Congrats on saving so much, and making good money while you’re young.
I was in your same boat in the mid 2000s. I moved here at 24 and was making 100K within a year, and saving more than half of my take home.
I waited until 2011 to buy a house in OB, and it was the best financial decision of my life. I actually saved money compared to renting, and have about 250k in unrealized cap gains, as well as a low property tax base locked in for life.
I dissent from the words of caution here and say go ahead and buy for sure if your job is safe, and stretch to get a house rather than a condo.
Unless you have student loans at a high rate, in which case pay them back as fast as you can. No safer way of improving your finances.
It was only after buying that how cheap homeownership can be sunk in. My mortgage payment is about $1900. Of that amount, $600 is principle, so increasing my net worth by decreasing my loan balance. The other 1300 is interest and property taxes (except a small amount for insurance). That gets deducted from my taxes. So my true cost of ownership is only around $880 a month for a house in OB. Your loan would have to be about double that, but $1700 as a true cost of ownership sounds like something you can afford.
I was did a refi when rates fell to 3.25%, and used this as a chance to pay in enough to remove mortgage insurance too. Rates are currently almost that low again, and when you own you always have the chance to take advantage of falling rates this way.
I think the market will continue to increase, probably by 15% over the next two years. There are just so many Chinese and Korean people who dream of moving to California, both the lifestyle, cleaner air, and the political stability. SD is not the top of their list, but SF and LA are getting really expensive and we offer more value. And we are getting a real critical mass in zone from Mira Mesa and Claremont to CV and Del Mar, pushing other buyers north to Carlsbad and South to OB and Point Loma.
Rates have also started to fall to near record lows again. Move-up buyers also now have plenty of equity to fund new purchases. And some potential moveup buyers like me will keep their old house, especially if it cashes out as a rental.
As for condo v house, I would have made more so far if I bought a condo. They go up more in good markets and down more in weak markets. However I think in 5-15 years single houses on lots zoned for 2 to 3 houses like mine will end up the best investment. Lately nearly all the construction in OB has been townhouses or townhouse style but detached houses. These keep selling for $650 to $950. Even if I’m wrong, I like having my own land with maximum freedom to do what I want with and no shared walls.
Right now there are about 5 houses on their own lots in OB under 700k. I think you should have a look, run the numbers, and make some offers. North Park and South Park would also be nice. You’re a little young and single for La Mesa and east county. For La Mesa in particular, I’d worry that all the boomers who bought in the 60s and 70s start to die off and their homes hit the market.
Another thing is, when I have free time from work I can improve the value of my house by fixing it up. Spend 20 hours improving the value of your house by $400, and that gain isn’t taxed at all now, and might never be since the first 250K of home capital gains is tax free.
