Top 10 Reasons San Diego is the 8th Least Affordable City in the World

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Once again San Diego has shown up on a Top 10 List of Cities with the likes of Hong Kong, Sydney, Melbourne and London…the Least Affordable Major Metropolitan Markets in the World.

San Diego is the 8th least affordable metropolitan market in the world according the the 11th annual study published by Demographia. San Diego has a metropolitan population of nearly 3.2 million, a median house price in 2014 listed at $517,800 and a median household income of $62,700. The 8.3 multiple of income-to-house price puts San Diego in the category of ‘Severely Unaffordable’, which Demographia applies to any metro area with a 5.1 or greater ratio.

So, why is it so unaffordable to live in San Diego? Here are my Top 10 reasons.

Weather forecast showing it is currently 73 and the expected high of 80

San Diego weather for January 25th

1. San Diego Weather

People want to move to San Diego for the weather. I’m writing this post on January 25th and posting a photo image of day’s weather forecast, which notes an expected high of 80° (27°C). Yesterday, it reached 79°. We are not south of the equator where places like Sydney are enjoying summer this time of year. We are in North America where places like Chicago and New York are bracing themselves for a major winter storm today. If you are not familiar with San Diego weather where the typical local skips watching the weather forecast because they expect it to be 70°s and sunny every day they walk out the door, read my introduction to San Diego weather in our travel guide.

2. San Diego People

The great weather in San Diego makes people happy. No windows to scrape in the winter and no humidity to escape in the summer. We are in a good mood all year round. Don’t you like to hang around happy people? Well, that’s another reason people want to move to San Diego.

3. San Diego Things To Do

With great weather, we can host tourists all year-round. As a local, we get to enjoy all the amenities provided for tourists…and we have a lot of them.

Panda chewing on bamboo

Checking out what the Panda is up to after work.

Our travel website describes over 250 attractions for tourists to visit in San Diego. Even better, most of the attractions sell annual passes. So for example, I have an annual pass that gets my wife and me into the San Diego Zoo and San Diego Zoo Safari Park. The cost is basically the same as it would be for a tourist to visit each place once but we get to visit all year-round, whether it is for 30 minutes or 3 hours. How would you like to go for a walk through the world-famous San Diego Zoo after work? Same goes for SeaWorld San Diego and many other attractions. Again, another reason people want to live in San Diego.

4. San Diego Mountains & Desert

We find most visitors to San Diego are surprised to learn we have more than just nice beaches. Our mountains rise up to 6,600 feet (2000 meters) and our desert is home to the largest state park in California, with over 938 square miles (2,400 square kilometers). This provides a variety of environment to enjoy hiking, camping, and enjoying all facets of nature. For example I’m in the middle of taking a Wilderness Basics Course with the local Sierra Club. Next weekend I’ll be camping in the desert, hiking through slot canyons, and checking out pictographs made by natives going back thousands of years. Later in our course, we’ll be camping in the mountain snow. All of this is within a short drive of where most locals live along the coast in San Diego. Follow this blog and I’ll share stories from the camping trips. Again, another reason people want to live in San Diego.

Surfer standing atop ocean cliffs admiring the ocean views

View from our tour stop in Torrey Pines.

5. San Diego Scenery

From beaches and seaside cliffs to the mountains and desert, the scenery in San Diego is spectacular. On our tours of San Diego, we meet visitors from places most Americans admire for natural beauty such as the French Riviera and the Greek islands and yet people from those areas who’ve taken the tour say they like to beauty they see in San Diego more than their own. So, not only do many American want to live in San Diego but there are many people who move here from around the world.

6. San Diego Environment

San Diego is home to many federally protected species and is a biodiversity hotspot. Princeton University and the Environmental Defense Fund rank San Diego County as the only place in the United States that is a biodiversity hotspot for mammals, fish, and plants. As a result, most of the undeveloped land in San Diego will remain off limits for development to protect these species. San Diego is also not able to build out (we are surrounded by the ocean, mountains, and vast desert), we are not able to build up (we have height restriction on buildings). Thus, San Diego has significant restrictions on building more housing limiting its ability to meet the demand.

7. Propositions 13 & 58

Multi-million dollar mansions on the La Jolla hillside

There are thousands of million dollar homes in San Diego.

