San Diego drastically outperforms Bay and LA on rents

User Forum Topic
Submitted by gzz on June 23, 2021 - 8:30am

LA City only and all of the Bay area see large rent declines.

San Diego is +7% on 1 bedrooms and +18% on two bedrooms.

https://www.apartmentguide.com/blog/apar...

Submitted by scaredyclassic on June 27, 2021 - 2:48pm.

Coronita wrote:
Escoguy wrote:
They were discussing some pretty steep assessments to get the building fixed.

Apparently there was some pushback due to the amounts 200K per unit and up.

I think there is much more to this story than many will want to come to light.

If this can happen with a 40 y.o. building then???

Are older buildings structurally sound?
What kind of maintenance program is needed to prevent this?
How to prevent condo boards from delaying needed repairs?
How will lenders react?
What will this do to insurance rates?
Is the Japanese mindset of tear down the older property more appropriate?

I don't think they will find any survivors.

balcony failures are not uncommon... But something of this magnitude, doesnt happen often.

https://www.latimes.com/local/lanow/la-me-ln-berkeley-code-violations-20150619-story.html

Thanks for this. My wife thinks I'm irrational for being terrified to go on any balcony. Now I have an explanation more rational than I'm afraid I will fling myself to my death.

Submitted by svelte on June 27, 2021 - 6:34pm.

Former maintenance man says the parking area would flood with 1-2 feet of salt water with every King Tide.

https://www.msn.com/en-us/news/world/ex-...

Submitted by sdrealtor on June 27, 2021 - 9:55pm.

The irony is all the terms he cites driving people here are even more a factor where he went and far more likely to dissipate there than here

These things take far longer than even the most pessimistic economist would predict and as they say in the long run we are all dead. He'll never see any of what he's predicting

Submitted by sdrealtor on June 27, 2021 - 10:03pm.

gzz wrote:
“ also prompted the high-earners to pick low-cost, low-tax areas ”

Citation needed.

You do sound increasingly bitter and engaging in confirmation bias reasoning to justify your decisions.

incredibly so

Submitted by sdrealtor on June 27, 2021 - 10:08pm.

svelte wrote:
scaredyclassic wrote:

What's the point of earning a lot of money if you have to live in a crap location.

Doesn't have to be a crap location, you can probably get a condo in Surfside, FL pretty cheap about now.

It was never very expensive. The uncle of my best friend growing up owned a small motel two blocks north from where that building was. We spent a month there senior year in high school and a few other times. I know that area very well. Bunch of old condos that were old when I was in high school.

Submitted by Coronita on June 27, 2021 - 10:56pm.

B29...

Dang... im on a roll.

BINGO!

Come on, its pretty fun... join in and its easy.

create your own bingo board.

https://bingobaker.com/

Submitted by sdrealtor on June 27, 2021 - 11:24pm.

N32!

Submitted by svelte on June 28, 2021 - 10:23am.

sdrealtor wrote:
Bunch of old condos that were old when I was in high school.

Well Champlain South wasn't old when you were in HS.

Champlain South was built in 1982.

Let's say you're 40. You were in high school 1994-98. Champlain South was 12-16 years old at that time.

Submitted by Coronita on June 28, 2021 - 10:50am.

sdrealtor wrote:
N32!

BINGO AGAIN!

Submitted by sdrealtor on June 28, 2021 - 12:29pm.

svelte wrote:
sdrealtor wrote:
Bunch of old condos that were old when I was in high school.

Well Champlain South wasn't old when you were in HS.

Champlain South was built in 1982.

Let's say you're 40. You were in high school 1994-98. Champlain South was 12-16 years old at that time.

Class of 81! I was speaking to the general area. They are always adding and rebuilding but the core of that area is old school condos.

Note, my friends uncle sold the old Sea Patio motel years ago and its now an orthodox synagogue.

Submitted by gzz on June 28, 2021 - 6:31pm.

That penthouse is beautiful, love the marble floors and bathroom designs.

The kitchen screams 2007-ish renovation, but is perfectly nice. Funny how a million year old stone can look 15 years out of date, but about 6 colors of granite got way overused during the bubble.

I think the current trendy solid white quartz looks like an apple store or biotech clean room and will age badly as a matter of style.

If I had to do a reno I’d use forest green countertops and classic colors of marble and travertine for bathrooms. Travertine looks amazing as flooring but isn’t strong enough and requires a lot of small patching. It is great on walls however.

Submitted by gzz on July 9, 2021 - 3:31pm.

Another article on SD rents. This one says we are 10% YoY and beating both CA and USA figures.

https://timesofsandiego.com/business/202...

