As most forecasts show, 2020 will be a good year for real estate investors who can afford to buy an investment property in the California housing market. The Golden State has many cities where you can buy a rental property and enjoy real estate success. One such location is the San Diego real estate market. But what makes the San Diego real estate market a good place to buy a property? And where are the best places to invest in San Diego? We will answer these questions by looking at:
- The San Diego Housing Market Data
- The 4 Best Neighborhoods in San Diego for Real Estate Investing
And to help you make the best investments, we’ll bring you up to date on 5 San Diego real estate market trends as well.
San Diego Real Estate Market: Mashvisor’s Data
How is San Diego’s market data looking? In order to find out, you obviously need to have the real estate data. So, where can you obtain access to San Diego’s data? Look no further! Mashvisor’s investment property calculator is all you need. We used our calculator to generate data for the San Diego real estate market. Take a look:
- Median Property Price: $813,485
- Price per Square Foot: $509
- Price-to-Rent Ratio: 24
- Traditional Rental Income: $2,790
- Traditional Cap Rate / Cash on Cash Return: 1.4%
To learn more about Mashvisor’s calculator, CLICK HERE!
The 4 Best Neighborhoods in San Diego
Where should you invest in the San Diego real estate market? The city is quite large and there are many great places for a San Diego real estate investment. However, only a select few are the best of the best. According to Mashvisor, the best places to invest in the city are:
- Median Property Price: $261,218
- Price per Square Foot: $233
- Price-to-Rent Ratio: 8
- Traditional Rental Income: $2,595
- Traditional Cap Rate / Cash on Cash Return: 8.9%
- Median Property Price: $347,639
- Price per Square Foot: $289
- Price-to-Rent Ratio: 11
- Traditional Rental Income: $2,674
- Traditional Cap Rate / Cash on Cash Return: 4.4%
- Median Property Price: $631,225
- Price per Square Foot: $266
- Price-to-Rent Ratio: 25
- Traditional Rental Income: $2,070
- Traditional Cap Rate / Cash on Cash Return: 4.3%
- Median Property Price: $346,275
- Price per Square Foot: $243
- Price-to-Rent Ratio: 13
- Traditional Rental Income: $2,192
- Traditional Cap Rate / Cash on Cash Return: 3.9%
San Diego Real Estate Market Trends for 2020
Before you start looking for properties in the top 4 neighborhoods, there are 5 San Diego real estate market trends for 2020 that you should know:
Condos and townhouses will be the most profitable rental properties in San Diego
As seen from the data above, San Diego real estate investing is very profitable. While the average San Diego investment property is lucrative, some property types are more profitable than others. According to Mashvisor, condos have the highest average return on investment in the San Diego housing market followed by townhouses:
- Traditional Rental Income: $2,635
- Traditional Cap Rate / Cash on Cash Return: 1.6%
- Traditional Rental Income: $2,666
- Traditional Cap Rate / Cash on Cash Return: 1.4%
Start your search for a condo or townhouse for sale in the San Diego real estate market here.
San Diego house prices will increase in 2020
House prices in California are expensive, to say the least. This is definitely the case in San Diego. According to Mashvisor, the median property price in the city is over $815,000. One of the causes of these high prices is real estate appreciation. According to NeighborhoodScout, San Diego real estate appreciated by 72.71% over the last 10 years. This placed the market in the top 10% nationally.
San Diego house prices are expected to continue to rise in 2020. According to Zillow, the expected appreciation rate is 3.6%. This is a notable 1.2% increase from 2019. The high property prices will likely be a barrier to San Diego real estate investors. So be sure to have your financing in place before you start your search for investment property in San Diego. Once you do get your hands on a local rental property, however, you’ll benefit from this appreciation.
San Diego will be impacted by the statewide California rent control law
The San Diego real estate market will be impacted by an important law in 2020. Of course, we are referring to the California rent control law. Effective since January 1st, the rent control law is meant to alleviate the state’s housing crisis. The law limits rent increases to only 5% per year, with state inflation taken into consideration. However, total increases cannot exceed 10%. Also, the California rent control law includes a ‘just cause’ requirement for evictions. Therefore, investors will need a specific reason for evicting a tenant. If you are going to become a landlord in the city, do more research on how San Diego rent control will affect your real estate investment.
Non-owner occupied rentals will be illegal for Airbnb San Diego
You may have noticed the lack of Airbnb San Diego data so far. So, what is up with Airbnb San Diego? The answer is, Airbnb is very restrictive in San Diego. Most importantly, non-owner occupied rentals are illegal for Airbnb investing. Airbnb San Diego rental properties must be primary residences. Also, they can only be rented out for up to 6 months a year. Airbnb hosts are also required to obtain a $949 short-term rental license. The license must be renewed annually. In addition, hosts must pay a 10.5% Transient Occupancy Tax. Due to such strict regulations, we do not recommend Airbnb investing in the San Diego real estate market. There is no expected change for 2020 at the moment.
Demand will be high in the San Diego housing market 2020
There’s no shortage of demand for San Diego houses for sale. This is most evident with San Diego being a warm seller’s market. There is competition between buyers over San Diego rental properties, specifically. 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. One main reason why is the city’s strong economy. For instance, San Diego’s 10-year job growth is 35%. This is above the national average. Of all the types of real estate rentals, however, one type is growing in 2020. According to the PwC, multi-family properties will be in high demand. In general, be prepared to face some competition from other investors over San Diego real estate listings in 2020.
The Bottom Line
All in all, the San Diego real estate market is one of the best markets in California. Want to find an income property in San Diego? To find houses for sale in San Diego, CLICK HERE to start your FREE trial with Mashvisor!