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What San Diego's high cost of living means for millennials and Gen Zers

 October 31, 2023 at 3:14 PM PDT

S1: It's time for Midday Edition on Kpbs. Today we're talking about the challenges Gen Z and millennials face trying to build a life in San Diego. I'm Jade Hindman. Here's the conversations that keep you informed , inspired , and make you think. The generational divide over home ownership and money.

S2: We are entering a very different situation than our parents were , and we cannot be prescribing those old paradigms and belief systems to the situation we're dealing with today , because it's just completely different.

S1: Plus , the expensive cost of San Diego housing and advice on how to make it work. Then a couple of ways Halloween is being celebrated in SoCal. That's ahead on Midday Edition. Home sales in San Diego saw a big drop in September , according to the San Diego Union-Tribune. But before potential home buyers get too excited , home prices remained high , dropping only about a percent , and they're still up 5% for the year. So it's no secret San Diego has an affordability crisis. If we needed any more indication of that , the US News and World Report just named San Diego the most expensive place to live in the country. And now , with median house prices hovering near the $1 million mark , the prospect of homeownership for younger San Diegans can feel far out of reach. Take Beatrice Adams , for example. She's a 23 year old college student who can't even fathom buying a home in San Diego.

S3: Honestly , if the prices don't go down , I don't see myself buying a house anytime soon. I don't think I have a projection right now to like , buy. Like what age I'm going to buy a house because I just like , don't think about that at all. Because like I said , it's like really expensive.

S1: Add to that college debt and high rental prices. The list of challenges to building a life here for young adult millennials and Gen Zers is long , so let's talk about it. Belarus is a Gen Z and community engagement editor with the San Diego Union-Tribune. Also , Daryl Fairweather is a millennial and chief economist at Redfin. Welcome to you both.

S4: Thank you for having me.

S2: Thanks for having us.

S1: So glad you guys are both here for this conversation. So , Bill , I'll start with you. Last month , you published an opinion piece in the Union-Tribune inspired by a conversation you had with your parents. Tell us about that conversation and how it led to you writing about this generational divide in home ownership. Right.

S2: Right. So I this summer I turned 25 and I was having a conversation with my dad over my birthday breakfast and just kind of talking to him and asked him , you know , what were you doing when you were 25 ? My parents are pretty young. They had me when I believe they were around 23. And so I knew that his response to this question was going to really reveal just how different our lives were at this kind of pivotal point. But he said , well , we just bought our first house , and that was kind of crazy for me to think about. Just because I work in news , I think about the housing crisis a lot , and thinking about where I am in comparison to where they were at my age. It's just really strange to think about , and especially due to the fact that , you know , my parents didn't finish college. You know , neither of them come from money. So I'm in a position where I did go to college. I have this job at the newspaper coming out of college , and you would think that I would maybe be in a better position at this age to be able to jump into a big decision about thinking about buying a house. But for them , it was much easier. And granite , I will add that they grew up in Phoenix and that's that's where I grew up. And now we moved to San Diego as a family in 2015. So very different situations , but just kind of highlighting generationally how different of a place that we were in. And this wasn't very long ago , this was in the late 90s. So they were able to just kind of buy a house , though , and I don't know that I will ever be able to do that. And so just really brought things into perspective for me and for a lot of people. I think you read the piece right.

S1: In your article , you also wrote that conversations about the housing crisis are increasingly dominated by homeowners complaining about hypothetical apartments.

S2: And I know I don't want to make blanket statements because I know that not everybody feels this way. But I think that , you know , a lot of homeowners are really resistant to seeing their communities changing. And it is hard to think about our community changing. I love San Diego. I love the way that it is now in a lot of ways. And it's hard for me to think about , you know , seeing bigger buildings and more traffic potentially , and all of these things that we kind of associate with growth. But I think that there are ways to do that smartly and that kind of get at a lot of our societal problems. When we talk about homelessness and young people and the cost of living , you know , being able to build futures for ourselves. And so when I was talking about hypothetical apartments , I feel like there's this group of people who always complain about homelessness and complain about , you know , like having to live with seeing the effects of poverty around them. But they don't seem to be willing to have the conversations about , well , you know , are we going to build more housing ? Are we going to do things to kind of address some of these problems because they associate it with maybe reducing their property values or having other impacts on their lives that they don't want to live with. And I think that we need to be able to have a conversation across generations , across class , across race , about how we can kind of grow in a smart way to address our problems and , you know , have a little bit more compassion for each other and recognize that , you know , the problems that young people like myself are dealing with today. Like we are entering a very different situation than our parents were , and we cannot be prescribing those old paradigms and belief systems to the situation we're dealing with today , because it's just completely different.


