My heart goes out to those who struggle over whether to rent or buy in the San Diego real estate market.
On one hand, folks fear getting caught in a real estate bubble that destroyed so many in the past few years. Alternatively, renters in San Diego are seeing rental costs soaring, with no let-up in sight.
So what to do?
Should you buy a home now while rates are low and lock in your monthly payment. Or should you continue to rent and wait to see if prices go down?
This visual from the KCM Blog shows what has happened on a national level with rents wince 1988. San Diego, of course, has higher rents and higher home prices–but would still track with this chart.
I have no crystal ball for home prices in San Diego. If interet rates rise in the, so will mortgage payments taken ouyt at those rates. And home prices could stagnate for awhile, while those future homebuyers will be wishing they had bought when rates were at historical lows.
We currently have a client who relocated to San Diego last year and had already decided which neighborhood he wanted for his family. Instead of buying, though, he decided to rent to see if home prices in Carlsbad softened. Regretably, they went up instead and he ended up paying about $40,000 more for the same type home he was looking at a year ago.
Of course, monthly mortgage payments will be higher than they would be for rental on the same home. But with a purchase, you have the opportunity to lock in housing costs–which provides some protection againtst certain inflation.