Submitted by gzz on July 9, 2021 - 5:35pm.

Metro Dallas prices are up 25% YoY and inventory down 67%.

https://ntreis.net/download/may-2021-mon...

While a big outperformance of national prices would feel good, a national boom is more sustainable and lets our prices grow without hurting our competitiveness.

Longer term, I think Prop 13 and the lack of developable land make SD a better investment than places like Dallas and St George. At some point construction parts and labor will get more reasonable and housing prices there will decline to marginal cost + a fairly small location premium.

Submitted by EconProf on July 10, 2021 - 9:03am.

gzz wrote:
Metro Dallas prices are up 25% YoY and inventory down 67%.

https://ntreis.net/download/may-2021-mon...

While a big outperformance of national prices would feel good, a national boom is more sustainable and lets our prices grow without hurting our competitiveness.

Longer term, I think Prop 13 and the lack of developable land make SD a better investment than places like Dallas and St George. At some point construction parts and labor will get more reasonable and housing prices there will decline to marginal cost + a fairly small location premium.

I agree with you that the lack of developable land in San Diego raises prices and rents. Add to that the influx of people from the even worse-run cities in the Bay area and LA, and San Diego prices and rent will benefit. But San Diego is tied to CA, which competes for worst-run state with the likes of New York, Illinois, New Jersey, etc. For years, CA ranks as most business-unfriendly, highest percentage of people in poverty (despite lavish welfare programs), and is tied with NY for highest taxes. Example: We have, by far, the highest gas tax and are tied with Rhode Island for worst roads in the US.
So as the new exodus from CA (Census Bureau) continues, San Diego will always have its ocean, mountains, and weather to benefit real estate investors. But these benefits could be outweighed by other factors. People can vote with their feet.

Submitted by sdrealtor on July 10, 2021 - 9:12am.

Friend left NYC /brooklyn for Dallas. House was supposed to be ready in February. He moved into his new McMansion two weeks ago.

Submitted by sdrealtor on July 10, 2021 - 9:46am.

EconProf wrote:
gzz wrote:
Metro Dallas prices are up 25% YoY and inventory down 67%.

https://ntreis.net/download/may-2021-mon...

While a big outperformance of national prices would feel good, a national boom is more sustainable and lets our prices grow without hurting our competitiveness.

Longer term, I think Prop 13 and the lack of developable land make SD a better investment than places like Dallas and St George. At some point construction parts and labor will get more reasonable and housing prices there will decline to marginal cost + a fairly small location premium.

I agree with you that the lack of developable land in San Diego raises prices and rents. Add to that the influx of people from the even worse-run cities in the Bay area and LA, and San Diego prices and rent will benefit. But San Diego is tied to CA, which competes for worst-run state with the likes of New York, Illinois, New Jersey, etc. For years, CA ranks as most business-unfriendly, highest percentage of people in poverty (despite lavish welfare programs), and is tied with NY for highest taxes. Example: We have, by far, the highest gas tax and are tied with Rhode Island for worst roads in the US.
So as the new exodus from CA (Census Bureau) continues, San Diego will always have its ocean, mountains, and weather to benefit real estate investors. But these benefits could be outweighed by other factors. People can vote with their feet.

People vote with their lifestyles. Check back in with us after five years of empty staring at the same desolate mountains and landscape

Submitted by EconProf on July 10, 2021 - 10:00am.

sdr, I totally agree with you. Regarding lifestyle, it is totally different in St. George, which is what is attracting people from CA. So it is not only the cost of living (perhaps half or two-thirds that of San Diego), it is the lifestyle as well.
And those darned mountains to look at. Always the same. Except they are snow-capped in the winter. So boring.
BTW, why did your friend move from NYC to Dallas (your previous post)?

Submitted by Coronita on July 10, 2021 - 10:06am.
Submitted by Escoguy on July 10, 2021 - 11:19am.

Coronita wrote:
http://coa.washco.utah.gov/st-george/activities/games/

G48...

BINGO!

The seven hour jigsaw sessions are clearly the best bang for the buck!

Submitted by gzz on July 10, 2021 - 3:03pm.

I would think an EconProf would be proud that CA wasn't afraid to implement an unpopular pigovian tax on gas. I want it to be even higher personally so people switch to less polluting transport, and we stop the awful arms race of bigger and bigger vehicles to see over and feel safe around the other bigger and bigger vehicles.

Our income tax on the other hand I would like to see cut. May happen given how big the surplus is, $70 billion!

What specific "lavish welfare" program is it you think California has? California was late to mostly abolish its state cash welfare program, called general assistance. But in nearly every county it is gone, and it wasn't lavish.

