SAN DIEGO — A new study released this week by Apartment List puts the median rent for a two bedroom in San Diego at $2,030. The median cost of a house in San Diego is $690,000.
As prices continue to rise each year, many are wondering: Is it better to rent or buy?
The bottom line? It really depends but there are things to consider on both sides.
Chase Wilsey, a financial analyst with Wilsey Asset Management, said the biggest benefit to buying is making a place your own.
"Renting and buying both do have benefits and costs to both of them,” said Wilsey.
Regarding owning, Wilsey warns about hidden costs like property tax and maintenance.
According to Realty Trac, the average price of a home in San Diego right now costs just over $639,000.
Wilsey said if someone has saved enough money for a down payment, they might want to consider investing it elsewhere.
"Historically the last 20 years homes have appreciated by 3.4% nationwide. Equities on the other hand have averaged 7.2% over the last 20 years,” he said.
Wilsey suggests renting will also help deter buyer's remorse by allowing someone to test out different areas. Another thing to look at is the price to rent ratio – in San Diego it's 30 times.
"The lower the number, the more attractive it is to buy a house. The higher the number the better it is to actually rent in that market,” he said.
Sam Hansen, with Loan Depot, said every situation is different. For example, Hansen said if you buy, your payment will never go up – unlike rent.
"There's definitely factors that we need to educate our clients on. As home prices rise, you can lock in a 30 year fix mortgage, which right now is 3.9%, on an average scenario, you are hedging against inflation."
Like Wilsey, Hansen believes having the freedom to do what you want with your home is a huge plus to buying.
When it comes to saving for a down payment, Hansen said potential home-buyers would be surprised what they could potentially qualify for.
"They can put less than 20% down. A lot of people think they must save 20%. They do not need to save 20%, they can put as little as 3.5% down. On VA loans it's 0% down. There are a lot or programs out there that do help people purchase their homes,” said Hansen.
If still unsure, the best bet is to talk to a professional first before deciding, that way you are prepared for what is to come.