City Spotlight: San Diego

January 6, 2020
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Author: ThinkWhy Analyst

San Diego is known for its balmy 70-degree weather and miles of beautiful beaches, but the metro is more than a tourist draw. As a hotspot for government, healthcare and professional services jobs, the nation’s eighth-largest city is home to 1.42 million people and a robust economy in domestic trade, manufacturing, military and tourism.

San Diego Labor Market Strong but Forecasted to Decelerate Slightly in 2020

Job Outlook: Sunny

The unemployment rate for San Diego sits at just 2.8 percent as of October 2019, besting the national average of 3.3 percent. Nonfarm employment increased from October 2018 to October 2019 with a gain of 30,200 jobs. This government sector recorded the largest increase, followed by Professional and Business Services, Educational and Health Services, Construction and Manufacturing.

Some of the area’s major employers include:

  • 32nd St. Naval Station
  • General Dynamics NASSCO (shipbuilders)
  • Kaiser Permanente Zion Medical Center
  • Merchants Building Maintenance
  • San Diego Community College
  • Scripps Mercy Hospital
  • Seaworld San Diego

Wages and Employment

San Diego County's wage growth has increased by 1.3 percent since June 2018, while the national increase is at 1.1 percent for the same timeframe. Looking at weekly averages, workers in the U.S. are bringing home an average weekly wage of $1,095, while San Diego workers are bringing home 8.6 percent more at $1,189 a week.

Overall, employment has grown by 2.0 percent from October 2018 to October 2019, with Mining and Logging, Construction and Manufacturing jobs seeing the largest changes.

Home Values

U.S. home values have risen by 4.7 percent over the last year, and they are forecasted to grow by 3.4 percent next year. In San Diego, home values have increased at a slower rate of 1.5 percent, and they are expected to continue rising by 2.2 percent next year. The median home value in San Diego is $640,900, with an average price per square foot of $468. (The city’s home prices are more expensive than prices found in the greater San Diego-Carlsbad metro, which is $382 per square foot.) San Diego’s median rental rates are sky high at $2,700 per month.

These realities, as well as a cost of living that’s about 30 percent higher than the national average, are why San Diego is often cited as one of the most expensive cities to live in the U.S.

Sunny Smiles

Job longevity is linked to wages and compensation, but the happy factor counts too. San Diego is well known for its sun and fun, with area attractions like the San Diego Zoo, Seaworld San Diego, Balboa Park and La Jolla hosting tourists in droves.

San Diego also has a large concentration of military and defense assets. In addition, the city is equipped with more than 80 educational and research institutions.

Finding the right real estate or rental property will be critical to affordability, talent relocation and cost of living sustainability. San Diego, as a whole, has a tremendous amount to offer – lifestyle, jobs, industry diversity and growth.

2020 Outlook

After healthy job growth in the San Diego metro area during 2019, we are expecting deceleration starting 1Q 2020. Annual average job gain is forecasted at 0.9 percent growth in 2020, down from 1.6 percent growth in 2019. However, ThinkWhy expects wage growth to average 2.8 percent in 2020, about 50 basis points higher than 2019.