Keep renting or find some place else to buy your first home. This is not the time or place for a first time buyer to be taking such a big risk. The people who are telling you that real estate can only go up are forgetting (or don’t know about) the serious drops that occured in the past.
I purchase a nice home in Connecticut in 1987, during an overheated market very much like San Diego last spring. I owned the home for 13 years. It was a nice starter home in one of the most desirable towns in the whole NY City metro area. After 13 years and $100,000 of repairs and improvements (furnace, roof, deck, etc.), I sold it. I broke even. That’s right $0 appreciation over 13 years.
Put your money into well-diversified mutual funds (both foreign and domestic stocks) and enjoy the renting lifestyle. If you want to play homeowner, find a friend who is a homeowner and go spend every Saturday mowing the lawn, weeding the garden, fixing the faucet drips, etc, etc. Also, ask them to show you how much money they’re spending on trips to Home Depot, the plumber, pest control services, etc., etc.
If you’re really set on owning a home, get some (if you don’t already have them) remodeling skills/experience. If you can upgrade a home with your own hands on your own time, you can increase its value well beyond your costs.
