San Diego drastically outperforms Bay and LA on rents

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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 Coronita on July 11, 2021 - 7:47pm.

who is Dr Housing Bubble?

Submitted by sdrealtor on July 11, 2021 - 11:16pm.

He has a blog. Back in 2005/6 when I first started looking for places to talk to people about what I perceived to be a bubble it was the first thing I saw. I tried to talk to people intelligently but because I used sdrealtor as my username all they did was attack me and discredit what I was trying to say. Back then they saw what was obvious to everyone but when I tried to get down into the weeds with them about different markets they were doom and gloomers who expected to buy oceanfront homes for $250K at the bottom. I realized it was pointless and went looking again. Thats when i first found this place

Submitted by gzz on July 12, 2021 - 11:25am.

When I made my first purchase in 2011, and lending was ultra tight, I was able to get a great rate and conforming loan with 5% down. And I was told I could even go a little lower. (I was prepared to put down 10-20%, but the 5% down made more sense.) FHA has long been 3%.

The difference between 3% and 0% isn't nothing, but a full-doc loan with good income, I don't see what the big deal is. The big problem with mortgage in the bubble was no-doc liar loans and the various flavors of negative amortization mortgages.

Submitted by Coronita on July 12, 2021 - 11:35am.

sdrealtor wrote:
He has a blog. Back in 2005/6 when I first started looking for places to talk to people about what I perceived to be a bubble it was the first thing I saw. I tried to talk to people intelligently but because I used sdrealtor as my username all they did was attack me and discredit what I was trying to say. Back then they saw what was obvious to everyone but when I tried to get down into the weeds with them about different markets they were doom and gloomers who expected to buy oceanfront homes for $250K at the bottom. I realized it was pointless and went looking again. Thats when i first found this place

Oh yeah, now I remember... $250k 4/4 del mar houses... ha ha ha

Submitted by sdrealtor on July 12, 2021 - 1:45pm.

I remember debating with a permabear here who left long ago about this parcel. He was convinced he was gonna buy it for $500k when all hell broke loose and I laughed at him.

https://goo.gl/maps/nFyPvo1LDyCBvW9u7

Part of it was developed into 9 new homes a few years ago. IIRC they started around $2m each. One recently resold close to $4m

Submitted by gzz on July 13, 2021 - 11:28am.

I haven't been to Dr. HB in 5+ years.

He's pretty good still. I liked this comment I saw there:

I work in tech and my co-workers who moved to CA and now rent an apartment in CA are:
1) New college grads who were offered an enormous salary out of college.
2) Not married so they rent a one bedroom apartment.
3) They didn’t even have enough stuff to rent a Uhaul. I saw pictures of new hire who had packed his entire worldly possessions into his Toyota for the move.

The enormous salary is not enough to buy a house yet, but it comfortably rents a one bedroom apartment near the beach. You are only young once.

If they stay, gain experience, and job hop for higher salaries, then they may at least qualify to buy a house.

To buy a house in CA since the late 1980’s, a buyer has had to stretch and live frugally. This is not a new thing but it seems to me that more stretching is going on today than ever before.

Historically, if you stretched and purchased a house in the 1990’s and lived very frugally for 15 years, you are likely OK now. Actually, you are probably a millionaire with all of your equity tied up in the house. If you still live there, it would be hard to move to a cold/hot strange place that isn’t close to the beach.

If you rented for the entire time, you are likely poor and have to move due to rising rents.

I went to high school in S. CA in the 1980s. All of my classmate’s parents who purchased a house in the 70’s and 80’s are still there and aging in-place. The parents who rented in the 80’s have long moved away to cheaper places.

If I was just married, in my 30’s, wanted kids, and had no college education and flipped burgers for a living, I would leave also to somewhere where I could qualify for a house.

Submitted by sdrealtor on July 13, 2021 - 1:21pm.

Ive seen that happen countless times since the mid 90's. To some degree it is my life story also

Submitted by EconProf on July 14, 2021 - 6:19am.

