Housing Statistics in San Diego
Posted on April 18th, 2005 in General, Economics by tavaresforby ||
Here are some interesting statistics on the housing prices in San Diego:
- “San Diego County’s high housing prices, coupled with its relatively low wages, make it the second least affordable area in the country, the National Association of Home Builders reported.” (San Diego Union-Tribune, 1/7/05)
- The average new detached home in San Diego County sells for $781,000, the average new condominium for $490,000 and the average condo conversion unit for $303,000. (2/28/05, San Diego Business Journal/MarketPointe Realty Advisors.)
- San Diego County’s resale single family homes are at a record high median price of $530,000; the median resale price for condos is $380,000. (SDUT/DataQuick Information Systems, 2-11-05)
- The median price of housing in San Diego doubled between 2000 and 2004, but the median household income only increased 10.4 percent. (SDUT, 10/31/04)
- Just 11 percent of households are able to purchase the median-priced home, according to the California Association of Realtors. (North County Times, 2/11/05)
- According to the National Association of Realtors, “The median price of a single-family house [in San Diego] has increased $152,700 in the last year, or $418 per day.” (SDUT, 8/31/04)
- “’San Diego’s Housing Market is one of the most inflated in the country – a detrimental factor in terms of recruiting and retaining employees,’ said Kristine Norquist, Communications Manager for the San Diego Regional Chamber of Commerce.” (The Daily Transcript, 2/18/05.)
- “’Housing prices are too high for middle-income people,’ said Larry Fitch – the president of San Diego Workforce Partnership. ‘People are now living in Tijuana and Riverside and putting stress on our roads commuting to their jobs because they can’t afford homes in San Diego, and some people are leaving the area.’” (SDBJ, 1/17/05)
- Families have to make nearly $135,000 to afford median priced homes in San Diego. In other words, the median income of San Diego households is less than half what is needed to buy a median priced home. “The monthly income needed to buy a median-priced home in San Diego County rose to $134,420, from $109,130” from December 2003 to December 2004. (NCT, 2/11/05)
- In San Diego, 29 percent of residents are considering moving out of the state because of high housing prices, according to the Public Policy Institute of California. (SDUT, 11/18/04)
Los Angeles housing prices are very similar.
This goes to show the basic rule of supply and demand. Many people argue that house prices are too high and that the government should step in and do something about it. Yes it is expensive and no the government should not step in and intervene. Let the economy work itself out or move to where it is more affordable. Evidently, it is affordable if people are buying property like hot cakes at their current high prices.
People also mention about a housing bubble out here in San Diego, something similar to the San Jose’s (Silicon Valley) housing bubble. I think San Diego is different. Unlike Silicon Valley, San Diego is very diverse on income where as Silicon Valley’s primary income was the technology market. I am not saying that the housing in San Diego will not go down, I am saying it will not go down by much.
April 18th, 2005 at 6:55 pm
Evidently, it is affordable if people are buying property like hot cakes at their current high prices.
Faulty logic. Look at the financing tools. Jumbo split loans? Interest only loans? ARM loans with big balloon payments, negatively amortizing loans, etc.
Financial games to get people to “afford” houses they normally would not be able to afford.
Wait about 5 years, then we will see the true impact.
April 18th, 2005 at 10:09 pm
Financial games to get people to “afford” houses they normally would not be able to afford.
The bottom line is, they can afford it.
So, if someone does not have $10,000 cash to purchase a car, does that mean they cannot afford it. No, they will finance it such that they can afford it or they will lease the car. Yes, it is all games finance companies uses to make money. That then leads to higher prices on the goods that are being financed. i.e., cars and houses.
April 19th, 2005 at 8:24 pm
The bottom line is, they can afford it.
If I buy a $6000 plasma television with a new credit card, by your logic I can afford the television. However, if I then can’t pay off the credit card, can it be said that I couldn’t afford the t.v.
In about 5 years, if the default rates of some of these financing schemes is greater than average, then it would be said that they really couldn’t afford the homes in the first place.
April 19th, 2005 at 8:38 pm
They can afford it at the interest rate they purchase the house. If they can afford the monthly note, then they can afford the home. If the average of the interest rates goes up, then the current purchasers cannot afford it, not the ones who are already locked at their current low interest rate. If they got a one or five year fix, then that is a different story. Hopefully, if they cannot afford the adjustments in interest rates, they have enough equity to sell their property. And the state that California is in now, many people won’t have a problem making profit on their property.
April 20th, 2005 at 4:15 pm
You are skirting the point. If they make the monthly payment for a little white, and then the ARM balloon payment hits and they can’t make that payment, then they can’t afford the home.
If they pay the “interest” part of the interest only loan, and then default when they have to start paying the other portion, they can’t afford the home.
April 26th, 2005 at 8:40 am
Whether it be A fixed rate or an adjustable rate mortage, fixed rate will necessarily be higher, my question is where is the responsibility of the buyer. Afterall they are the ones who have to pay the bill every month. If you get a 10/1 ARM the bank loan company can give you print out what the adjustments are going to be.
Buying a home is a huge responsibility, and I think it is sometimes taken too lightly without realizing what the buyer is getting into.
The guide line here is buyer beware. Because the loan company is going to make money thats what they are in business for and this the buyer sould know up front.
I have seen too often where buyers purchase a home, based not on their annual income but based on the amount of overtime they work. Then the low in the economy hits and the overtime drys up and these guys are in big trouble.
There is an old saying, Banks only load money to people who don’t need it. Thats where the good rates are.
June 6th, 2005 at 5:26 pm
I live in Los Angeles and I know there are a lot of people buying homes with interest only loans and other financial schemes. Their logic: just get me in the house and I’ll worry about the rest later. So folks are purchasing homes that under normal circumstances they couldn’t get. There is just too much speculation for me and I’ve dropped out of the housing market. I’ve seen the statistics and almost 70% of the loans made today are interest only, no money down. That means people are gambling with their financial future. I don’t think it is worth it. A home should be an investment - the largest that most people will ever make. And in five years a lot of people are going to feel the pain of that gamble. So I agree 100% with DarkStar
September 5th, 2005 at 2:49 pm
(A couple of months late, but anyway…) DarkStar and James Manning are correct. What you fail to realize is very few people that are buying homes in San Diego now are getting a 30-year fixed interest rate. Most are getting the interest-only or a 2, 3 or 5 year fixed rate. If they can barely make the minimum monthly payment now, what’s going to happen once principal starts kicking in? Or when the fixed rate expires?
September 13th, 2005 at 1:01 am
Well, that means they can afford it for the next 3 to 5 years. Sell after that. Short term interest rate for short term investments. That’s the beauty of it. When you buy 3 and 5 year rates, you typically are buying for short term investment. Unless your that good to predict that the interest rate will be lower in the next 3 to 5 years.