Why housing costs so much in San Diego
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The median-priced home in San Diego County sold for $459,000 in 2004, according to a just-released report by DataQuick Information Systems. That amounted to a record 21.1 percent increase over a year earlier. Meanwhile, San Diego households have a median income that ranks a mere 55th in the country. That explains why the San Diego region suffers the dubious distinction of being the nation’s second-least-affordable housing market, according to the National Association of Home Builders. Some housing experts, like Alexis McGee, president of Foreclosures.com, an investment advisory firm based in Fair Oaks, Calif., expect the San Diego housing bubble to burst. The “combination of rising interest rates and very high housing costs-to-income ratios,” McGee said, “is putting pressure on overextended homeowners.” That presages an increase in foreclosures, she suggested. But San Diego’s housing market is relatively inelastic. That’s because the demand for housing outstrips the available supply in the nation’s fourth-largest county by some 87,000 units, according to a study last year by the Public Policy Institute of California. When you have that kind of disequilibrium between demand and supply, particularly for a commodity as essential as housing, prices will steadily increase, as they have for nine years straight here in San Diego. The only way to slow the upward spiral of local housing prices, to make homeownership more affordable for San Diego’s propertyless population, is to substantially increase the county’s housing supply More : signonsandiego.com |