[EconProf]

Thanks for all the feedback, both positive and negative.
First, I agree with the crotchety old man description. You young whippersnappers may some day come to the same conclusions as me.
To be clear, I thoroughly enjoyed living in San Diego and still miss aspects of it. But as a long-time real estate investor, I fear for its future and thank Piggington for the opportunity to warn others.
San Diego RE prices are having somewhat of a sugar-high due to factors that are largely temporary: unusually low mortgage rates, an influx of sellers of LA and Bay area properties, and the artificial shortage of buildable land (ocean, the border, Pendleton, mountains, etc.). Above all, CA politics are driving away families and blue-collar types who hope some day to own a house. This will likely accelerate, since CA is 2 to 1 Democrat vs. Republican. It was evenly balanced when I came here, and our housing prices were very similar to other big cities. Now the flight to cheaper states will accelerate.
I suspect Piggs are well above average in income, home ownership rates, and neighborhood quality. But it is a bit unseemly to laud the runup in prices and rents considering who it hurts. Yes, I know–I benefited as well during my decades of investing in San Diego RE. But RE investors should look at long-term demographic trends in their decision-making.

[EconProf]

[quote=sdrealtor]Excellent the world’s eyes will be on you this weekend. Maybe next year you’ll really step it up and get an archery tournament

FYI they picked a low population location with liberal covid restrictions and they anticipate there will be less than half the usual number of participants. It was moved there last second from New Zealand and they obviously had very limited choices. Dont plan on this being anything more than a one or two off occurence[/quote]

I doubt they moved it from New Zealand at the “last second”. NZ has been totally locked down due to COVID for at least a year. Sources please.
One or two off occurence? It is already scheduled for next year.

[EconProf]

Yeah, St. George has such terrible weather and unsophisticated rubes and retirees. Nothing exciting here happens compared to sophisticated San Diego.
So why did the INTERNATIONAL World Championship Ironman Triathlon pick us for their annual event happening tomorrow, Saturday? 6,000 runners/swimmers/bicyclists.
In past years, they have picked Oahu, San Diego, and other worldwide locations. St. George–so boring.

[EconProf]

Newsflash: they are called seasons.

[EconProf]

[quote=sdrealtor]8 pm in Saint George and currently 93 degrees. Such bliss[/quote]

Yep, it is hot here for 4 months of the year. But remember that because of our mountains and higher elevation, there is a 30-degree swing in temperatures between late afternoon and early mornings, when an 87 degree high means mornings in the 60’s.
BTW, it is hotter in lower elevation Phoenix and Las Vegas, which doesn’t seem to slow refugees from CA to those rapidly growing cities.

[EconProf]

[quote=The-Shoveler]SD seems to be run a whole lot better than LA, So I would imagine SD will continue to attract those with the means to escape LA.

But Probably just about anywhere is run better than LA.[/quote]

Yes, SD RE has benefited from the flight from worse-run coastal cities of the Bay area and LA. But it is still in CA and will be pulled down by CA’s self-imposed problems. It is the least-dirty shirt in the closet.

[EconProf]

CA voters have spoken, so Newsom is in for 2, or maybe 6 more years. Now, as writer H. L. Mencken once said, they are going to get what they voted for, good and hard.
The exodus from CA of businesses and people will accelerate, as the “push factors” continue to grow. Can San Diego RE be far behind?

[EconProf]

Lots of fun anecdotes here about skateboarding, baseball cards, and relocations of rich people to San Diego’s coastal areas. But yesterday a factoid came out from the Hoover Institute of Stanford University that is more relevant to RE trends. CA has lost more businesses to other states so far this year than all of last year: 74 so far in 2021 vs. 62 in all of 2020. So the exodus of people (as per Census Bureau) and businesses is accelerating.
San Diego’s advantages for the wealthy elite will always make it a destination for the refugees from LA and the Bay area, pushing up prices in desirable neighborhoods. But it is still in CA, where governmental policies continue to drive away businesses and people.

[EconProf]

[quote=sdrealtor][quote=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”.[/quote]

St George is over 300 miles from salt lake city and is in the middle of nowhere. It has no industry to speak of, a college that is more comparable to a community college here than a research university and a population significantly smaller than Carlsbad. A few hundred or even thousand people going there isn’t even a rounding error vis a vis the CA population. CA still is the Golden State and more wealth is created in SD County than the entire state of Utah. SD companies received more venture funding this quarter then the entire State of Utah does for a full year. That won’t change. You’ll dominate the bingo halls[/quote]

sdr: OK, you have convinced me. You are right, I am wrong. So I’ll stop our exchanges here.
After all, the Census Bureau is just lying about people leaving CA for neighboring states in increasing numbers. And people don’t care about cost of living and housing and taxes when they decide where they live. They want good Thai restaurants. And CA schools are better because of high per-pupil spending. And roads too. And people don’t mind high taxes because bigger government is good for everyone, especially the homeless, who now come not just from the rest of the US, but now from the world. Diversity, you know. And then there’s the ocean.
So I give up. This site is all yours.

[EconProf]

[quote=sdrealtor]So here is some data for EP.

My hometown of Cherry Hill NJ has a median HH income of $105K. It has demographics similar to Carlsbad, top rated schools and healthcare. Its an easy one hour drive to lovely Jersey Shore towns. Its an easy 15 minute drive to Philadephia with great jobs, multiple teaching hospitals some of which rank among the best in the country and Ivy League schools nearby. They have professional sports and world class musuems and theatre in Philly. School funding is among the highest in the country. The median home price is $336K.

