Is it good time to buy a house in San Diego?

We are frequently asked by our friends or investors if it is a good time to buy a house in San Diego.

Ideally, the best time is when interest rates are low, when home values hit the lowest point and when a move fits your current situation, such as before the start of school, so your children are settled before starting a new school year.

Getting the good Interest Rate

The average rate for the benchmark 30-year fixed mortgage is 3.87 percent, down 6 basis points over the last week. A month ago, the average rate on a 30-year fixed mortgage was unchanged, at 3.87 percent, according to Bankrate.

New Housing Bubble is forming?

Prices have soared for the past couple of years in San Diego, suggesting that those who waited have suffered. Now some worry that a new bubble is forming. Homebuyers have cause to be nervous: during the crisis of 2008 and 2009 prices fell by 50% in some places. There are already signs that the market is stabilizing. The prices have appreciated to a point where there’s not as many of those deals out there, and so we’re starting to see a shift more back toward the kind of owner-occupied side of the market rather than investor driven. Demand for Investment Properties remained near it’s lowest level since 2009, according to 2016 Annual Housing Market Survey by C.A.R.

Banks are more cautious than at the pre-crisis peak. We don’t have the problem with subprime loans. Homebuyers are buying a house for long-term. They are not trying to make a large profit selling a house a couple years using an interest only loan. Its not the same now. We don’t need to be extremely concerned with the past years appreciation simply because most properties are being bought with loans with 20 percent down (Median Downpayment was 19.6% according to 2016 Annual Housing Market Survey).

The pipeline of new houses is hardly gushing. In fact supply is severely crimped, a housing stock is 1.7 months. (Five to six months is considered a healthy inventory level.) Residential construction is still below its pre-crisis peak. Even if supply does improve, new homes will not be cheap ones. Construction costs are rising fast.

Highly limited supply with low inventory and minuscule new construction is coupled with rising demand due to income growth and low mortgage rates. These dynamics are unlikely to change in the near term although we are clearly pushing the limits of affordability. San Diego will continue to experience real house price appreciation for the foreseeable future.

Is it good time to buy a house in San Diego

Is it good time to buy a house in San Diego?

In our Investor Seminar (Unfortunately discontinued due to our schedule), we talked about Five Investing Myths. One of myths is successful investors are able to time the market. Truth is, in successful investing, the timing finds you. It is always the right time to buy the right property. You need to focus on why, rather than the market condition. Do you want to be mortgage free when you are 60 years old? Do you want to make $5,000 per month in passive income by investing real estate?

Savvy investors who purchased the property at the peak of market, did not panic during the crisis. Because they know the fact that as their tenants pay down their mortgage, they eventually own the property, which will increase their cash flow, the value of the Real Estate will always go up over time.

By | 2017-05-25T22:29:55+00:00 May 25th, 2017|0 Comments
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