My advice is to always hold onto your properties as you move on (and up!) and rent them out if at all economically feasible. I know of very few folks in SD who purchased properties over the years, traded up, and held onto and rented prior homes that wish they had done otherwise.
As for purchasing downtown – two issues there: first, downtown has been the focal point of speculators local and world-wide – yes, world-wide speculation on downtown SD condos. Several of the newer developments are stalling in pre or early construction phases due to financing, lack of pre-sales and the downtown condo glut. Second, many downtown condo buildings have significant construction related deficiencies that are really impacting residents’ lives. You really need to do your homework on these buildings to find out what is going on and what the solutions are, if any.
Of all the SD micro-markets, downtown is by far the shakiest. It is one of the few markets where I would advise a wait and see approach or a rental approach before purchasing.
