I am looking at the possibility of purchasing a property in the San Diego costal area, however I wanted to get some feedback from people that know the economic outlook better than I would. Is it a wiser time to buy a property in this type of area at the prices that the homes are currently demanding? We would ideally like to make sure that we are not buying at a time when the prices are so inflated that our economy may not be able to hold the value and be stuck paying for a property that we can’t sell for anywhere near what we bought it for.

Will there be a better time to buy in the future if we can wait, or will the prices continue to rise?

Can our current economy support continued upward increase in value.

Just looking for some feedback for decision making and understanding what economically the future state of the investment would look like.

  • Keep in mind that if you sell your house to buy a new one and real estate prices have fallen in the mean time, you also pay less for the new home. So the development of the real estate market only is affects you if you expect to significantly upsize or downsize in the future. If you expect to upsize, you actually want prices to fall. If you want to downsize, you want prices to rise even further. However, this logic ignores that you might want to move to an area where real estate prices developed in a different way. – Philipp Jun 13 '19 at 13:37
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    Predicting the market is only half the equation. It's a very difficult half to do well. The easier half is predicting your own future: what's the chance that you will actually want to sell, and in what timeframe? Granted, no one wants to be caught off guard by an unexpected life change, but someone looking for a 30 - 40 year "forever home" may be less market-sensitive than someone who is more mobile or uncertain about their future. – dwizum Jun 13 '19 at 14:09

Since the '08 Crisis, after the initial (hard) drop prices are continuously going up, therefore such a question is meritable.

Will there be a downturn/correction? Most definitely yes, to which severity and how much will it affect popular areas like the one you 're looking at no one knows. Its usually never a good thing to try to time the market.

That being said, there are also positive associations in buying in the current situation. For instance, access to capital has never been easier and that includes mortgage rates that are record-low. Just keep extreme caution to opt for a fixed rate mortgage which will be locked at said rates regardless of economic outlook (and which you can also re-finance if somehow things get noticeable better rate wise, while at that).

You can also mitigate costs by house-hacking aka buying a small multi-unit real estate property, live in one unit, and rent out the others to essentially pay for the entire property. Occupants in schemes like that, also benefit from smaller down payments, since 0% to 5% is possible with programs like VA and FHA loans in contrast with the typical 20-25% down.

In any case, if you approach this like that, the actual price of housing wont affect you even if the asset loses value (in paper), even more so since economic instability deters people from buying, therefore, increasing the number of people seeking to rent(which will be a source of income and a guarantee to your repayments should you opt to go down that route).

  • Leon, Is it safe to buy in these markets at their current value though, or am I buying it at inflated costs if purchasing right now? – CodingRiot Jun 13 '19 at 16:16
  • @CodingRiot it's very likely to be an "inflated" price in this continuous bull market but the real question is if that should matter. If you 're financing it at record low rates can house hack it, to begin with and throughout that as well as later continue to rent it out for prices that pay for the monthly expenses (mortgage incl). I do not know the details of either your financial situation, job stability, and potential mobility but given the right conditions its likely to not even matter if you purchase now "at inflated costs". – Leon Jun 14 '19 at 5:48

Due to climate change I would stay away from coastal markets. I would assume that more and more people are becoming reluctant to buy in a location that might not exist in a couple decades.

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    People keep flooding into Florida, so your assumption seems to be wrong. In addition to you not knowing how slowly sea levels are rising. – RonJohn Jun 13 '19 at 15:57
  • The question was about buying a house now, not buying a house 20 years ago and selling it now. – xyious Jun 13 '19 at 16:16
  • What does buying a house 20 years ago have to do with people immigrating to Florida now? And -- according to Wikipedia -- the Census Bureau, the population of San Diego is almost 9% higher than 9 years ago. IOW, your answer is flat out wrong. – RonJohn Jun 13 '19 at 16:38
  • @RonJohn It's wrong for today, but not in the upcoming decades. – Jonast92 Jun 13 '19 at 17:22
  • @Jonast92 maybe. But xylous' answer is are becoming, not will become. – RonJohn Jun 13 '19 at 17:31

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