Opinion

‘Bargain’ Home Prices Make San Diego a Destination for California Buyers

Written by Mark Powell

In John Carpenter’s action movies Escape from New York and Escape from L.A., Kurt Russell plays Snake Plissken, a former special forces war hero who saves lives by helping people escape these crime-ridden cities. Little did we know that in 2020 residents of both Los Angles and New York would be fleeing their cities for similar reasons, and heading to San Diego.

Although record numbers of people are leaving California altogether, many are moving to San Diego because they consider buying a home here to be a bargain. And while densely populated cities like New York, Los Angeles, and San Francisco struggle with skyrocketing rates of crime and homelessness, with the best weather in the country, lower crime rates and comparatively lower property prices, San Diego has become a choice destination for both in-state and out-of-state buyers.

As home purchases increase in San Diego, inventory drops, and that drives up prices. But buying a home in San Diego is still more affordable than in other large metropolitan areas.

Currently, the median home price in San Diego hovers around $650,000, somewhat lower than Los Angeles, where the median home price is $715,000—and substantially lower than the median asking price of $1.6 million for a home in Manhattan. Even with one of the highest homeless populations in the nation, San Francisco’s average home price is a whopping $1.625 million, so many homeowners who want to leave their city but also remain in California are choosing to move to San Diego. Another reason for the increase in home prices in San Diego is overzealous government mandates that make it too expensive for developers to build, further limiting our housing inventory. These restrictions influence contractors to look to other states, where building costs are cheaper and profit margins are greater.

San Diego’s new leadership will most likely take another look at the city’s ambitious Climate Action Plan. Early drafts included point-of-sale mandates that would require homeowners to make retrofits to their homes prior to selling, which would raise home prices even more.

Every $1,000 increase in the price of a home disqualifies thousands of households from achieving home ownership. The costs to make upgrades to a property prior to selling may also prevent the homeowner from selling at all, thus further limiting the housing inventory, which also drives up home prices.

Lastly, many homeowners are hesitant to sell during COVID-19. Holding a traditional open house is prohibited, special “property entrance advisory disclosures” are mandated, and some sellers have concerns that they might contract coronavirus from an infected buyer. So some are keeping their homes off the market and refusing to sell at this time. This further exacerbates the housing shortage, creating a historically low housing inventory that causes home prices to surge upward.

Most community leaders agree that there is no single solution to the housing crisis. What we need is a multifaceted approach to increase the number and affordability of homes. This is why our newly elected officials need to push to fix the costly permit process and ease the restrictions surrounding new construction—and do it now.

Property owners should also be given tax incentives or a reduction in permit fees for making upgrades to their properties. Costly point-of-sale requirements should be negotiated between buyers and sellers, not mandated by the government. Governmental mandates drive up housing costs, pricing buyers out of the market, which is the opposite of what affordable housing advocates want.

Our newly elected officials should work to incentivize builders, and they have the ability to make the changes needed to make housing a little more affordable in San Diego. But it will only happen if we voice our concerns to them—or we may need call Snake Plissken to save us.