I’m sure some of the well-qualified real estate professionals on this forum can better answer your question, but I just wanted to respond based on what I’m currently seeing in those markets.

Several family members and friends live in Mission Hills, Point Loma and Sunset Cliffs, and, especially recently, they have seen properties around them selling for above asking prices. There seems to be a renewed interest in the area of late.

My Mom has a neighbor in Sunset Cliffs who is a Patent Attorney, and he spent a million for the property, tore it down, and is now spending another 2MM to rebuild. Same story across the street from her with an insurance executive.
(My parents paid $70K for their house in ’78, so go figure)

As in all areas of San Diego, there will be deals, but my suggestion would be to start working with a reputable realtor to help you find the gem you are looking for at the price you wish to pay.

I’m sure some of the well-qualified real estate professionals on this forum can better answer your question, but I just wanted to respond based on what I’m currently seeing in those markets.

Several family members and friends live in Mission Hills, Point Loma and Sunset Cliffs, and, especially recently, they have seen properties around them selling for above asking prices. There seems to be a renewed interest in the area of late.

My Mom has a neighbor in Sunset Cliffs who is a Patent Attorney, and he spent a million for the property, tore it down, and is now spending another 2MM to rebuild. Same story across the street from her with an insurance executive.
(My parents paid $70K for their house in ’78, so go figure)

As in all areas of San Diego, there will be deals, but my suggestion would be to start working with a reputable realtor to help you find the gem you are looking for at the price you wish to pay.

I’m sure some of the well-qualified real estate professionals on this forum can better answer your question, but I just wanted to respond based on what I’m currently seeing in those markets.

Several family members and friends live in Mission Hills, Point Loma and Sunset Cliffs, and, especially recently, they have seen properties around them selling for above asking prices. There seems to be a renewed interest in the area of late.

My Mom has a neighbor in Sunset Cliffs who is a Patent Attorney, and he spent a million for the property, tore it down, and is now spending another 2MM to rebuild. Same story across the street from her with an insurance executive.
(My parents paid $70K for their house in ’78, so go figure)

As in all areas of San Diego, there will be deals, but my suggestion would be to start working with a reputable realtor to help you find the gem you are looking for at the price you wish to pay.

Assuming that interest rates remain at current levels (probably not a good assumption), I do not see the nice parts of these areas dropping to 12x annual rental income. People will buy in the nice areas at well before they become cheaper to own than rent. (Same is not true for the marginal areas). I would expect more like 14 or 15x at current interest rates. That’s about the point where the marginal cost to own vs rent is relatively small.

HOWEVER, if interest rates creep up to the 8% + range, I would fully expect to see houses in Point Loma sell for 12x rent or lower.

Assuming that interest rates remain at current levels (probably not a good assumption), I do not see the nice parts of these areas dropping to 12x annual rental income. People will buy in the nice areas at well before they become cheaper to own than rent. (Same is not true for the marginal areas). I would expect more like 14 or 15x at current interest rates. That’s about the point where the marginal cost to own vs rent is relatively small.

HOWEVER, if interest rates creep up to the 8% + range, I would fully expect to see houses in Point Loma sell for 12x rent or lower.

The historical relation in San Diego normally quoted between rent and purchase cost is generally somewhere between 150 and 200x rent, with the higher desireability places going for closer to the top. Since 12x annual is pretty close to 150, I think you may be using a “rule of thumb” that is designed more for areas that aren’t “premium” (e.g. Mira Mesa, La Mesa, etc).

Be that as it may, housing prices to rent ratios in San Diego are still significantly out of whack. At the peak of the bubble, I would guess they were up at about 300x rent as a general rule. They’re falling now, but as has been noted all over the blog, they’re falling first from the outlying and inland areas, and the correction is slowly making its way to the coast. It’ll be quite awhile yet before we get back to normal historical ratios. I suspect the Pt. Loma area though will not likely dip too much below 200x rent – it’s very central, and very popular, though not quite as chic an address as La Jolla or Del Mar.

The historical relation in San Diego normally quoted between rent and purchase cost is generally somewhere between 150 and 200x rent, with the higher desireability places going for closer to the top. Since 12x annual is pretty close to 150, I think you may be using a “rule of thumb” that is designed more for areas that aren’t “premium” (e.g. Mira Mesa, La Mesa, etc).

Be that as it may, housing prices to rent ratios in San Diego are still significantly out of whack. At the peak of the bubble, I would guess they were up at about 300x rent as a general rule. They’re falling now, but as has been noted all over the blog, they’re falling first from the outlying and inland areas, and the correction is slowly making its way to the coast. It’ll be quite awhile yet before we get back to normal historical ratios. I suspect the Pt. Loma area though will not likely dip too much below 200x rent – it’s very central, and very popular, though not quite as chic an address as La Jolla or Del Mar.