Why are San Diego housing prices so high?
a- the ocean?
b- temperate climate?
c- strong economy?
d- proximity to Mexico?
e- real estate is a rigged game in San Diego
The answer is a combination of all answers but "e" is the best answer. San Diego News Desk points out the glaring supply/demand imbalance in San Diego County:
In 2010, data revealed that San Diego was short 59,000 housing units. Furthermore, if one were to include the past 20 years, the data would reveal that San Diego is actually 140,000 housing units short.
San Diego has tried to recover from the 1990 recession that involved Southern California, but three decades later, San Diego has failed to approve the permits needed. The refusal to grant building permits, in turn, is producing the very slow homebuilding pace seen in San Diego. This impediment is ruining the housing market by artificially restricting the supply—which increases the cost of existing housing.
Here is my analysis, if you are thinking of purchasing a home in San Diego:
The supply shortage doesn't mean that housing prices will always rise, year-over-year, but it illustrates a structural imbalance which heavily favors ownership in residential real estate, be it for living in the home or holding it as a rental. Long-term then, San Diego real estate can be expected to rise at a greater rate than the inflation rate. When leveraged, San Diego residential real estate can produce annual returns which rival the stock markets but with far less volatility.
