Paul Krugman wrote recently about the financial boundaries of the middle class: “So let me suggest a measure that may get at the general sense of declining social inclusion: the ratio of incomes at the 60th percentile of the income distribution, currently $106,000, to incomes at the 95th percentile, currently $336,000. The cutoffs are arbitrary, partly reflecting easily accessible data. But the 60th percentile is probably a good placeholder for people who are middle class but not affluent, while the 95th percentile may be a good indicator of the very affluent who aren’t so affluent as to be removed from ordinary Americans’ reference group.” What this gobbledegook really means is that Mr. Krugman is suggesting the upper and lower bounds of the middle class. In fact any family earning $336,000 or more is in the upper 5% of income earners in the United States while those earning less than $106,000 can hardly be called middle class any more.
Now let’s look at how much income you need to have to buy a typical middle class home in San Diego, CA. Zillow/NBC reports $273,000 – $275,000 is needed for a typical median-priced home with average monthly costs. Only about 11% of households in San Diego County, where the median household income is $96,964, make enough money to comfortably afford a home, according to USD research. According to the Google AI Overview, Approximately, 6% to 8% of the American population has an individual income greater than $275,000. So to afford a home in San Diego you need to be borderline upper class. The middle class has been priced out of the housing market. Again according to Google AI Overview: The average MD salary in San Diego County varies by source but generally falls in the $210,000 to over $320,000 range, with specialists earning significantly more than primary care physicians, and experienced doctors making much more than entry-level roles, with figures showing around $311,989 average (Salary Expert) or $239K (Glassdoor Physician), and primary care around $210K (Indeed) to $277K (MedSchoolCoach).
So one has to have an income roughly what a medical doctor makes in order to buy a typical middle class home in San Diego. No wonder that average earners like teachers, police, firemen can’t afford to buy a home in San Diego. Not to mention jobs like servers and Uber drivers. San Diego is well on its way and in fact is a harbinger of the fact that most people with the exception of highly paid professionals are destined to be life long renters. Whatever wealth could be derived from owning an asset like a middle class home is out of reach for most people. And rents will continue to increase at least at the inflation rate. Having a mortgage, despite the fact that a huge amount of the monthly payments goes to interest that makes bankers wealthy, at least guarantees that your monthly payment will not go up over the course of the mortgage. Not so for renters.
So who can buy a typical middle class home in San Diego? Corporations who pay cash to buy up the housing stock, that’s who. In San Diego, several companies and iBuyers purchase homes for cash, including local players like We Buy San Diego Houses, I Buy SD, OveraskSD, Gordon Buys Homes, and larger entities like HomeVestors, alongside major iBuyers like Opendoor & Offerpad (though fees apply). These companies offer quick sales, often in “as-is” condition, avoiding repairs and realtor fees, with options for flexible closings, catering to sellers needing speed or simplicity over maximizing market price.
So what do these corporate cash buyers do with the home after they buy them? San Diego cash home buyers typically either renovate and “flip” the house for a profit, sell it to another investor, or rent it out as a long-term investment property, aiming to buy below market value for quick cash sales, avoiding repairs and traditional timelines for sellers. They cater to distressed sellers or those needing speed, then repurpose the property for resale or rental income, generating profit from the difference in purchase and sale/rental price after improvements.
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