{"id":414,"date":"2006-10-19T11:37:00","date_gmt":"2006-10-19T18:37:00","guid":{"rendered":"http:\/\/seattlebubble.com\/blog\/?p=414"},"modified":"2007-06-23T14:10:31","modified_gmt":"2007-06-23T21:10:31","slug":"a-california-comparison","status":"publish","type":"post","link":"https:\/\/seattlebubble.com\/blog\/2006\/10\/19\/a-california-comparison\/","title":{"rendered":"A California Comparison"},"content":{"rendered":"

Since Mr. Kelly did such a poor job<\/a> of actually comparing the Northwest to California, I’d like to get my own idea of how the two compare. For the illustrative purpose of this post, I’m going to be comparing the regions of Seattle and San Diego. Here in King County<\/a>, the median home price (condos & SFH) for September was up<\/em> 8.6% YOY, and down<\/em> 3.0% from the peak (Aug. 2006). In San Diego<\/a>, the median home price for September was down<\/em> 4.4% YOY, and down<\/em> 8.1% from the peak (Nov. 2005).<\/p>\n

Most people would say that an 8.1% drop in 10 months is pretty major. So I have to wonder, what’s to stop that from happening here? Let’s take a look at some of the claims we frequently hear to see if they hold any merit. The purpose of this post is not to discover why prices have dropped 8% in San Diego, but rather to find out if some of Seattle’s oft-cited positive attributes will shield us from price declines.<\/p>\n

In Sunday’s article, Mr. Kelly repeated a claim<\/a> that we have heard over and over again in this debate, that “availability of jobs props up the housing market.” Let’s look at San Diego to see how well that claim holds up. Using unemployment figures from the Bureau of Labor Statistics<\/a>, we find that the Seattle area’s unemployment rate has fluctuated between 4.1% and 4.8% in 2006. Those are pretty good numbers. So what about San Diego’s unemployment rate? 3.7-4.3% this year. So despite having better<\/em> “availability of jobs” than Seattle, San Diego’s home prices have tumbled 8%.<\/p>\n

What about foreclosures? If Seattle has a low rate of foreclosures, will that prevent housing prices from dropping? Looking again to San Diego, Dustin (of RCG fame) showed us in Monday’s open thread<\/a> that the current number of foreclosures in San Diego is only 81% of the 1991-2006 average. Doing my own search of Foreclosure.com<\/a>, I see that King County has 2,043 properties in foreclosure or pre-foreclosure, while San Diego County has 6,180. Using 2005 population estimates<\/a>, I calculate 1 foreclosure for every 878 people in King County, and 1 foreclosure per 475 people in San Diego County. So while San Diego may not yet be reaching historic highs foreclosure rates, they’re still higher than King County. Thanks to Dustin’s investigation though, we know that historically high foreclosures is not a prerequisite for declining prices.<\/p>\n

Of course, there’s always the “desirability factor” that people love to cite, about what a great place Seattle is to live. I agree that this is indeed a great area (otherwise why would I still be living here?), but I think you’ve got a great career as a salesperson ahead of you if you can convince a majority of people that cloudy, sound-side Seattle is more desirable than sunny, ocean-side San Diego.<\/p>\n

San Diego has lots of jobs available, low foreclosures, and a highly desirable climate, yet prices there are clearly dropping. I would like to suggest that none of these things will shield Seattle from price drops, despite what the local media may like us to believe.<\/p>\n

Update:<\/strong><\/em> I’d like to point out SDtoSEA’s comment below. As a San Diego resident, they offer some interesting insights: “Now, SD has brought in significant amounts of both high tech and bio related jobs. We have yet to see any reductions in any area of our economy. It continues to grow. Many companies are having a hard time finding qualified employees.” Sound familiar?<\/p>\n

Read A California Comparison, Part 2<\/a>.<\/p>\n","protected":false},"excerpt":{"rendered":"

Since Mr. Kelly did such a poor job of actually comparing the Northwest to California, I’d like to get my own idea of how the two compare. For the illustrative purpose of this post, I’m going to be comparing the regions of Seattle and San Diego. 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