First-time buyers beaten back by investors, who now own 1 in 4 single-family homes in San Diego. But it’s not all bad news
There's good and bad news if you’re trying to buy a house in San Diego.
The bad news is that you’re up against investors who are buying real estate for its value and as rentals. However, this also suggests that the coastal city could be one of the best bets for long-term home value growth, which is the good news.
Don't miss
Car insurance premiums in America are through the roof — and only getting worse. But 5 minutes could have you paying as little as $29/month
Commercial real estate has beaten the stock market for 25 years — but only the super rich could buy in. Here's how even ordinary investors can become the landlord of Walmart, Whole Foods or Kroger
These 5 magic money moves will boost you up America's net worth ladder in 2024 — and you can complete each step within minutes. Here's how
According to a recent report by Redfin, San Diego was the second most popular market for real estate purchases by investors in 2024’s second quarter. Nearly one in four houses were bought by an investor, ranking only behind Miami. In total, investors bought over $2.3 billion in housing stock between April and June 2024.
Although it may seem discouraging for potential homeowners trying to establish themselves in San Diego, there is a silver lining. The current market dynamics mean that with patience and the right deal, buyers can ultimately purchase a property with significant potential for growth.
Families vs. Investors
The struggle between families in the real estate market against investors is not new. An April 2024 study suggested that investors are purchasing as much as 30% of available single-family homes nationwide.
In San Diego alone, the cost of a home can also be a barrier for those trying to get into the housing market. In the August 2024 home sales report by the Greater San Diego Association of Realtors, the median sales price of a townhome or condo jumped to $675,000, while the median price of a single detached home came out to $1.06 million.
It’s not just homeowners looking at median-priced homes that are being affected by investors moving in on listings. A previous study showed that around 25% of affordable homes were purchased by investors.
Just like families trying to purchase a home, investors are attracted to lower-priced homes to save money in expensive markets combined with high interest rates. One advantage investors have over home hunters is with more capital to work with, they can go after lower-priced or foreclosed homes which may need revitalization or repair — forcing families to shop at the median price or higher.
Read more: Rich, young Americans are ditching the stormy stock market — here are the alternative assets they're banking on instead
What to do for sunnier returns
While it may sound like investing in the real estate market is unreachable for families, there is an upside for those who do decide to purchase a home. Even with high interest rates, home sales are increasing with property values climbing.
Data from the Greater San Diego Association of Realtors shows that in one year alone, the median detached home sales price increased by 3.5%. Moreover, Summer 2024 had the highest number of home sales over the past 12 months, showcasing a healthy real estate market for the region.
“The reason investors are buying a lot of homes in San Diego is because they study markets all over the country and they perceive San Diego to be a really … really good investment,” real estate broker Matt Battiata told CBS 8. “It's bad news if you're a first-time buyer trying to buy a home and you're getting beat out by investors but at the same time it is good news because it means that they believe that our market has a lot of promise over the long term,”
For those getting into the market, buying a home is not an impossible task. Experts from the San Diego County Credit Union recommend starting a home search with understanding how much you can afford, working with a local real estate agent who can help find hidden gems (like unlisted homes for sale) at the right price and be prepared to put in a serious offer with a mortgage pre-approval letter.
With that in mind, if you’re set on making your home in San Diego, you must first review your finances: income, debts, savings, financial habits and credit score.
Then explore all of your home loan options. If you’re planning to live in your home for a short period — 5, 7 or 10 years — an Adjustable Rate Mortgage may be a good fit. If you plan to stay there for a longer period, then a Fixed Rate Mortgage Loan should do the trick.
With the right strategy, San Diego can become your home.
What to read next
Cost-of-living in America is still out of control — use these 3 'real assets' to protect your wealth today, no matter what the US Fed does or says
Lock in juicy quarterly income through this $1B private real estate fund — even if you’re not a millionaire. Here’s how to get started with as little as $10
Jeff Bezos and Oprah Winfrey invest in this asset to keep their wealth safe — you may want to do the same in 2024
This article provides information only and should not be construed as advice. It is provided without warranty of any kind.