A Complete Guide to Buying a House in San Diego

One visit to the coastal Southern California city of San Diego will make it easy to understand the appeal of buying a home there. The lifestyle is laid back, the beaches are stunning, and the city offers everything from a vibrant craft beer and food scene to a burgeoning startup community.

If you’re seriously considering buying a house in San Diego, it’s important to conduct plenty of research to ensure you’re positioned to make the best purchase decision for yourself. Like with every major city, there are certain details and quirks you should be aware of that may impact where you hone your search.

Check out this complete guide to buying a house in San Diego for a thorough look into the area’s real estate market, what it’s like to live there, and important financial information. With these 7 tips, you’ll be well equipped to tackle San Diego’s hot market and snag the home of your dreams.

buying a house in san diego

1. It’s a Seller’s Market

What you’ve been hearing is true — these days, real estate is often a seller’s market, and the same applies to San Diego, California. As one of the fastest-growing cities in the U.S., it is an attractive option to investors.

The housing supply in San Diego is constrained due to geography and limitations set in place by the government. San Diego is on the coast and the Cowles Mountains limit city expansion. City regulations prevent tall condos, making it hard to meet demand.

On top of that, there is currently a housing boom due to inflation across the country. Post pandemic, interest rates are the lowest they have been in years (2-3%), leading to more demand than supply and encouraging sellers to sell for higher. It is not uncommon for bidding wars to occur in today’s market, so be prepared to offer over asking.

2. Understand the Numbers

San Diego County’s median home price has topped $720,000 — and experts say not to expect a crash, or a big slowdown, anytime soon. Prices are up 16.1% in a year in San Diego County. In addition, inventory of houses in San Diego county has decreased by 49.8% compared to last year, making it a highly competitive market.

If buying a house in San Diego, the recommended down payment is 20% of the total cost of the house. However, some loans may require a less down payment, such as if you are a first-time buyer, but your monthly mortgage payment may be higher. Make sure you have plenty of money saved up to pay for upfront costs.

20% of $720,000 = $144,000 down payment

If you’re new to the state of California, there are other aspects of buying a home there that are important to consider. For example, property taxes can vary by city and county and, depending on location, may add significant costs to your mortgage. The average effective property tax rate in San Diego County is 0.73%, significantly lower than the national average, which is about 1% of the property’s total price.

Finally, your credit score is a very important factor in buying a house — especially if you’re planning to finance. The recommended credit score for getting a mortgage on a house is 680 or above.

3. Proximity to the Ocean Means Higher Prices

Like with many waterside cities and neighborhoods, San Diego is all about the ocean. When buying a house in San Diego, the closer your home is located to the water, the higher the value and list price.

Zillow reports that the median value of waterfront homes across the country is more than double the median value of all homes. Proximity to a beach can make a neighborhood more costly, and having even a small view of the ocean increases home prices.

4. Living With Drought

If you’re new to the United States Western region, an important environmental factor you should consider when buying a house in San Diego is susceptibility to droughts, especially in the hot or dry seasons.

Like many other California cities, San Diego prioritizes water conservation due to the state’s ongoing drought. Look into the year-round permanent mandatory water restrictions that are in place, such as allowing the watering of your lawn only on certain days of the week or, in more severe situations, not allowing it at all — something to consider if you’re buying a property with large yards.

Many San Diego homeowners have begun “going brown” by replacing their lawns with stone or gravel to aid with water conservation. Apartment living is also an option in San Diego, where you can be close to the action, earn stunning views, and not have to worry about landscaping.

5. Get to Know the Neighborhoods

Upon visiting San Diego, do some exploring to get a feel for the different areas and neighborhoods. The communities west of the I-5 highway and closer to the Pacific are more desirable. Some areas north of the city (such as La Jolla and Del Mar), as well as neighborhoods within the city itself (such as Little Italy and Point Loma), are just a short distance from the water — and those buying a house in San Diego are willing to pay top dollar for that access.

Rancho Santa Fe is a community in northern San Diego County, known for its expansive multimillion-dollar properties. As buyers lean away from homes with large square footage, however, many of the dozens of homes currently for sale in the area have been on the market for months — potentially presenting a great deal for the right buyer.

6. Use a Real Estate Agent

Whether you’re from the area or not, a real estate agent can prove to be a valuable partner to have when buying a house in San Diego. They can provide you with guidance and access to listings. Realtors are great resources to tap for questions on different neighborhoods and will be able to point you in the right direction based on your preferences for a home. They are very familiar with their market and can help you close the deal on your dream home!

7. Contact New Venture Escrow

When that time to close on your house comes, partner with an escrow company you can trust. New Venture Escrow is San Diego’s top escrow company, with offices in Temecula, Carlsbad & Mission Valley. Our dedicated team of Escrow Officers has years of experience in the San Diego real estate field and can help guide you through the closing process for the home of your dreams. Get in touch with us today and learn more about what sets us apart from the rest!

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