Welcome to San Diego Blog | January 4, 2016
Why 2016 is the Year to Buy a House in San Diego
If you’ve been considering purchasing real estate in the sunny city of San Diego, now is the time to move on your housing venture. Our city recently earned the third position on the Realtor.com list of top housing markets to watch in 2016, and a combination of factors including interest rates, mortgage insurance premium rates, housing bubbles, and competition make this new year an excellent time to buy.
Interest Rates are Likely to Rise
Interest rates aren’t going down anytime soon, so now is the time to jump. In mid-October, interest rates were below 4% in San Diego, but as we head into the new year, they’ve risen to hover around and above that number for a 30-year fixed rate, with no indications of a decrease on the horizon. In fact, predictions indicate that this rate will reach 4.5% during 2016. Taking advantage of these low rates now could mean thousands of dollars saved each year.
Mortgage Insurance Premiums are Cheaper
Due to an executive action passed by President Obama in January 2015, there are cheaper mortgage insurance premiums in effect. With the 2016 election steadily approaching and an imminent switch in the Oval Office, this may or may not ring true in subsequent years. Through his executive action, Obama directed the FHA to reduce annual mortgage insurance premiums from 1.35 to 0.85 percent. This benefits new and existing homeowners alike, and the White House asserts that this new regulation could save the first-time homeowner up to $900 per year in their annual mortgage payment.
Home Values are Trending Upwards
If you’re looking to buy in San Diego and waiting for prices on homes to decrease, don’t hold your breath. The cost of homes in our SoCal metropolis have experienced constant increases, with home prices swelling by an impressive 5.4% over the span of a year in San Diego county. While the numbers are still in the single digits, constant increases make this the time to buy—no sense in waiting for local prices to again experience price increases of 10 to 20% like those seen back in 2013 and 2014. Time is of the essence if you’d like to choose from a larger inventory of homes at great values.
Rent Prices Continue to Climb
Rent prices are rising astronomically in San Diego. In fact, they have been steadily increasing since 2011. From January through October 2015, rent prices were up 7% versus the same period in 2014, and 19.9% versus the same period in 2011. And according to CNN, buying a home in San Diego is 10% cheaper for Millennial households than renting.
Home Sales Projected at a 10-Year High
San Diego housing inventory seems to be on a convincingly strong trajectory, and that means that waiting until 2017 or later to buy a home is probably going to cost you. The healthy status of the current housing market means great things for first-time buyers and an influx of younger purchasers.
Source: First Tuesday Journal
Certain Housing Markets Forecasted to Bubble
You’ve likely been inundated with the news that San Francisco is in a housing bubble, but San Diego is not (at least not yet), meaning your 2016 home purchase likely wouldn’t be overvalued and a solid investment for years to come. A majority of the 35 experts interviewed over at Zillow cited a significant risk of a housing bubble for San Diego in the months and years ahead, so if you’re looking to avoid the skyrocketing overvalued home prices that come along with this trend, now is the time to buy.
Author Bio: Sacha Ferrandi is a managing partner with Source Capital Funding, Inc., a hard money lender based out of San Diego.