Market Overview

If you are considering investing in San Diego, chances are you understand the lifestyle benefits that this beautiful city offers. With one of the most desirable climates in the world it has nearly perfect weather all year round. The city is well known for the active outdoor lifestyle it fosters, being in arms reach of some of the top beaches in the world and only a quick drive to the mountains and desert.

San Diego’s economy is growing rapidly, and more people are headed towards these sunny shores. The population has grown by 7.5% since 2010 and it’s 10-year job growth is 35% which is above the national average. Over 53% of the city’s population resides in San Diego rental properties, making them a great real estate investment. Long-term rental properties, in particular, are in high demand in the San Diego real estate market.

With the median home value currently at $680,000, San Diego real estate appreciated by 72% over the last 10 years. This placed the market in the top 10% nationally. The prices of homes for sale and rent continue to rise, and savvy San Diego real estate investors are snatching up smart investments before supply depletes. The city is battling low inventory by rezoning various areas of the city into higher density zones along with making it easier to convert existing structures/garages into ADU’s that can be rented out for additional income.

Today’s most prominent market indicators suggest it may be better for investors to consider long-term strategies. In addition to high valuations, the new landscape created by the Coronavirus has tilted the investing landscape in favor of long-term investors. That said, here are some of the new San Diego real estate market trends benefiting rental property investors:

- Interest rates on traditional loans are historically low

- Years of cash flow can easily justify today’s higher acquisition costs

- Inventory shortages will increase rental demand

Lower borrowing costs will help absorb today’s high prices, but it’s the cash flow potential of real estate assets which makes the prospect of owning a rental property even more attractive. With a median rent price of $2,750, it is possible to simultaneously rent out an investment property while having someone else pay down the mortgage. That way, investors could potentially build equity in a physical asset and collect cash flow each month with the right long-term investment.

Investment Price Points

You can be able to cash flow on purchases at every price point. From $500,000 duplexes to million dollar multi-unit properties. From 1 bed condo’s to million dollar ocean view short term rentals. No matter what your investment strategy is there are plenty of opportunities awaiting a smart and motivated investor.

With the average $/sf at $460 San Diego presents an opportunity to increase income and equity by adding square footage, additional units, and/or converting extra space into an ADU(s).

Entry Level: $300,000 - $600,000

Mid Level: $600,000 - $999,999

Upper Level: $1,000,000+