San Diego, California The economy and the population of the San Diego metropolitan area began to increase at a fairly rapid rate beginning the latter half of the 1990s. Defense-related employment and technology sector expansion accelerated the county’s rate of growth to approximately 2 percent annually. The San Diego metropolitan area had a population estimated at 2,974,400 in December 2002, making San Diego County the third largest in California. San Diego County has a diverse employment base. In 2002 nonagricultural employment averaged 1,244,733 jobs, a 2-percent increase over 2001. Approximately 7 percent of the county’s nonagricultural jobs are in the high-technology sector. Tourism also contributes to the local economy; although it declined in 2001, tourism improved during the second half of 2002. San Diego benefited from the consolidation of military facilities in the 1980s and 1990s. More than 80,000 military personnel are stationed in the county, and 4 of the top 10 employers in the county are military-related facilities. Defense-related jobs will be a bright spot in employment for 2003. Local companies benefiting from the current defense appropriations bill include General Atomics Aeronautical Systems at $131 million, Northrop Grumman Corp. at $129 million, and the Marine Corps’ Camp Pendleton at $96 million. The recent and upcoming deployments of troops from Camp Pendleton and other military facilities in the county will affect the economies of cities adjacent to the bases, depending on the length of the deployments. San Diego County’s average unemployment rate was 4.1 percent in 2002 compared with 3.2 percent in 2001. The improving tourism, convention, and defense sectors will help keep the unemployment rate below 4 percent for most of 2003. The sales market remains strong throughout the county, though some slowing was noted in the upper end of the market. DataQuick recorded total home sales of 54,930 for 2002, 10 percent above 2001. Single-family construction volume has remained fairly stable over the past 6 years, and permits were issued for a total of 8,689 homes in 2002. The market for sales housing is extremely tight, resulting in significant increases in sales prices. The median sales price for existing homes reached $349,000 as of the fourth quarter of 2002. Demand is so great that some buyers have reportedly placed offers without seeing the inside of the house. As a result of the tight market and high prices, several thousand people who work in San Diego County commute from adjacent Riverside County, where new homes are more than $100,000 less expensive than in San Diego County. At the end of 2002 the overall rental vacancy rate rose to 7 percent, up significantly from 4 percent at the end of 2001, because of increased vacancies in the upper end of the market. The softer conditions are the result of reduced demand in light of layoffs during the past 2 years at high-paying high-technology companies and a large supply of newly completed luxury apartments entering the market. Concessions have become more prevalent at higher rent levels, especially in downtown San Diego. Conditions remain tight with vacancy rates at or below 4 percent in the lower and middle rent ranges of the market. Long-term deployments of military personnel from Camp Pendleton and other bases in the county will result in higher rental vacancy rates, especially in Oceanside. Rents are expected to increase in the low single digits during 2003, primarily in low- to midrange properties. Permits were issued for a total of 4,804 multifamily units, down 20 percent from 2001, as builders reacted to the softer conditions in the upper end of the market. Proposition 46, an affordable-housing bond measure approved by voters in November 2002, will provide some affordable units in San Diego County over the next several years.

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