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The San Diego housing market has achieved a somewhat troubling milestone: Homes are now more expensive than they’ve been at any recent time outside of the prior decade’s enormous bubble. Have a look:
The above graph charts the price of San Diego homes compared to local rents and incomes, which tells us whether housing is cheap or expensive compared to its most important economic underpinnings. Right now, it’s telling us that homes are quite expensive: not crazy mid-2000s bubble expensive, but pricier than the prior two cyclical peaks in 1979 and 1990, and 17 percent above the historical median.
For some detailed thoughts on the significance of homes being this expensive: what’s happened when we’ve reached these levels in the past, the impact of mortgage rates and what we can and can’t know for sure, see this post.
For now, San Diego housing’s recent incursion is in (non-bubble) record territory.