The median HH income in St George is under $50K. It has none of that. School funding is among the lowest in the country. The only university was recentlya two year associate degree college. No theatre, no international airport, no teaching hospitals, no major industries, no pro sports, no beaches, no culture or diversity. The median home price is $430K.

And you dont think you just bought into one big time bubble that will come crashing down as soon as the economy turns? You have bought into Hemet circa 2005.[/quote]

sdr: for starters, New Jersey is losing population. Why would that be? And if you think Philly is good for culture, the arts, and theatre, check out their crime rate before going downtown.
St. George/Washington City is exploding with growth because of its culture, broadly defined. Theatre, museums, concerts, a rapidly expanding 4-year university, lauded health care, year-around outdoor activities such as hiking, biking trails, parks (minus the homeless in tents), and numerous gyms. The people are young, healthy, and fully employed–unemployment rate 2.9%. Because the cost of living is so low, average income means little. True, the average household income is slightly under the US average. But adjusted for COL is what counts. For example, my total utilities for last month were $181.10–gas and electric, water and sewer. That’s with our hotter weather and the AC on constantly in a 2500 SF house. My friend in Scripps Ranch recently told me his total was over $1,000.
Educational quality has little to do with spending. In NYC the per pupil spending is over $20,000 per year, and their educational attainment is dreadful. CA is notorious for high government spending in most every category and abysmal results. San Diego is the best of the big cities, but it is still in CA.

[EconProf]

[quote=XBoxBoy][quote=EconProf]Given recent inflation numbers, this cannot last, as history sadly shows. The parallels between Biden and Fed chairman Powell and President Carter and Fed Chairman Arthur Burns are uncanny. The stagflation that followed those two lasted for years.[/quote]

Haha! What a clown comment! And from someone who uses EconProf as their handle.

Let’s get a couple facts straight. Arthur Burns first major govt office was Counselor to the President in 1969. And was that for President Carter? NOPE! That was for President Nixon! Then in 1970 Arthur Burns became Chairman of the Fed. Again while Nixon was president.

As inflation started to heat up, Nixon and Burns (Not Carter and Burns) imposed wage and price controls in 1971. This didn’t work so well but undeterred Nixon engaged in lots of deficit spending and then took the dollar off the gold standard. And then Nixon pressured Burns to loosen the money supply so that the economy would boom and Nixon would get reelected. In 1973 inflation had reached 8%. This wasn’t it’s peak, but keep in mind Carter is only the Governor of Georgia at this time.

Things only get worse re inflation for the next several years reaching 12% in 1974. (And worse for Nixon too as he is forced to resign leaving Gerald Ford president.)

January 20, 1977 Jimmy Carter takes over the presidency. A little more than a year later Arthur Burns is out at the fed. Replaced by William Miller, and thus ending any partnership between Carter and Burns. Another year later (Aug. 6, 1979) Paul Volker takes over as Chairman of the Fed Reserve.

So, let’s get this straight:

1970: Nixon appoints Arther Burns Chairman of Fed Reserver

1970-1974: Inflation starts to heat up under Nixon/Burns partnership that includes deficit spending, price and wage controls and taking the dollar off the gold standard.

1974-1976: Ford is president with Arthur Burns still the Fed Chairman. During this time inflation first rises to 12% but falls to 5% by late 1976

1977: Carter becomes president and Arthur Burns remains Chairman of the federal reserve. This partnership you want to blame everything on lasts only 14 months.

1979: Carter nominates Paul Volker to be new Chairman of Federal Reserve. (Volker is generally considered to be the man who tamed the 1970’s inflation)

Given all the above, it is stunning, yes absolutely stunning that someone who claims to be an economics professor would make such a misleading claim that inflation in the 1970s was largely the result of Carter and Burns. If anything you should be blaming Nixon and Burns. Nixon is the one who nominated Burns and had a long partnership with him. Carter should be paired with Volker who he nominated.

Of course that doesn’t fit with your completely delusional political views so I guess we shouldn’t be surprised. But really, it’s time to stop making shit up and stop spreading misinformation.[/quote]

XBoxBoy:
Your history is largely correct, but it does not relate to what I said.
The parallels of that period to today in terms of policy and resulting inflation and all that it entailed are strikingly similar. Yes, we had big deficit spending combined with rapid increases in the money supply (M2). Inflation skyrocketed and so did interest rates. Stagflation (recession combined with inflation) resulted.
Today deficit spending relative to GNP and the total federal debt is unprecedentedly high, even higher than during the previous period, and is not needed to stimulate the economy. The Fed is accommodative with ultra loose money supply and low interest rates, just like Arthur Burns was. Like today’s Fed Chairman Powell, Burns said the inflation was only “temporary”, and due largely to oil prices.
I suspect this is the consensus opinion of most economists today, of whatever political stripe. Rich T. feel free to weigh in here.

[EconProf]

sdr: I bring facts to the table, you bring snark. You need to get out more. Especially regarding future trends affecting RE, not irrelevant comments that denigrate people and RE opportunities that are not in San Diego.

Scaredyclassic: You stated “…if you really believed this is Carter redux, you’d be all in gold…are you? No, you are not.”
Actually, I have $36,000 in gold, since last January. It is down from what I bought it at.

[EconProf]

Thanks Flyer for the thoughtful and well-reasoned comments.
I think we can all agree that the real estate price boom occurring most everywhere is due largely to the artificially, and I might add, temporarily low interest rates. Given recent inflation numbers, this cannot last, as history sadly shows. The parallels between Biden and Fed chairman Powell and President Carter and Fed Chairman Arthur Burns are uncanny. The stagflation that followed those two lasted for years.

[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.

[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”.

[Author]

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