The main welfare programs in the USA right now are medicaid and SSDI/SSI, which are mostly and entirely federal funding.

Submitted by sdrealtor on July 10, 2021 - 5:57pm.

He moved for better weather, a nicer bigger home for his family and I think he was also tired of the crowds in NYC and lower taxes. In case you are wondering he doesn't care about politics only money. I know he hated Trump because his stupid trade wars and tariffs that did not work and cost them millions.

Submitted by flyer on July 11, 2021 - 7:18am.

We've seen various people move out of CA and other locations for various reasons--finances, kids can't afford to buy a home, family ties, politics--etc., etc.

In EP's case, he and his family lived the good life in CA for more years than most people ever will, so I don't think he should have any regrets about his move at this point in time. He's been here, done that.

Now, for those who need, or say they choose to leave, or check out permanently in their 30's, 40's or 50's--the good life was cut short-- so, no matter how they rationalize, they might, if they're honest with themselves, still have regrets--if, in fact, they're still among the living.

Personally, we, including extended family, would never be interested in leaving CA completely, for any reason, but if it works for others, hopefully, they'll be happy with their choices.

Submitted by sdrealtor on July 11, 2021 - 9:34am.

Of course no regrets but stop with the CA bashing. He probably owes everything he has to this great place. Take your money and quit whining

Submitted by EconProf on July 11, 2021 - 1:11pm.

sdrealtor wrote:
Of course no regrets but stop with the CA bashing. He probably owes everything he has to this great place. Take your money and quit whining

Once again sdr, you misinterpret my message. In comparing housing costs, living expenses, quality of government vs. taxes paid in CA vs. the states people are moving toward is, in your words, "California bashing", I call it bringing facts to the table. Sorry if that offends you.
Based on your Piggington entries, you move in a fairly select group of buyers and sellers of mostly high-end, coastal properties. The wealthy will usually pick a La Jolla over a Scottsdale, but the working class, those with growing families, children they want in school, renters who want their own house and yard, etc., will increasingly learn the facts and make the move.

Submitted by Coronita on July 11, 2021 - 1:34pm.

G40

BINGO!

Submitted by flyer on July 11, 2021 - 1:45pm.

A friend forwarded this to me from Dr. Housing Bubble. I have no opinion on it one way or the other, but, I guess only time will tell if he's right, and at the very least, it's entertaining:

As Housing Prices Peak Zero Down Mortgages are Back: No Down Payment Loans Available up to $1.25 Million.

"The attention span of people is slightly above that of a cat thanks to social media platforms that rewire the brain for instant gratification, including on the financial front (think of all of the meme stocks and Robinhood). All the cheerleading that is happening for real estate is largely socialism for real estate. That is, a Fed that is pumping easy money artificially into the market to inflate prices for those that already own. So not a shocker that 2.3 million California “young adults” are living at home and many are waiting until their Taco Tuesday baby boomer parents take a dirt nap from one to many street tacos until they can inherit the home. Don’t believe this? Go read some forums and you will be surprised what this distorted market is doing to people. But don’t worry! Help is on the way. As housing prices reach a peak, our good old friend, the no down payment loan is showing up to the party with a bit more alcohol and financial meth to keep things going.

Housing History Amnesia

I know 2007 to 2009 must seem like ancient history to some. 7+ million foreclosures (with only about 1.5 to 2 million foreclosures happening due to funky loans) and the majority of people that lost their homes last time happened to those with boring traditional 30-year fixed rate mortgages. Because when you lose a job, it doesn’t really matter what kind of mortgage you have if you can’t pay the monthly nut. Today, we still have millions in forbearance and other millions of renters on moratoriums. All of this seems slated to end in the fall.

Housing is so hot that it is forecast to get hotter (because you know, momentum):

So we are still likely to see higher home prices because of this:

Wait, doesn’t economics tell us that rising demand and prices would add more supply? Yes, in a truly capitalist market. But housing humpers don’t want to admit that real estate in the US is one giant socialistic operation between banks and the Fed (and this is strictly from a non-political definition). How so? First, the market is artificially depressed – forbearances and moratoriums for example. You also have the Fed with an unlimited debt printer so interest rates are incredibly low. Then all of the tax breaks given to homeownership. So with all of that, builders are building much more rental housing because they know Millennials are deep in debt and unlikely to buy in numbers like their baby boomer parents. Also, builders do have a memory of 2007 to 2009 unlike most housing cheerleaders.

So this leads us all to zero down mortgages baby!

“(OC Register) Now, even first-time buyers without a down payment can get in on the action. That means no skin in the game — just like the good old Great Mortgage Meltdown days.

