When you put it out into the universe that you’re interested in purchasing real estate in San Diego you begin to hear a lot of opinions. Your spouse may be quick to rattle off a lengthy “wants” list. You’ve been reading about how it’s a seller’s market yet the interest rates are still low. And whether this is your first purchase or your fourth, today’s home buying process has taken on a tech-savvy approach making property information accessible with a click of a button. While purchasing a home is oftentimes an emotional endeavor, it is also a business transaction and can be considered part of your investment portfolio. Seeking out the advice of trusted professionals like a vetted-lender, your local San Diego financial planner, and a responsive REALTOR® adept at negotiations, are all important meetings to schedule before deciding to move forward with your real estate purchase. Are you purchasing with your partner? Another family member or friend? Sitting down with all the decision makers is necessary to hash out what you’re ultimately looking for as well as the timeline you’d like to accomplish it by. Deciding whether now is the right time for you to purchase a San Diego home, here are some crucial questions to get answered:
What is your budget?
A lot of your questions can’t be answered if you don’t know what your budget is. Even if you are planning on making an all-cash purchase, understanding where your line in the sand is, impacts the type of property and location you should consider. If you’re seeking financing, looking at an overall budget (purchase price) as well as your out-of-pocket expenses (down payment plus closing costs) and your monthly budget (mortgage payment) at various price points for different loan products will help you decide the best financial option. Be sure to ask your REALTOR® or financial planner for lender recommendations. Just like any of your financial partners, your loan officer should have your best interest at heart. Your San Diego financial planner can go over the financial risks involved and help you tailor your budget. Perhaps you are considering purchasing a historical Mission Hills or Sunset Cliffs home that will need ongoing maintenance or a Normal Heights home that you would like to expand and add value to. Your CFP® professional can help you project and plan for the out-of-pocket expenses surrounding homeownership.
What is your risk level?
Despite higher than average prices, San Diego county has a wide range of price-points. The county offers both established luxury communities like La Jolla, Del Mar, Rancho Santa Fe as well as up-and-coming neighborhoods like Golden Hill, City Heights, and Barrio Logan. There are also hundreds of moderately priced communities in between. Ten years ago, a buyer would have been nervous purchasing in South Park over Kensington while a buyer today would consider both communities as well-established urban luxury markets. Exploring whether you want to invest in a community that may appreciate more dramatically versus investing in an already established community will help you understand what other goals you would like to accomplish through a potential purchase. A well-versed REALTOR® should be able to discuss the pros and cons of various neighborhoods as well as compile statistics on demographics, crime, and historical values.
How will this impact your lifestyle?
Are you upgrading to a larger home? A more expensive home? Or are you downsizing? Assessing whether you will need to make lifestyle changes based on your financial situation, even for a short period of time, is important to plan for. Budgeting for upkeep and insurance are all things that should be factored in. Your San Diego CERTIFIED FINANCIAL PLANNER™ professional can help you address your insurance needs and make sure that you and your investment are protected.
Buying real estate in San Diego is often times about location and that location can be tied to lifestyle. You may be seeking a lifestyle change: moving from the energetic East Village of Downtown San Diego to a quieter but central neighborhood like Bay Park or Poway; perhaps you’d like to move from Carmel Mountain Ranch closer to the coastline or metro San Diego. If you are considering neighborhoods outside your current one, plan on making exploratory dates without your REALTOR® to spend some time doing some of the things you would normally do if you were to live there. Check your comfort level by taking a walk down the residential areas as if this was already your neighborhood; perhaps grab a cup of coffee or visit the nearest farmer’s market.
If you’re new to the area, San Diego is a town of drivers. Although ridesharing has increased in popularity, San Diego is a difficult city to live in without a car or at least without access to one. A 20-30 minute commute is usually the goal, however with traffic 40-60 minutes is not uncommon. Knowing your options in neighborhoods and communities that put you closer to work, lifestyle points you enjoy and frequent, will help your decision making.
Whether you have children or not in San Diego, access to top-rated schools based on your home’s location helps your purchase retain value. In recent years the internationally diverse La Jolla school system and the award-winning Poway Unified School District, are just a couple examples of neighborhoods that garner attention from buyers as a result of their education. With the development of several charter and private schools, sections of metro San Diego offer a wider range of educational options than in previous years. Of course choosing private over public schools may mean additional budgeting and planning is required.
What are the benefits of homeownership?
While you’re sitting down with your San Diego CFP® professional, discuss the tax benefits and wealth potential that can accompany purchasing real estate. Taking the time to look at the big picture, will help you consider how to properly vest your property as well as what price point offers you the most financial benefit for your tax bracket and personal financial situation.
Is the timing right?
In a seller’s market, the price tag for San Diego real estate can be hard pill to swallow. However, there’s peace of mind in knowing that the county’s value continues to rise in popularity. With the scarcity of buildable coastal land, buyers can count on a certain level of value retention and appreciation. San Diego county has seen a median value increase of 7.4% over the last 10 years, which means despite the market crash of 2008, the median home price now exceeds the median home price in January 2007 (reported by Sandicor). Some may interpret this information as a red flag that we are in another real estate bubble. With interest rates expected to rise a couple more times by the end of 2017, these increases may cause a leveling off but waiting for values to drop dramatically in order to scoop up “a deal” will most likely result in a higher mortgage payment.
Researching the answers to your financial and lifestyle questions isn’t a task to go at alone. As dedicated San Diego CERTIFIED FINANCIAL PLANNER™ professionals, WorthPointe advisors are well networked and have wealth of local contacts that can help you assess your needs whether you need a list of mortgage brokers or specialized real estate agents.
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