S4: And that's even more true in San Diego. Since the pandemic , San Diego has been a top migration destination for people leaving Los Angeles or San Francisco. And those people are coming with money and they're willing to spend. So with the added population and the added money flowing in , it drives up the cost of housing and makes it even harder for first time homebuyers who may be long , long term residents of San Diego. You now need to earn over $160,000 just to afford a starter home in San Diego , so that entry point is becoming further and further out of reach for people who are in their 20s. Not many 20 year olds make more than $160,000.

S1: Yeah , and I want to dig into that issue of starter homes in a bit. But you recently wrote an article about the phenomenon of nepo homebuyers.

S4: And it turns out 38% of people under the age of 30 who bought a home in the last year did so with help from their parents. And that's a leg up that not everyone has access to. And going back in our country's history , it didn't used to be that everyone had equal access to owning a home. You're more likely to own a home if your parents owned a home , and if your grandparents owned a home. And those historical inequities can echo into today , especially when people are passing down their housing wealth or intergenerational wealth , it still continues to give a leg up to certain segments of society. Right.

S1: Right. And Darryl , this is something you experienced in your own family. I mean , tell us about your parents experience buying a home. Yes.

S4: So my mother is white and my father is black. And when they went to go buy their first home in Santa Barbara , they didn't have much success. They kept getting turned down. One home seller even delisted their home after my father viewed the home. So after they experienced that , my mom started touring homes on her own and then did successfully get an offer accepted , she just told the homeowner that my dad was busy working , so she had to submit the offer. They never met my dad , so it just goes to show that even in the 80s , when my parents were buying homes , even though the Fair Housing Act was in effect , it wasn't necessarily being enforced. And there are still ways that people can give preferential treatment to certain families that remind them of themselves. Right.

S1: Right. And it wasn't just our parents generation , it was our grandparents generation two. They also experienced that same type of discrimination , many of whom were veterans returning from World War Two and denied access to the GI Bill , which was huge in establishing home ownership at that time.

S4: And a lot of people , they get the benefits of home ownership and it passes on through generations. People will take a second mortgage on their home to pay for their kids college , or they may take money out of their home and then give that as a cash gift to their kids to pay for their next down payment. So when someone is able to buy a home many years ago , they're able to accumulate wealth , especially in California , where home values have gone up so much that added wealth can have impacts on generations and generations moving forward.

S1: And , you know , I think another important piece of this conversation is the role college plays here. You know , Bella , you wrote that neither of your parents finished college and you were among the first in your family to graduate from college. Despite that , though , your parents were able to buy a home in their 20s. While you say you feel far away from that goal of homeownership , how big of a role is college debt playing in this.

S2: Right ? I mean , I think it plays a huge role. The idea that , you know , because it's not that college college debt doesn't exist on its own. College is getting increasingly more expensive , as we understand. And there are so many people who get out of college and have this huge debt. But then that , coupled with the increasing cost of living , like , you know , if you have to own a car or pay rent and like , I think that all of those things kind of coupled together , put our generation behind. And when you think about like , you know , I'm in a position where , like , I'm in a pretty good position , I did graduate with debt , but I'm able to meet all of my basic needs. But when I'm like thinking about trying to save , like saving money , especially something for as big as like buying a house is extremely difficult. Like even my friends who've been able to do things like buy cars , you know , in their mid 20s. Like we're only able to do so because maybe they didn't have to pay rent because they were living with their parents or something like that. So I think it's more like the fact that that coupled with all of these other things that we're experiencing , is just making it really difficult to get ahead , kind of always just like fighting to keep up. And then there's the fact that the college degree just doesn't go as far as it used to. Now it's kind of the standard , you know , like graduating from college doesn't guarantee you a good job. It doesn't guarantee you being able to buy a house doesn't really guarantee you all these things were in the past. Maybe it was not like maybe it was a little bit easier in the past to access those things with just a college degree. But now I'm seeing more people feeling like they have to get masters to really be able to get ahead , and then you're just taking on more debt. And we haven't really found out a way to get around or resolve this issue about college affordability. So I think a lot of people my age are just feeling really jaded by the whole experience , like we were told , maybe if we went to college and we work hard , we'd be able to access all of these things. But that's just not the case for everybody.

S1: And so , Daryl , how big of a barrier is college debt for ? Millennials and Gen Zers who want to buy a home.

S4: What matters is your debt to income ratio. So how much those monthly payments are in your college debt relative to how much income you're earning ? Plenty of people will take on a mortgage , and they haven't paid off their college debt yet. But still , a lot of young people see it as this weight that's on them. They don't want to take on extra mortgage debt when they haven't even paid off their college debt , or when they feel like it's going to take them decades to pay off their college debt. They don't want to add another piece of debt to the pile. But I think when it comes to financial planning , it's good to take a step back and look at it holistically and look at your financial goals moving forward. College debt tends to have a lower interest rate , so it's better or it's preferred to things like credit card debt. So I hope that young people don't feel too discouraged by their college debt and feel like it means they can't afford a home. It's not usually the case , but I understand that it is like this extra expense where maybe you would have wanted a different home , or maybe you can't qualify for the home that you want , but there may still be homes that fit within your budget , even if you have that student debt.