No down-payment loans are available for up to $1.25 million so long as the primary wage earner has at least a 700 middle FICO credit score.

Should you not show enough income from your day job or your self-employment income to qualify, you can document your income with bank statements, averaging the most recent 24 months of personal bank statement deposits.”

That is correct. Instead of looking at things deeper for the causes, we are trying to juice this party even more. It is worth noting that lenders are competing for the razor thin inventory sales so guess what? Now that zero down is back in the market other creative instruments are only a short duration away.

And you are seeing booms and busts again. Bitcoin hit close to $65,000 this year – it is now down to $33,000. This isn’t some meme play here. This is an asset class valued at $626 billion (was over $1 trillion). Or to frame it differently, Bitcoin at its peak was valued at the total auto debt market of the US.

So going back to housing, zero down is back. Lenders are getting more creative because capital is cheap. But what happens when all of the Fed juice starts slowing down in fall? This time is different of course. In one year, the median home price in LA (with a major homelessness crisis) will be $1 million because you know, this time is truly different!"

Submitted by sdrealtor on July 11, 2021 - 3:21pm.

EconProf wrote:
sdrealtor wrote:
Of course no regrets but stop with the CA bashing. He probably owes everything he has to this great place. Take your money and quit whining

Once again sdr, you misinterpret my message. In comparing housing costs, living expenses, quality of government vs. taxes paid in CA vs. the states people are moving toward is, in your words, "California bashing", I call it bringing facts to the table. Sorry if that offends you.
Based on your Piggington entries, you move in a fairly select group of buyers and sellers of mostly high-end, coastal properties. The wealthy will usually pick a La Jolla over a Scottsdale, but the working class, those with growing families, children they want in school, renters who want their own house and yard, etc., will increasingly learn the facts and make the move.

Once again you are wrong. I work all over at all levels.

You made money here you never would have made in any other state. This is the Golden State for a reason. The best and brightest aspire to be here and flock here. The great advances happen here while you are gonna ride out your California winnings playing bingo and doing crossword puzzles. The demise of this great state has been incorrectly predicted fur decades. You economists have accurately predicted 55 of the last 8 recessions. Enjoy your life in quiet Utah with franchise restaurants and no real ethnicity or diversity which is the secret sauce on the world's prosperity.

The great irony is you just moved to a massive welfare state with little private industry. Look at the top employers where you just moved. Almost all public sector. Far worse than here with the lowest school funding in the country. It's a good thing you brought California money

G56!

Submitted by sdrealtor on July 11, 2021 - 3:15pm.

Dr Housing Bubble is a doomer that was mostly wrong. He's trying to be relevant again. He's almost as bad as Mark Hanson

Submitted by Coronita on July 11, 2021 - 3:50pm.

Wait, did I hear G56????

BINGO!!!!

Submitted by flyer on July 11, 2021 - 4:08pm.

Good to know wrt Dr. Bubble. Still, he does have a way with words.

We could never leave CA, since, as you mentioned, we also enjoy being in the thick of things with real estate and the entertainment industry.

As the article below references, my wife is involved in more productions than ever, since Hollywood is back, baby! The streaming services have become Hollywood gold.

Both industries are cyclical, but it's fun to ride the wave while you can--as long as you also plan for the inevitable downside.

With Hollywood Production in Overdrive, the Soundstage Is a Hot Commodity

"The surge in new movies and TV shows has touched off a scramble for places to film. Empty office space, abandoned malls and even a shuttered Sears store—apparently all the world really is a stage.

There is one going up in Buffalo, and another planned for Missoula. The South Side of Chicago is getting one, and so are Seattle and Spokane. Oklahoma City just opened one, and Los Angeles is getting at least a half-dozen more.

In cities large and small, developers are building cavernous soundstages, rushing to fill a voracious demand for the space needed to make movies and TV shows. A scramble by studios and tech giants for programming to keep their streaming platforms fresh has touched off a building bonanza unlike any seen since the early days of the entertainment industry. Even abandoned malls are being eyed for the job.

“Developers are salivating,” said Tima Bell, a principal at Relativity Architects, a California-based firm. His team is building a soundstage in Canada and an entire campus in Atlanta—while also moving toward construction of six in Los Angeles. Approximately half of those sites were initially designated to be warehouses before investors pivoted toward soundstage use in the past year.

The capacity crunch is the result of a yearslong surge in production, but the stay-at-home orders that kept many people out of the office over the past year and a half increased the demand for content and kicked Hollywood into overdrive. The industry is now spending tens of billions of dollars to maintain a constant flow of movies and TV shows to keep subscribers hooked."

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.