Here is how much San Diego home prices are outpacing wages

San Diego County’s median home price is now nearly nine times the median income — close to its highest point in history.

San Diego home prices have been more expensive than the nation since the 1990s, but the difference is now more pronounced. A U.S. median priced home was five times more than income in October, something that hasn’t been true in San Diego for 25 years.

There have been times when San Diego was closer to the rest of the country in housing affordability.

In fall 1997, when the San Diego County median home price was $177,286 and the median household income was $40,981, homes were 4.3 times income, said housing market researcher Intercontinental Exchange. That was as close as it got to nationwide levels, when the U.S. average was 3.6 times.

Price-to-income disparities have become a popular topic as economists strain to figure out why lower mortgage rates have not led to a noticeable increase in home buying.

Intercontinental Exchange provided data as far as they have records for, to 1992, for The San Diego Union-Tribune. It shows how, by the 2000s, San Diego’s affordability had sharply diverged from the rest of the U.S.

Andy Walden, head of mortgage and housing market research for Intercontinental Exchange, said it would be difficult for San Diego County to get back to the affordability levels of the 1990s. He estimated there would have to be around a 40% drop in home prices and a 70% rise in incomes to return to those levels

“Given where things stand now,” he said, “it would take some time and meaningful movement to return to historic levels.”

Walden said the average San Diego County household today needs to devote 51% of their monthly income to the principal and interest of a mortgage. Using that metric, San Diego ranks the third highest out of 100 metros, behind Los Angeles and Orange County (62%) and the San Jose metro area (53%).

Metro areas where the least monthly income would be required for a mortgage were Des Moines, Iowa, and Dayton, Ohio, where 19% of monthly income would go to a mortgage.

San Diego County’s affordability in comparison with wages often follows historic events. For instance, in summer 2004, a San Diego County home cost 9.7 times the median income as the housing boom, led by loose credit standards and exuberance over the real estate market, raced through communities. At the time, it was the biggest gap between San Diego and the U.S., as the national median was 4.7 times the median income.

But the biggest affordability gap was more recent. During the rush for housing at the tail-end of the COVID-19 pandemic San Diego County’s median home price, in spring 2022, was 10 times the median income. That era was marked by very few homes for sale to meet demand: There were around 3,200 homes listed in May 2022, said the Redfin Data Center, compared to about 6,000 now.

Compared to 2022, home affordability has improved, despite approaching nearly double the national average. In October, International Exchange said the median home price in San Diego County, $985,092, was 8.7 times higher than the median household income of $112,933.

San Diego economist Ray Major said of the two factors — household income and home prices —  the bigger factor is lackluster wages in the region. He said San Diego lacks large corporate headquarters so incomes have been weak for decades.

“The biggest problem I’ve always seen,” Major said, “is we don’t have the type of jobs here that allow people, even for (households) with two incomes, to buy a median priced home.”

He said other costly areas, like the San Jose metro area (home to Silicon Valley), have a bigger chunk of the population that can afford higher home prices because of many large companies. Major said the effect in San Diego was a hollowing out of the middle class that relied on home ownership to build equity.

A study by payroll-services provider ADP this summer said the San Diego metropolitan area was considered the ninth worst place for new grads (out of 55 metro areas) because annual wages did not match the cost of living.

This phenomenon is often called by locals “the San Diego discount” — where workers accept a lower wage because of great weather.

“It’s the sunshine tax,” said Genine Wilson, a staffing industry veteran. “It’s the beach tax, it’s the beach and mountain all in the same day tax.”

She said she has pushed back on companies trying to offer lower wages for Southern California, but recent remote work trends have made things more difficult.

Wilson, who now serves vice president of client strategy at CHG Healthcare, said it was much more common pre-pandemic to see a scale of pay based on location. She said that is less prevalent now with companies just listing what the job pays and no scale. Wilson said some of the jobs essentially sound like employers are saying, “it’s not my fault where you live.”