The San Diego Tribune recently posted an article about rent costs in San Diego County, which reached record highs in March 2018. A survey was conducted by MarketPointe that researched 133,785 apartments throughout the county. The average rent price was $1,887 a month based on their figures that measure everything from the smallest of studio apartments to large multi-bedroom rentals.
Interpreting the Numbers
This current average rent price represents an 8 percent increase since March 2017 and a 20 percent increase since March 2015. The question is will this increase ever slow down? Some indications do show that rent increases could level out some. One of the factors measured is vacancy rate, which went up in March. However, that doesn’t mean there will be a decrease in the average price any time soon.
Is it Time to Buy?
The brutal truth is that renting is becoming less and less affordable in San Diego County. For those who may be in a position to buy a home, now may be the time to get off the fence and take action. It never hurts to talk with a mortgage professional or a financial advisor to run some numbers and see what kind of house or condo you can afford. A good recommendation is to go through the process of being pre-approved for a mortgage loan (not just pre-qualified). This will help make securing the final loan easier and will give you a more precise idea of what you can truly afford.
Obviously, home prices have increased at similar rates as rentals in San Diego County because of a lack of inventory. It has simply been a hot market for sellers and homeowners looking to refinance. However, the good news is that mortgage interest rates remain fairly low and the timing could be right. Here are some things you will want to compare when thinking about renting versus buying:
1. Monthly Payment
Naturally, you have to compare your monthly rent payment against what your monthly mortgage, property tax and homeowner’s insurance payments will be (HOA dues may also need to be factored in if you are looking at buying in a residential community or condo association). Now that rent prices are so high, these numbers might be more comparable than you realize.
2. Tax Advantages
Many tax benefits come when you own a home, from “green” tax credits for energy-efficient home upgrades to writing off mortgage interest and certain closing costs. A first-time homebuyer tax credit of up to $7,500 is also available, though you will want to weigh the advantages and disadvantages of claiming that as it will need to be paid back over time.
3. Home Equity
The long-term advantage of homeownership clearly comes when you gain equity. Assuming home values in San Diego County will continue to rise (even if not at the current rapid pace) in the foreseeable future, so too will your equity as an owner. This equity can later be used when refinancing your original mortgage loan or securing a home equity line of credit (HELOC). Or, it can be put toward buying a newer, bigger home for your family in the future.
These factors—and more—should be considered when thinking about buying a home instead of renting. If all the numbers line up, then the long-term investment in real estate will be worth it. Ultimately, it’s a decision you have to make for yourself.
To get pre-approved for a mortgage loan or for help with crunching the numbers to decide if buying is right for you, call Transparent Mortgage today at (619) 929-0199 or send me an email at firstname.lastname@example.org