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Josh, agree that is a key graph.

The other key is long term bond rates. They impact affordability on one hand, and also show what an alternative use of money earns.

7% mortgage rates and a safe 6% treasury bond return produce a very different real estate market than 4%/3%, even if rents are the same.

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“It seems all builders are going for these days are 5/4 3500sqft mcmansions.”

It doesn’t cost a lot more to add that extra 1000sf, so they do it everywhere.

That is one reason I prefer older areas of San Diego, it feels a little claustrophobic in the new areas that are basically suburban, but every single house is built to the absolute max SF and lot coverage.

So with that bias, if you want something newer and without any additions, the old suburbs like La Mesa, San Carlos, and Tierrasanta.

The remodel on this one looks very well done. The outside says Brady Bunch, the inside is modern and cozy, though the staging furniture looks kind of ugly and uncomfortable. I wouldn’t want to sit on a single one of those chairs.

https://www.sdlookup.com/MLS-180041510-6760_Maury_Dr_San_Diego_CA_92119

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Ahhh the young generation with their high sq footage requirements!

My childhood homes were all 4/2.5 2000sf and seemed like plenty of space for 2 adults and 3 kids.

TVs and PCs are also smaller now, making living rooms and study areas less bulky. Those first PCs had 60 lb CRT monitors, external disk drives, external modem, space around everything to ventilate the heat, cords everywhere.

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Congratulations on the babies and saving up the down payment.

If you have a 700k budget and have La Jolla/Downtown commutes, Claremont seems a much better option. Here’s a 1700sf 4/2:

https://www.sdlookup.com/MLS-180038635-5243_Dante_St_San_Diego_CA_92117

Here’s a newer 2000sf 4/3 for $829k:

https://www.sdlookup.com/MLS-180037506-4904_Cannington_Dr_San_Diego_CA_92117

Escondido may have mello roos and HOA so $829 in claremont might have the same payments as $729 in new developments.

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EJ raises a good point that is not limited to STVR. Which is that small local landlords are better for a community than large out-of-state ones.

As with STVR, I would just make our taxes reflect this, and make the annual tax the city has on long-term rentals much higher, but also waive it on the first two units owned.

So someone with two rentals would see their tax paid go from maybe $100 to $0, but someone with 100 would see it go from $5000 to $50,000.

This is a double effect on reducing inequality. The first reason is that it benefits us minor landowners at the expensive of the very wealthy. But the other reason is that large out-of-state landlords tend to squeeze every last penny out of their tenants, often using dubious means like stealing security deposits. It is lot easier to screw over tenants when you have never met them.

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Now if I did want to restrict AirBNB, I would just raise the hotel tax on them even higher. At some point, the tax will be high enough people will stop converting them to STVR. If there are 10,000 in the city now at the current hotel tax, raise it to 20% and that might cut the number down to 5,000.

In general taxes are the best way to deter behavior than command-and-control regulations that ban it completely in some cases, while providing a windfall to those still allowed to do it. That’s what the city did. If you have a granny flat in your primary residence beach house, you now can make a mint as one of the few options a tourist will see when looking for a STVR.

Or more likely, the law will be selectively enforced.

These are all a lot worse than just letting people know there is a certain tax up front and they can make their own decisions.

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I do not see any need to pass additional laws to regulate STVRs. As Flyer said, if there are noise problems, enforce noise laws.

STVR are already subject to a huge hotel tax.

Think of the numbers here for a basic 1/1 condo in OB:

Annual rent on long-term lease: $20,000
City revenue from that rent: 0
Average sales tax per day from resident living there: $30*7%= about $2 or about $700/year.
Total city taxes collected: $700/year

AirBNB: Annual rent $90/day off seasons $150/day on season = $40,000
Hotel tax = $5,000
Sales tax on $80 a day in visitor spending = $2000

Total city revenue from AirBNB $7000/year

I may be off a little on some of these estimates, but I doubt it is that much. The city collects about 10 times more in taxes from an AirBNB then a rented condo, and this is only the direct economic effect.

This AirBNB is going to have to be made up one way or another. How much in extra taxes or cut city services are you willing to deal with to ban AirBNB?

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EJ, I am a long term resident of OB, moved not too long after college, and my rental properties there both have the same tenants for years. I tried to do a vacation rental right after purchasing one of them, this lasted like 3 months, and I definitely will not do so again.

There are a small number of AirBNBs on my street, and I have never had the slightest problem with them, not with noise, parking, or any other issue. If I did, I would address the owner of the property, not try to take away rights of every property owner in San Diego.

I also lived next to a vacation rental cottage in the mid 2000s. Again, never had the slightest problem, and had some lovely conversations with people visiting from all over Europe and Asia.

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I find that 44% figure very hard to believe.

Just checked craigslist, and only 5 of the 31 MB listings were 12-month leases. And of course full-time AirBNBs would not be on craigslist.

To put it another way, do you know a single person who is a long-term full-time MB resident, either as an owner or a renter? I have never met such a person in many years in San Diego, and I live nearby in OB and am social. You’d probably have to go back to the 70s or 80s to find many such people.