Allow me to get back to the original theme of this thread: rent trends in various US cities, in which San Diego fares better than LA or the Bay area.
A closer look at the location of the the cities with the biggest rent growth shows them to be immediately outside of the three west coast states: Phoenix, Tucson, Las Vegas, the various cities of Idaho, Utah, Montana. One odd exception to this rule is Santa Ana. Another is Spokane, perhaps escapees from Seattle who want to stay in a zero income tax state.
Is this not more evidence that people are leaving the high cost, poorly governed locations for a lower cost of housing (and everything else), lower taxes, and, dare I say it, lifestyle?
The fact that San Diego rents are doing better than LA and San Francisco may simply mean that we are the lease crappy CA city left.

Submitted by sdrealtor on July 14, 2021 - 9:22am.

It simply means two things. One work from home now allows people to live anywhere rather than being tied to a physical location and says nothing about politics. Two you won't let an opportunity pass to kick the place that provided you everything you've got on the way out.

BTW, when you look at rents in previously unlovable places with little rent demand and small populations a small increase in demand can have an outsized impacts on the stats.

Rent going from $500 to $600 is 20%. Rent going from $3000 to $3500 is less than 20% but a case isn't hard to make its a hotter better rental market

And SD / Orange County population dwarves the combined population of Utah, Idaho and Montana combined

Submitted by sdrealtor on July 14, 2021 - 1:47pm.

Was out on broker caravan today in my hood. Struck up a conversation with a buyer looking at the house. Moving down from Silicon Valley with family. He is also bringing his Fintech company and his employees. And he is hiring. I asked him why not move to Utah or Idaho? He laughed. I laughed.

Submitted by gzz on July 14, 2021 - 2:17pm.

The Western USA has had faster population and economic growth than the rest since the Mexican Cession.

California has been such a success that it has become as expensive or more so than the ancient centers of civilization and commerce like Peking, Paris, London, and Rome.

Some people want to be as close to the center of the action as they can, others as far away as they can.

I feel SD is the happy and blessed middle, as do millions of others who live here or would do so in a heartbeat if they had the money.

One reason I like OB is that I don't have to choose between walkable, bike-friendly, and car-friendly. It's all three, with mild clean ocean breezes 99.5% of the time.

The "compromises" I make are a pittance compared to the benefits. The places you say are "well run" are monotonous and living there is a far bigger compromise.

Submitted by EconProf on July 14, 2021 - 4:33pm.

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".

Submitted by EconProf on July 14, 2021 - 4:45pm.

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.

Submitted by flyer on July 14, 2021 - 5:58pm.

Having been in real estate for many years, we have seen just about every cycle imaginable. Previous generations of the family, among other things, spent their time hauling water from downtown by wagon to build their housing developments around town. They felt they had found their paradise, and they were going to make the most of it.

Fast forward a hundred years or so, it's extremely interesting to watch the current incarnation that is pushing our property and rental values through the roof, thanks to the good folks who are just now discovering our beautiful San Diego.

edit: EP, just read your comments, and completely understand where you're coming from, and yes, I agree having homes in more tax friendly states is a good idea. That said, we'll continue to live much of the time in CA, regardless of what the future holds, but for many, we also understand that may not be an option. Hopefully, everyone will find their own paradise and be happy with the choices they've made.

Submitted by EconProf on July 14, 2021 - 6:34pm.

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.

Submitted by Coronita on July 14, 2021 - 6:36pm.

N57

BINGO!

Submitted by sdrealtor on July 15, 2021 - 12:01am.

EconProf wrote:
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".

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

Submitted by sdrealtor on July 14, 2021 - 11:27pm.

EconProf wrote:
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.

Straw man. Never said you should feel guilty about leaving.

CA gave you what you have. No need to throw it under the bus.

Be grateful for what this wonderful state gave you. Respect the greatness it represents. Better opportunities? lol! Go and enjoy your life with your family.

Submitted by scaredyclassic on July 15, 2021 - 6:21am.

sdrealtor wrote:
EconProf wrote:
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.

Straw man. Never said you should feel guilty about leaving.

CA gave you what you have. No need to throw it under the bus.

Be grateful for what this wonderful state gave you. Respect the greatness it represents. Better opportunities? lol! Go and enjoy your life with your family.

I think I might have said you should feel guilty.

You benefit from a state and a gubmint jerb that makes you millions, then paying a few percent back a year just on your income is unbearable. Kinda like taking the money and running.

Even if this time is Carter esque, Carter lasted like 3.7 years. Then the glory days of Reagan deficit spending came, plus Iran Contra funding and atlrggggghhhh...

