Since the last update in July, prices have shambled a small distance towards affordability, and monthly payments an even smaller distance.
I continue to think that the most likely scenario is for prices to kind of go nowhere for a while as rents/incomes/inflation catch up, allowing the blue lines in the above graphs to return to more historically normal levels. (More nuance on this view can be found in the previous installment).
It’s worth mentioning the potential effects of the terrible LA fires. It’s possible they will goose demand here, if some people who lost their houses decide to move to SD. That could slow or halt the expected return to affordability for a while, but it seems unlikely to change anything long term. It amounts to a temporary reduction of supply, which could impact pricing while it lasts, but which will be reversed once those homes are rebuilt.
Thanks Rich,
Just want to point out that there is a chance that the LA fires could have the opposite effect and cause supply to increase if people need to move because insurance companies are refusing to cover them or because their insurance cost sky rockets… Could also have an increase of people moving just cause they want to get out of fire prone areas. I find it hard to believe that people escaping LA fire would move to SD, which is if anything, more fire prone.
Really appreciate that you still make these updates!!!
Thanks… good point on fire prone areas. Some of them may get out of SoCal altogether for sure. I’m not sure I understand your first point — are you saying that the owners will just have to leave that area altogether, but the houses will be rebuilt, resulting in higher supply vs. population at that point?
First point is that this disaster is just going to increase the flight of insurance companies from California, especially Southern California. Maybe some of those that cant get insurance or have to pay exorbitant amounts to renew their insurance will just leave. I know that this is already happening where sales are dropping out of contract because the prospective buyers cant get/afford the insurance.
Where did you get your data on SD being more fire prone? All the risk assessments Ive seen place SD lower than LA county. People are certainly going to migrate from higher to lower risk areas, which means more folks coming into SD from other parts of Cali. Just like when SF bay folks moved down here during Covid, this time will be climate events driving folks down here from LA.
Where are you getting info that it is less? Almost all of San Diego is a very high fire hazard area see:
https://experience.arcgis.com/experience/03beab8511814e79a0e4eabf0d3e7247/
https://www.sandiego.gov/fire/services/brush/severityzones
vs LA where its just the edges of the city
https://egis-lacounty.hub.arcgis.com/datasets/lacounty::fire-hazard-severity-zones/explore?location=34.345254%2C-117.861826%2C7.72
. Also just anecdotally, the climate of LA and San Diego are basically the same but the terrain of San Diego is way more conducive to wild fires affecting more of the city… In LA there is a massive urban sprawl vs canyons and chaparral open areas all over the place in San Diego. This why most of LA proper is not a fire hazard area but a very high proportion of San Diego proper is…
The idea of people moving from LA (or other parts of the state) to San Diego to escape wild fire risk is laughable in my opinion… 2 of the top 10 most destructive fires in California history were in San Diego.
Um, those links are just maps without any quantitative comparison of LA vs SD county…
If you actually look for a comparison, you’ll quickly see that LA county is higher risk than SD.
https://www.axios.com/local/san-diego/2025/01/10/california-insurance-wildfire-floor-insurance-risk-fair-plan
Um, what are u talking about? Those are literal government organizations risk categorization for the area, which insurance companies base their rates off of. Are you sure the maps loaded for you? Ill attach here just in case they didnt… Red equals the government designates that zone as a “Very High Fire Hazard Severity Zone” for San Diego map, blue for the LA map. Notice how it confirms my “… In LA there is a massive urban sprawl vs canyons and chaparral open areas all over the place in San Diego. This why most of LA proper is not a fire hazard area but a very high proportion of San Diego proper is…” statement
That Axios article you shared is literally just some random peoples “Estimated; Because of wildfire, wind or flood”. I can find an article in 5 seconds that shows San Diego having higher rates on non-renewal than LA… https://www.sfchronicle.com/california/article/home-insurance-nonrenewal-rates-19988913.php
Are you a recent transplant? That’s the only way I can understand this POV on you thinking San Diego is more fire resistant than LA… Its been relatively quiet the last few years fire wise in San Diego, but that was NOT the norm from 2000-2015…
https://ktla.com/news/local-news/data-los-angeles-county-is-least-prepared-county-in-america-for-climate-disasters/
since were posting random peoples opinions as well, here are a few articles that have sd county ranked higher than LA in fire danger:
https://www.govtech.com/em/preparedness/which-california-counties-are-most-at-risk-for-wildfires
https://www.sacbee.com/news/california/article286560450.html
Also note that Im not arguing that LA doesn’t have a fire risk, but the idea that people would flee LA to come to SD to escape fire risk is so out of touch that its comical
LA->SD migration trend already happening; perceived and real climate risks will simply accelerate it.
“According to a January renter migration report from Apartment List, 32% of the website’s users in the Los Angeles metro area have been looking elsewhere, searching for apartments in a different metro area. Popular destinations are noted in both Los Angeles’ Southern California contemporaries like Riverside and San Diego, but out of state metro areas like Phoenix, Seattle and Dallas were also popular searches”
https://smdp.com/news/recent-reports-reinforce-migration-trends-out-of-la-california/
“perceived and real climate risks will simply accelerate it” San Diego and LA have essentially the same climate, are literally only 100 miles apart, and have essentially the same climate risks. But whatever man, you obviously have some skin in the game or something because this argument is just… wow
at least our new AI overlord agrees
My ai’s take
You shouldn’t use those sites in my opinion. Instead, use First Street data that is imported into Redfin and other sites.
Both Pacific Palisades and Altadena were extreme risk. The site accurately reflects that risk of runaway wildfire is extremely low in San Diego, especially so west of the 805 where your links say there’s EXTREME fire risk when there isn’t. I live in clairemont and the area it says are extreme are not.
The cedar fire in 2003 made it to Kearny mesa from far out in east county in very little time, basically 24 hours, and would have made it to clairemont if the winds didn’t suddenly switch from strong santa anas to westerly. The canyons and other wide open areas like miramar(which don’t really exist in the middle of la, unlike San Diego) are why the fire risk is there
Also, I checked out the first street data and it seems to align with the government map pretty well, and also clearly shows the vast majority of LA (ie. the city core, most of san fernando valley) being less fire risk then most of San diego where its basically only right near the coast that doesnt have any risk
oops, intended to attach this screenshot which shows both maps
Sorry for the spam also but Im realizing that I dont understand how you thought first street supports that San Diego has “extremely low” fire risk:
There are 120,308 properties properties in San Diego that have some risk of being affected by wildfire over the next 30 years. This represents 44% of all properties in San Diego
There are 206,811 properties properties in Los Angeles that have some risk of being affected by wildfire over the next 30 years. This represents 30% of all properties in Los Angeles
131k/244k homes at risk in San Diego (53%)
246k/582k homes at risk in LA (42%)
this is all directly from their website…
https://firststreet.org/city/los-angeles-ca/644000_fsid/fire
https://firststreet.org/city/San-Diego/666000_fsid/fire
Thank you for the insightful analysis as usual.
I think the LA fires once again highlight the ongoing dysfunction in the home insurance market. With insurers reassessing risks from fires, floods, and hurricanes, premiums are rising sharply as events previously expected every 100 years now occur far more frequently. This is especially relevant for us in San Diego, where wildfire-prone canyons and open spaces throughout the county put many properties at higher risk. I agree with the price stagnation theory for housing, driven in part by rising insurance costs, which are actuarially supported by the major fires since 2003. If monthly insurance premiums 10x, I can see that breaking a lot of budgets.
Good points here and by bribrah above. I wasn’t thinking through the insurance aspect. Thanks for the thoughts.