S4: So that extra cost , it doesn't come out of nowhere. People have to make tough decisions about , you know , how they're going to be budgeting their incomes and still making sure they put enough money towards savings. So that increase in mortgage rates can can eliminate a lot of people from the housing market , because they just can't make the numbers work for the kind of home that they want. I think the good news is , at least at this moment , the rental market is pretty stable. We're not in a time or rents are going up every year like they were before the pandemic. So if you need to rent before you can afford to buy a home , that's a perfectly acceptable thing to do. It may feel like you're falling behind , but as long as you have a roof over your head and you're budgeting for the things that matter to you , including your savings , I think you're going to be fine.

S1: And you mentioned earlier that starter homes are also getting more unaffordable.

S4: They might have less square feet. They may be condos. They're that entry point that people take to get into the housing market , so they can start building equity and then buy their next home. That maybe fits the needs that they have at that point in their life , like a growing family. But it's really important that there are affordable entry points into the housing market , because without that entry point , people end up renting longer. They're not able to save for that home. If they couldn't afford the starter home , it's unlikely that they're going to be able to afford that dream home that they want. So it's important that to note that starter homes are getting more expensive , because it means that fewer and fewer people are going to be able to break into the housing market , and instead , we're going to have more people who have owned their homes longer and maybe even are buying their second home or their next investment property , as opposed to first time homebuyers getting into the market.

S1: So what challenges do you face trying to build a life here in San Diego and is anything working for you ? Give us a call at (619) 452-0228. You can leave a message or you can email us at midday at Coming up , for many Gen Z and millennials here , the American dream of owning a home remains just that a dream.

S2: It just does not feel feasible at all. Like it feels like entertaining a pipe dream.

S1: You're listening to Kpbs Midday Edition. You're listening to Kpbs Midday Edition. I'm Jade Hindman. Today we are having a conversation about how the high cost of living is impacting adults pretty much under 42. That's millennials and Gen Zers. My guest today are Bella Ross from the San Diego Union Tribune and Redfin chief economist Daryl Fairweather. So , Daryl , you say that another route for aspiring homeowners is to team up.

S4: These may be romantic partners. They may be friends , it might be a parent and a child. But because housing has gotten so expensive , it can often be advantageous to team up with somebody. That way you have more income that goes towards qualifying for that mortgage. And , you know , it's important to still have an agreement in place. If you're not married , you need to have strict terms about who owns the home and when you would sell or who pays rent to whom. But it can be a way for people to break into the housing market when otherwise they wouldn't be able to.


S2: I mean , I think one of the biggest issues that I see , especially among people my age in their mid 20s , is that , you know , the wages that people are being paid are not keeping up with the expenses that we're experiencing , the growth and expenses , like , I think that , you know , people from older generations or even myself , as I've seen wages increase over the years , can look at something like $18 an hour and be like , well , that's way more than I made. And that sounds like a lot. But even if you're working full time on $18 an hour , you can't really afford to live here in most scenarios. And if you can , you're more than likely having to live with large amounts of roommates , or maybe in situations that aren't as ideal for you. So I think that that's a huge part of this that we need to remember to talk about is that the housing issues are not happening in isolation. There are so many other factors to this that are making it difficult for young people to get ahead , or even just keep up.


S2: And I think that also that is just about the points that people are in their lives. You know , people are getting married later and thinking about homeownership later. And I think that there's a lot of social reasons for that as well as economic reasons. Um , and so I think for people like myself , I talk a lot about the fact that young people don't feel like they can buy homes. I'm not personally looking to buy a home now or anytime soon , but it makes me wonder how much of that has to do with the fact that it just does not feel feasible at all. Like it feels like entertaining a pipe dream. Um , and so I think that there is a little bit of an appetite for it , but I also think that people kind of have gotten so used to this idea that it feels so far away that they're just embracing different lifestyles. But it , you know , it's not necessarily feasible in the long term. At some point , if you want to build up wealth and not have to rent for the rest of your life and be able to take care of a family , um , and that'll come down the line for a lot of the people that I talked to. Like , you probably need to figure out how to buy a home. And I think that a lot of these innovations in buying are good , like talking about pairing up and things like that. But I don't think that they should be used to avoid talking about housing solutions that our city and really our nation really need.


S4: The reason that starter homes have gotten so expensive is because we aren't building enough starter homes , especially that missing middle type of housing like townhomes which take up less land , or condos which are stacked on top of each other. We need more of those dense housing solutions , because ultimately the problem is a lack of supply and a immense amount of demand making prices higher.