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Flyer, if you rented your places on 12-month leases and used your additional time to work in the labor force, would you have a lower income?

I briefly tried doing short term furnished vacation rentals, and concluded the extra time it took me was not worth the extra income. Not even close.

If you are especially good at marketing, hospitality, and contractor management, and also like it, then sure. By that isn’t most people with 1 or 2 rental properties. And the original poster appeared to have little to no experience in property management.

Really if you have an extra SFH worth 1.6M, you are probably best off selling it unless you have some awesome low tax assessment/mortgage locked in you don’t want to lose. Few 1.6m SFH are renter-occupied for a reason.

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The rate increases give the fed plenty of ammo if the economy starts to cool. What would the local market look like if 30-year rates were 3.25% again?

I don’t see a trade war. China and EU will swallow their pride and give Trump a win.

China needs their trade with the USA more than vice versa. We export them a small amount of key goods plus ag stables. China however exports products that are also made elsewhere in Asia, and if it loses market share it may never come back, especially if it loses share to lower cost places like Vietnam.

China’s government really does not want mass factory layoffs + large increase in the price of US soy, pork, beef, and grain.

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Those are more than reasonable rates, they are awesome for 30 year mortgages.

Some suggestions:

1. Silver has a kind of peak oil issue. It is used more and more in electronics, especially batteries and solar panels, but mining costs keep going up and the good mines with low production costs are gone or getting low. The recent fall below $16/oz I think makes a good entry point. It hit 50 a few years ago, and adjusted for inflation, it was 150 in 1981. If you have a long time horizon, buy now, hold for the next spike. Might be a 20 year wait, but I think about 10 years is more likely, and also reflects the time between the two prior price spikes. But it is hard to see it getting much lower simply because few mines can produce it at current prices.

2. There is a special kind of muni bond that are not tax free, most of them are called “build america bonds.” I think they represent a great balance of strong returns and low risk, and they pay out cash monthly. The one I have owned for many years has the ticker BBN and pays 6.5% per year.

https://www.morningstar.com/cefs/xnys/bbn/quote.html

Even when the market crashed about a decade ago, it only went down to 17.3.

3. I think US stocks are in general fairly valued. If I had to buy more and was being conservative, I’d get VZ and T. The market is getting less competitive, and nobody is going to go without their cell phone.

4. San Diego real estate is hardly a steal now, but as long as the rent covers the taxes, mortgage interest, HOA, and insurance, you’ll do fine. Rents should keep going up, incomes should keep going up, China is getting richer but their rich still prefer safe, unpolluted and free California, but your costs will only go down as the mortgage balance goes down and each payment goes more toward principle.

I love that my investment properties’ rents more than covered the entire mortgage/escrow payment on day 1. However, it is still a profitable investment if your mortgage balance falls by 500 a month but you need to throw in 100 of your own money on top of rent to pay it. Wait a year or two and it goes cash neutral, then another couple years and it cash flows, and then just keeps getting better until paid off and the much higher rent is almost all profit.

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The version that passed yesterday was even worse than the Mayor’s proposal I opposed. From what I can tell, vacation rentals are completely banned from the city unless it is someone’s primary residence or a secondary unit on the parcel.

So I guess all of Mission Beach will have to be converted to long-term rentals since there are very few people with primary residences there.

Laws like this show the downside of term limits. I am sure the law will be held up for years in litigation, but if it ever takes effect, the giant job loss and giant hole it blows in the city’s budget will be someone else’s problem.

Losing short-term accommodations of 40,000 units probably holding 100,000 people could cause San Diego hotel rates to skyrocket and cause us to lose ComicCon and other major events. Normal summer rates in San Diego right now, not on special event days, are already $150 a night at Motel 6 type places.

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Flyer, I learned Spanish when I was 17-18 by taking 6 months of immersion in Mexico and living with a Mexican family. It was great, and my school is still operating almost 20 years later with some of the same staff.

They can set you up in a program with 3-4 hours a day of private lessons + 1-2 more of group lessons, and live with a local family that cooks for you three times a day, for a very reasonable price.

It was about $600 a month all in in late 90’s prices, I’d guess more like $1200-1500 for a month now.

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That’s just another form of privatize the profits and socialize the losses.

Josh, owner-occupiers and long-term rentals generate very little revenue for San Diego. Many cities try to stop new residential development in favor of commercial, because at least they get sales taxes that way.

Vacation rentals however generate a ton of money from the hotel tax. A $150/night AirBNB will pay about $5500 a year in hotel taxes. And visitors also spend a lot more per day than locals, so more sales tax there too.

Flyer, for a zoning restriction to become a government taking, it needs to almost completely destroy the value of a land. They are very hard cases to win.

I agree with you that a mix of small scale commercial inside residential zones is best for people’s health, for the environment, and for long-term property values. Overall central and coastal San Diego does a good job with mixing them together. I would not like living in a suburb where there are nothing but houses and maybe a small school within a 3-mile easy walk range.

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