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Buying a house in San Diego

San Diego shoreline
David Toussaint/Getty Images
San Diego shoreline
David Toussaint/Getty Images

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If you’ve been thinking about buying a house in San Diego, kudos on your choice of location: The city landed on Bankrate’s list of best places to live in California in 2022. However, planting roots here isn’t easy. As prospective homeowners compete for the limited number of available properties here, consider this your guide to navigating the market, submitting a winning bid and unlocking the door to your new pad.

Why buy a house in San Diego, CA?

Buying a house in San Diego is clearly a wise move — with sunny days, ocean waves and plenty of job opportunities, the city is a slice of paradise. And owning a home here isn’t just about enjoying the present: San Diego real estate is a wise investment for your future, too. By 2030, Renofi estimates that the average home here will be worth approximately $1.145 million. That’s the sixth-most-valuable major metro area, beating out New York City, Washington, D.C. and other high-priced markets. So, when you’re ready to sell, you’ll likely reap the benefits of some big home appreciation.

Find a San Diego home in your budget

The first step to finding a home in San Diego is figuring out how much you can afford. Bankrate’s Home Affordability Calculator can help you understand how much you should set aside for your monthly housing expenses. If you’re moving from out of state, make sure you factor in the city’s cost of living to estimate how much you’ll need to set aside for transportation, utilities, food and other necessities.

Like much of California, living in San Diego is not cheap. The local real estate market will play a key role in determining what kind of home you can afford to buy, and in what area. According to data from the San Diego Association of Realtors, the median price of a single-family home topped the $1 million mark in April 2022 — meaning that half the homes in the city sold for over $1 million. Condos and townhomes are worth exploring if you are on a tighter budget; the median price for these is $660,500.

Your budget will also be impacted by the neighborhoods you’re considering calling home. In San Diego, the closer you are to the ocean, the more you’re going to pay. So, if you’re looking for the laid-back Pacific vibes of Carlsbad, Solana Beach, Encinitas or other spots along the North Coast, you’re going to need a much bigger budget. However, if inland living feels like a good fit, you can save some serious cash. Places in North Inland and East County, like Ramona, Escondido and Descanso, all have median sales prices under $1 million for single-family homes.

When to buy a house in San Diego

As you consider where you want to live, you’ll also need to think about when you should buy. The best time to buy is when the most homes in your budget range are available — but unfortunately, that may not be anytime soon. The housing supply in San Diego, as in much of the country, is low. Historically, spring and summer tend to be the best times to buy a house, as that’s when more sellers wind up listing their properties.

In addition to trying to time the market, you need to be mindful of mortgage rates. Rates have been increasing over the past six months. When you are ready to buy, be sure to lock in a mortgage rate that looks especially competitive to avoid letting a good deal slip away.

Things to know about buying a house in San Diego

While the process of buying a house is similar regardless of location, there are some specific details to keep in mind about the San Diego area.

Weather and climate considerations

Being in Southern California means San Diego enjoys plenty of sunshine and picture-perfect weather. However, it’s not always perfect. Like much of the state, wildfires present a major threat to San Diego. Be sure to factor in the cost of homeowners insurance to protect your investment from a natural disaster. And consider this wildfire-hazard map as a helpful resource in identifying whether a home is particularly at risk.

Traffic congestion

Data shows that the average worker in San Diego spends more than 26 minutes in daily commuting time. With gas prices hitting record highs, you’ll want to pay close attention to how long you might need to spend in a car each day. Be sure to consider a neighborhood’s walkability and access to public transportation to reduce the time you have to spend driving.

Taxes

Almost anywhere you buy a home, you will need to pay property taxes. The property tax rates in the San Diego region vary. But within the city limits, the rate is 1.23 percent of the home’s value. So, if your San Diego home’s assessed value is $750,000, your annual property tax bill would be $9,225.

In addition, some San Diego homes fall within a designated Mello-Roos district, which comes with additional tax obligations above the city’s tax rate. Around 10 percent of properties in San Diego fall into Mello-Roos districts, so be sure to check the location of any home you are considering to know if you’ll have to pay these additional taxes.

Crime rate

Of course, any big city will have its share of criminal activity. In 2021, City of San Diego police data showed a crime increase of approximately 13 percent versus 2020. You may want to review recent crime statistics near any home you are considering.

Closing costs

In addition to coming up with a down payment, anyone buying a house will also need to budget for closing costs. In California, those closing costs average 1.05 percent of the purchase price. For example, if you buy a home in San Diego for $750,000, your closing costs would be $7,875. Transfer taxes are typically paid by the seller in San Diego, but you will also need to consider potential fees from your lender. The average closing cost in California as a whole is $7,953.

Recommendations and requirements

Make as sizable a down payment as you can

A 20 percent down payment — the threshold for avoiding the need for private mortgage insurance — can feel overwhelming in San Diego. That’s $200,000 on a median-priced home here. In the state of California overall, the median down payment is $103,000.

If saving a large chunk of money is daunting, be sure to compare low and no down payment lenders, which can help you get into a home for considerably less, or even nothing if you qualify for certain programs. And keep your eye on the news from the California State Senate, where the new California Dream for All bill is under consideration. If it passes, the state’s first-time homebuyer programs would get a big boost, with up to 17 percent of down payment assistance for qualifying buyers.

Get preapproved

Once you have an idea of how much you can contribute to a down payment, get preapproved for a mortgage. The process is easy — you can often do it online — and a preapproval letter shows sellers that you are a serious buyer who is highly likely to successfully secure financing.

Find a real estate agent

While you can certainly look at homes online on your own, finding a real estate agent is a smart move in San Diego. Realtors have local expertise and can sometimes even point you to listings before anyone else knows about them. Be aware that California does permit dual agency, which means that a single agent can represent both the buyer and the seller in a transaction. This can cause some conflict of interest (though it doesn’t always), so be aware of exactly who your San Diego agent is working for.

Be competitive

If you really want to beat out other buyers, the best strategy is a cash offer. These are especially appealing to sellers who worry that financing through a lender can fall through. However, if you aren’t sitting on a pile of millions of dollars, there is another strategy that can help a lot: speed. Properties in San Diego spend only around 20 days on the market. Make sure your finances are all buttoned-up well in advance, so you can be ready to act fast with your offer.

Closing on your new home in sunny San Diego

After the long journey to officially making that home yours, be ready for the final step in the process: closing day. Schedule a final walk-through shortly before closing to make sure that the home is in the condition you’re expecting and there are no issues that need to be resolved. And review your California closing disclosure — you’ll receive it at least three business days before the official close — to determine how much money you need to bring. Get a cashier’s check or certified check (a personal check likely won’t do the trick) for the final amount, and stretch out your writing hand before showing up. You’re going to be signing a lot of documents. Pay close attention to everything your attorney says, put your autograph everywhere it needs to be and get ready to smile: You’re officially a homeowner in San Diego.

Written by
David McMillin
Contributing writer
David McMillin is a contributing writer for Bankrate and covers topics like credit cards, mortgages, banking, taxes and travel. David's goal is to help readers figure out how to save more and stress less.
Edited by
Senior real estate editor