According to realty advisors MarketPointe, San Diego County’s average rent just hit a county wide high of $1,960. Locals have always dubbed San Diego “America’s Finest City” (debatable) but now it is also one of “America’s Most Expensive Cities.” So what is the reason for this happening? Well, here are a few factors:
1). San Diego Is A Coastal City Close To The Border
You can’t expand west into the ocean so the path of progress has three directions it can go:
East – too hot and far from the ocean.
South – California’s paranoia of being to close to Mexico means that the border region has been criminally neglected for years.
North – the majority of aspirational residents are forced to live in Downtown, around Balboa Park or north in beach communities. These areas are often overpriced by 3 to 4 times due to high demand.
2). A Severe Shortage of Apartments
When it comes to getting apartments built, San Diego is 11th worst in the nation. As a result, there are too many people and too few places for them to live. A high demand combined with a low supply means you have a landlord’s market. With no restrictions in place for owners, many tenants are being forced out of apartments and houses after only a year. If new apartments and houses take too long to be built, it means the City of San Diego can artificially create a market where the prices will always be going up.
3). Stale White Bread
There is a lot of talk in San Diego about fixing the homeless issue. Nothing ever happens. There is a lot of talk about affordable housing. Next millennium maybe? There is a lot of talk about helping entrepreneurs to get off the ground and giving creatives a place to thrive. Talk, talk, talk. It is all that seems to happen in this city. But no action is ever taken. The idea of being progressive fades and is replaced with the oh so comfortable black cloud of conservatism which rains supreme (see what I did there)? It seems as if the creative classes and minorities are set a threshold which will always be too high for them to hurdle.
I was speaking to a real estate developer recently about the market in San Diego and he made an interesting point about where the city was going. He thought that as San Francisco’s Bay Area was the top region for outward migration, a high percentage of that population would move to Los Angeles. He added that when they get tired of the traffic, pollution and forest fires, they would migrate south to the more affordable San Diego. As the talent moves, so do the tech companies. The venture capitalists follow. Which web developer wouldn’t want to join a tech startup in San Diego? Great weather and a much cheaper cost of living than the Bay Area.
Here’s where the problem arises: remember when San Francisco used to have a beautiful blend of people ranging from hippies to cutting edge politicians? Well, the tech industry killed that. As the $1 billion valuations for napkin sketch startups began, it was only a matter of time before San Francisco would lose its soul. Well now San Diego is positioning itself as the “next Silicon Valley”. Low commercial rents, tax incentives and “cheap real estate” is very attractive to the tech crowd. So brace yourselves. The geeks are coming!
Which brings me round to what my crystal ball is telling me. There are already entrepreneurs who cannot afford to live in San Diego. So as the tech companies roll into town, they will further cause the real estate prices to soar. These entrepreneurs and startup companies will consider moving to places like Austin, Texas but that will be too far from California. They have become spoiled by the perfect weather so Seattle’s dreary weather is not going to cut it. So my prediction is that a new suburb of California, well Baja California will become the next suburb of San Diego.
Unlike San Diego, Tijuana is a city right on the border in Mexico. All of the core development and Downtown area is within minutes from the busiest border crossing in the world. Yes, it has had tough times. Like Berlin and London, it has been through wars. In the case of “TJ” (as locals refer to it), these were not World Wars but rather drug wars. But as the city tries to reinvent itself, Tijuanenses are finding their own identity. Micro breweries are opening, top restaurants, a wine region to rival Napa Valley (Valle de Guadalupe in Ensenada) and of course the same great weather that San Diego has.
If you are a tech startup, you can hire web developers for about a third of the cost of a Californian coder. An average meal in Tijuana is about $5 compared to about $20 in San Diego. A meal in the 2nd best restaurant in Mexico (Mision 19) is $60. The same meal would cost you $300 in San Diego. Uber rides are about a third of the price in TJ. Mexico is an older civilization than the USA so there is way more culture. You can fly from Tijuana airport to Guadalajara or Mexico City for about $150. If you fly from San Diego it will be at least double. And if you really do miss avocado toast, dogs everywhere and people saying “it is what it is” all the time, then you are only 14 miles away from SD. Plus, the trolley runs from the border to Downtown San Diego in about 45 minutes for only $2.50. The new border crossings at San Ysidro and Pedwest mean crossing times will shorten.
A few years ago, smart parents noticed the increased activity of American companies in China. As outsourcing became the norm and US factories disappeared, they made their kids learn Chinese anticipating that their children would grow up to need this language for business. Well things can change fast. Our new President is destroying international relationships for fun and factories are closing at a record rate in “Zzzhina” (for Donald), China for the rest of us. A new language is becoming much more likely to be used not only in the US but when we do business over the border. I read an article a few years ago saying that within 10 years, 50% of people living in the US will speak Spanish. That is a staggering statistic. As a Brit, I couldn’t imagine half of people living in England speaking French. So I have been learning Spanish for the last few years in anticipation of doing increased business over the border in Mexico. There is great potential, untapped resources and people who you actually love to work with.
I recently met a couple of Americans who had moved to Tijuana from San Diego. They are loving life over there. One is a freelancer and the other is creating an immersive language school for westerners. The idea of being a Fronterizo is not new for Tijuanenses. But to see Americans and international people crossing the border more frequently excites me and makes me think great things are about to happen in the city.
– Have you moved to Tijuana? How are you finding life down there?
– Are you thinking of moving to Tijuana soon? What inspired you to leave San Diego?