Kelly Cunningham, NATIONAL UNIVERSITY SYSTEM INSTITUTE FOR POLICY RESEARCH
Thursday, March 22, 2012
FOR RELEASE March 22, 2012
High (and Rising) Cost of Living in San Diego
Recently released data on household consumption underscores what is, perhaps, San Diego’s greatest competitive challenge. Even after the greatest downturn of housing prices in nearly a century, the county’s households continue to spend much more on shelter than most other Americans.
The largest difference and main factor for higher cost of living locally are housing expenses. Despite the severe downturn of home values in recent years, shelter costs still account for 29.4 percent of San Diegan’s cost of living. This is the highest proportion of shelter expenditures among the 18 large metro areas detailed by the BLS. Shelter costs nationally average only 20.5 percent. While Washington DC, San Francisco, and New York households spend more dollars on shelter than San Diego, those communities also have substantially higher household incomes.
Who has borne the brunt of these increases are renters. Over the past four years, expenditures by San Diego consumers on mortgage payments has FALLEN 17.2 percent. Spending by renters, on the other hand, over the same four-year period leaped 30.0 percent, and was nearly 2½ times above the U.S. average.
“High housing costs make San Diego less competitive”, said Kelly Cunningham, NUSIPR’s Chief Economist and Senior Fellow. “Consumers have less to spend and businesses contemplating investing in our region need to think twice about how the region’s high housing costs will impact their ability to recruit and retain workers.”
Overall the cost of living in San Diego measured by the consumer price index (CPI) increased 2.3 percent over 2010-11, indicating expenditures further rose to $53,228, assuming spending patterns stayed the same. We project expenditures to further rise 3.1 percent in 2012 to $54,870 based on general price increases.
Other findings from NUSIPR’s analysis include the fact that San Diegans eat out more than other American consumers. Households in San Diego spend 56.9 percent of their food budget for consumption at home, while the remaining 43.1 percent is spent on food away from home. By comparison, U.S. households typically spend 59.0 percent for food at home and 41.0 percent away. (It is important to note these figures do not include or reflect visitor spending at local restaurants.)
We also as a community like both our veggies and our beer. We spend, more on fruits and vegetables than other Americans, but otherwise, spend less on cereals, meats, and other foods (at least to eat at home). San Diegans also typically spend a greater amount on alcoholic beverages, with average annual expenditures of $581, compared to the rest of the U.S. average of $423.
San Diego’s increase in cost of living or inflation rate accelerated to 3.0 percent in 2011. Energy prices led increases as gas prices jumped 23.7 percent. This was before gas prices rose another 16 percent, as of March 2012, to $4.35 per gallon.
San Diego’s 3.0 percent inflation rate exceeds California’s other metro areas with inflation of 2.7 percent in Los Angeles and 2.6 percent in San Francisco.
Our increasing cost of living, however, was slightly less than for the rest of the nation at 3.2 percent. Both the CES and CPI show San Diego’s cost of living is relatively higher and rising much more than average over the past nearly 30 years than in the rest of the nation.
Details of the NUSIPR’s analysis of the BLS measurement of San Diego’s cost of living are published in the March 2012 edition of the San Diego Economic Ledger.
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