2000 is $112k today, a 25% jump)

Louis Vuitton… hahaha. We have paid-off cars and shop at Target. But a large chunk of my income goes to savings… guess I’m old-school in that way. It’s tough trying to be fiscally responsible in our current credit-orgy economy. Other people spending 100% of their income pushes prices of everything to stupid levels.

[permabear]

[quote=AN]Wasn’t 2000 the peak of the .com bubble? Or did you get paid that much after the .com crash? Were 6-7 years experience s/w engineers making that much after the .com crash?[/quote]

Yes and yes. SD got hit by the dot-com bust but 100k for a senior programmer was about the same back then as now. Although looking at your figures I bet if I did the math on total comp I could buy a 10% increase. But that would still mean salaries haven’t even kept pace with the woefully-understated CPI. ($90k in 2000 is $112k today, a 25% jump)

Louis Vuitton… hahaha. We have paid-off cars and shop at Target. But a large chunk of my income goes to savings… guess I’m old-school in that way. It’s tough trying to be fiscally responsible in our current credit-orgy economy. Other people spending 100% of their income pushes prices of everything to stupid levels.

[permabear]

[quote=AN]Wasn’t 2000 the peak of the .com bubble? Or did you get paid that much after the .com crash? Were 6-7 years experience s/w engineers making that much after the .com crash?[/quote]

Yes and yes. SD got hit by the dot-com bust but 100k for a senior programmer was about the same back then as now. Although looking at your figures I bet if I did the math on total comp I could buy a 10% increase. But that would still mean salaries haven’t even kept pace with the woefully-understated CPI. ($90k in 2000 is $112k today, a 25% jump)

Louis Vuitton… hahaha. We have paid-off cars and shop at Target. But a large chunk of my income goes to savings… guess I’m old-school in that way. It’s tough trying to be fiscally responsible in our current credit-orgy economy. Other people spending 100% of their income pushes prices of everything to stupid levels.

[permabear]

[quote=AN]Wasn’t 2000 the peak of the .com bubble? Or did you get paid that much after the .com crash? Were 6-7 years experience s/w engineers making that much after the .com crash?[/quote]

Yes and yes. SD got hit by the dot-com bust but 100k for a senior programmer was about the same back then as now. Although looking at your figures I bet if I did the math on total comp I could buy a 10% increase. But that would still mean salaries haven’t even kept pace with the woefully-understated CPI. ($90k in 2000 is $112k today, a 25% jump)

Louis Vuitton… hahaha. We have paid-off cars and shop at Target. But a large chunk of my income goes to savings… guess I’m old-school in that way. It’s tough trying to be fiscally responsible in our current credit-orgy economy. Other people spending 100% of their income pushes prices of everything to stupid levels.

[(former)FormerSanDiegan]

[quote=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.

[/quote]

Rich’s curves are based on per capita income, so Yes the zero incomes are averaged in, bringing the average down.

[(former)FormerSanDiegan]

[quote=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.

[/quote]

Rich’s curves are based on per capita income, so Yes the zero incomes are averaged in, bringing the average down.

[(former)FormerSanDiegan]

[quote=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.

[/quote]

Rich’s curves are based on per capita income, so Yes the zero incomes are averaged in, bringing the average down.

[(former)FormerSanDiegan]

[quote=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.

[/quote]

Rich’s curves are based on per capita income, so Yes the zero incomes are averaged in, bringing the average down.

[Author]

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