California has very favorable property tax laws, particularly Propositions 13 & 58, which set a cap on the growth of property taxes (1% tax on a home value, which is capped at an annual increase of 2%) and allows you to pass that tax benefit to your children if they hold onto the home. So, once you are in, chances are you and your children will never sell the home. To give you an example, there are houses across the street from the beach in the Ocean Beach area of San Diego (albeit they are smaller, older homes built in the 1950s) whose property tax bills for 2014 were under $1,000. So, not only do we have very little land left to build new homes but once people are in a home, they have a lot of motivation not to sell it limiting the availability of resale homes.

8. Bright Minds and Wealthy People

So, who can afford to move to San Diego? Honestly, anyone can make it work. For regular working folks who don’t have the benefit of an inheritance, you have to set lower expectations on the size of the house and yard. More realistically you’ll live in a condominium complex and explore all that San Diego has to offer rather than sitting in the backyard of a house.

blue welcome sign to the medical research institute with the slogan "From Research, the Power to Cure"

In 2014, the Sanford-Burnham Institute received an anonymous donation of $275 million.

However, if you have your mind set on living in a single-family home with a small yard (big yards are out of reach for even most wealthy people in San Diego), you’ll have to be smart with a good high-paying job (two of those in a household is a general requirement) or the good fortune to have made it big somewhere else before moving to San Diego. San Diego attracts so many smart people that later this Spring, National Geographic will have a one-hour feature about San Diego as being one of the Smart Cities of the World. During our tours, we take are guests through the Torrey Pines area where over a dozen of Nobel Prize winners are at work. San Diego also attracts many of the most successful people in the world from the NFL quarterbacks who live in the Del Mar area to many business people like Ted Waitt and Mitt Romney who made their way to La Jolla.

9. San Diego is a safe city

San Diego generally ranks #2 as the safest large city in the United States. (#1 is San Jose, which is also on the world list of least affordable places). I’ve spent time in inner city areas in the Northeast, Midwest, and South in neighborhoods known for high crime that others avoided or were extremely cautious of their surroundings. I’ve visited all parts of San Diego numerous times, even the poorest neighborhoods, and never once have I felt the need to be overly cautious of my surroundings, even at night.

10. Our Neighbor Tijuana

buildings surrounding a traffic circle in Tijuana

Tijuana is San Diego’s neighbor to the south.

The city border for San Diego touches the city border for Tijuana, Mexico. There are two border crossings for people to cross from the City of San Diego into Tijuana. The San Ysidro crossing is ranked as the busiest international border crossing in the world. This provides part of the answer that many of our tour guests ask, which is, “where does the ‘working class’ or the laborers live?”. Well, as I mentioned earlier, it is possible to live in San Diego if you are willing to live in a small place or your parents happened to have moved to San Diego well before people started realizing how much San Diego has to offer and real estate prices went up and can pass the house down to you while keeping a very low property tax. The other thing that makes it work is that many of our local laborers from landscapers to hotel maids come across the border from Tijuana, which is what contributes to San Ysidro being the busiest border crossing anywhere. There are many cross border families with dual citizenships. (For a brief history lesson, California was a part of Mexico until 1848.) Also, there are many cross-border marriages and the families decide to live in Tijuana where it is a lot cheaper than in San Diego but work in San Diego where wages are much higher than in Tijuana. In addition, Tijuana and the beautiful coastline south of it provides even more things for San Diegans to enjoy, including a growing dining scene that is attracting many top chefs.

looking throught the top of a palm tree at the San Diego coastaline while standing on a trail 100 feet above the ocean

A very quite (hidden) spot just a 12-minute drive from my condo, I like to consider this one of my many backyards in San Diego.

Making it Happen in San Diego

I moved to San Diego in 1998 and was very fortunate to get some wise advice the following year. I joined by father at his high school reunion in upstate New York and met one of his classmates who lived in San Francisco, which is #5 on the least affordable places to live in the world. He told me that he and his wife both had high level jobs with Hewlett-Packard and they kept telling themselves, “we’ll save up money for one more year and then buy a house, but each year the home prices kept going up more than their savings went up”. He said “don’t wait, buy now!” At the time, home prices were going up quickly in San Diego as more people learned about how desirable of a place it is to live and work. Others said I should wait until the market cooled off. Fortunately, I jumped in at the end of 2000 and am forever thankful of that sage advice to buy as soon as I could afford anything, no matter how small it may be, to be able to stay for a lifetime in my favorite place in the world!

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