S2: People just want handouts. There's just like a different work ethic that's innate to this generation. That is the real root of our problems. And I don't think that that's true at all. I think that people want to work , people want to be able to afford things. But as I've said many times , the we're just playing in a completely different playing field than past generations. And I think we need to be able to understand that and have compassion. I think that every almost every time I have this conversation with somebody from one of the older generations or , you know , even just looking at the comments on the essay that I wrote about buying a house versus my relative experience being a young person , um , people are just always relying on these extremely personal anecdotes about how they worked so hard in order to buy their house , and now the next generation should have to do the same thing. And I don't disagree with that. We all want to be able to work , to be able to earn things , but. It's it's just not the same. Like if I , if I want to do that , I have to do that outside of California and think for some people that's fine. But we can't just expect all young people to move out of California or to live in tiny condos for the rest of their lives and completely reshape all of their ideals and values and aspirations around the fact that there is zero affordability. Um , like , you know , living in San Diego is important to me , and I want to figure out a way to make it work here. And we can't just expect young people to up and move because , you know , times have changed. Yeah.

S1: Yeah.

S2: Housing troubles and cost of living , and then also even thinking bigger , like thinking about climate change and all of these circumstances that can just feel so grim and just to be told that , you know , as a generation , we're all just lazy and we don't want to work , but in reality , we're being held to a completely different standard. And I think it leads to a lot of resentment and frustration from younger generations. It just like it feels like we inherited a situation that was created by generations past , and now they want to act like. You know that we are the ones who are lazy or don't want to work because we're dealing with a totally different situation than them. So I feel like it deals a lot of frustration , and I don't want to create some kind of generational war , like I do genuinely want to have these conversations and not make generalizations. But , you know , when you're dealing with these comments and things on such a regular basis , I think on a generation wide , it creates a sense of resentment.


S4: That's not true everywhere in the country. I think people who live in the Midwest are probably about equal to where their parents were in terms of affordability. But San Diego has become so popular , it used to be this much more wide open space , where land was much more affordable and therefore homes were more affordable. But land values have gone up considerably in the last couple of decades , and it is just one of the most expensive places to buy a home. Now it's even more expensive than Los Angeles starting this year , so it's become very desirable. I mean , San Diego has a lot to offer , so it's understandable , but any city that is attractive needs to plan for growth , and doing nothing doesn't mean that things stay the same. It means that things actually get worse , get worse for the people who live in it , live in that city , and have contributed to what it is. So I think we really do need to be more forward looking and plan for future generations , or else we're going to have the same situation for the next generation , where they also feel like nobody planned for them. And if anything , there was resistance to their existence at all.


S4: There are some people who want a single family home with a yard. That's their dream. And being able to afford that within the city limits of San Diego has gotten so much more expensive. So that's your dream. Focus on earning a lot of money , which I know is kind of trite to say , but if your dream is to work in a field that doesn't earn as much money and you still want to live in San Diego , I think for the time being , consider other housing options , more dense housing options so that you can still find something that meets your budget. But yeah , it's I think it's there really aren't any easy solutions here. I think you have to make a compromise in one area just because of how expensive housing has gotten. And even if we make all the correct policy changes moving forward , it could be decades before housing feels affordable in a place like San Diego.


S2: You know , I work for the newspaper , and I do what I do because I care about San Diego. But , you know , especially as somebody who isn't from San Diego , having spent most of my childhood in Phoenix and my family , who we all moved here together when I was late in high school , kind of all have the same experience. Like we all feel like we are really fighting to stay. Um , and so I think as my priority shift , it could end up being a situation where I have to leave. But I really do want to try to figure out a way to stay in San Diego. But it does feel very much contingent on the ever changing financial climate.

S1: It's something you're not alone in. I've been speaking with Belarus community engagement editor with the San Diego Union Tribune. Bela. Thank you.

S2: Thank you for having me.

S1: And also Redfin chief economist Darrell Fairweather. Darrell , thank you so much for joining us today.

S4: Thank you.

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A house is shown in La Mesa where a lawn has been replaced by drought resistant landscaping on June 9, 2022.
Roland Lizarondo
A house is shown in La Mesa on June 9, 2022.

San Diego was recently ranked the most expensive place to live in the United States by U.S. News and World Report. Despite a major drop in home sales in September, high interest rates and low demand are keeping housing prices out of reach for many San Diegans, particularly young homebuyers.

For many millennials and those of Generation Z, who may be burdened with student loan debt, the dream of purchasing a home often seems further away than for their parents a generation ago.

On Midday Edition Tuesday, we have a conversation about the struggles millennials and Gen Zers face when trying to build a life in San Diego today, and what they wish older generations would better understand about their experiences.