3.7 years of Carter less once you consider w campaigning a and lame sickness, the term is over almost as soon as it starts., And the beginning of a term carries in on the wave of the predecessor. So really your complaining about ford, or the first few years of Reagan's term. That's a microscopic timespan for an investor.

But economic history does not repeat itself that precisely anyway , and if you really believed this is Carter redux you'd be all in on gold, which went up 600 percent in 4 years. Are you? No, you are not. Maybe you have 7.5 perc gold in your portfolio, max. So no, you do not even really believe this is
Carter part 2.

Instead you believe we are doomed because Biden is president. Jesus. I need to move to the people's republic of urlington ... Or get off the internet ....

I feel like an idiotic idealistic college student arguing with a smirky old professor. I need to not be this way.

Submitted by XBoxBoy on July 15, 2021 - 7:03am.

EconProf wrote:
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.

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.

Submitted by EconProf on July 15, 2021 - 7:16am.

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.

Submitted by scaredyclassic on July 15, 2021 - 7:31am.

if 36,000 is a substantial part of your portfolio, then you'll probably get a tax credit in ca. taxes are the least of your worries.

Submitted by XBoxBoy on July 15, 2021 - 7:44am.

EconProf wrote:
sdr: I bring facts to the table,

Oh the irony!!!

Submitted by EconProf on July 15, 2021 - 7:51am.

XBoxBoy wrote:
EconProf wrote:
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.

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.

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.

Submitted by XBoxBoy on July 15, 2021 - 8:07am.

EconProf wrote:
Your history is largely correct, but it does not relate to what I said.

Oh yes it does! You said:

EconProf wrote:

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.

Which clearly establishes a relationship between Carter and Burns. And clearly implies that Carter and Burns were the cause/precedent that lead to years of stagflation.

Now you want to back track and say you were referring to the economic conditions and policies, not the people. There's a name for what you're doing. It's called gaslighting and I for one am not buying it.

Submitted by scaredyclassic on July 15, 2021 - 8:10am.

XBoxBoy wrote:
EconProf wrote:
Your history is largely correct, but it does not relate to what I said.

Oh yes it does! You said:

EconProf wrote:

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.

Which clearly establishes a relationship between Carter and Burns. And clearly implies that Carter and Burns were the cause/precedent that lead to years of stagflation.

Now you want to back track and say you were referring to the economic conditions and policies, not the people. There's a name for what you're doing. It's called gaslighting and I for one am not buying it.

I fucking hate republicans. Don't get me wrong, I also hate democrats. But I can't fucking stand republicans.

Submitted by sdrealtor on July 15, 2021 - 8:48am.

XBoxBoy wrote:
EconProf wrote:
Your history is largely correct, but it does not relate to what I said.

Oh yes it does! You said:

EconProf wrote:

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.

Which clearly establishes a relationship between Carter and Burns. And clearly implies that Carter and Burns were the cause/precedent that lead to years of stagflation.

Now you want to back track and say you were referring to the economic conditions and policies, not the people. There's a name for what you're doing. It's called gaslighting and I for one am not buying it.

Thanks and for lack of a better word. BINGO!

Submitted by sdrealtor on July 15, 2021 - 11:18am.

EconProf wrote:
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.

I'm taking you to task for denigrating our great state. You chose to leave clearly stated to be with family. You are using that to complain about politics You don't like. If your family didn't move there would You have moved there? Of course not! You didn't go for opportunity, You went to throw a baseball with your grandson.

You bring factless whining not facts. You bring politically slanted opinions. I've not seen data from you only nebulous claims.

The irony is you are celebrating economic growth and rapidly rising prices in St George. Won't that quickly make it unaffordable to the working class? Then what?

Submitted by sdrealtor on July 15, 2021 - 12:37pm.

Today's anecdote. House up the street in escrow. Buyers doing inspection today. Chatted up their agent. Young family with two kids moving down from L.A. Another from up north. With 12,500,000 people in the L.A. Metro I don't think they be missed up there. It doesn't require an onslaught of people moving from up there, just a small steady slow flow which shows no sign of abating any time soon.

Submitted by Coronita on July 15, 2021 - 4:49pm.

G60.

BINGO!

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