When I say “coast”, I generally mean north county coastal or a location in San Diego proper that is near the coast (like Bay Park). I probably wouldn’t consider areas like North Park just because they can command a premium without what I would consider to be a premium location.
I think buying a house anywhere (coast or not) is a mistake if the payment is dangerously high for your income. By dangerously high, I mean there would be a risk of losing the house if one or both owners lost their job. I’m a firm believer in being extremely conservative when it comes to budgeting. If a couple can survive with one spouse on unemployment and the other working full time at a gas station, that’s a good start (and that’s not even a worst case scenario – think major injury/illness if you want to go there). If not, or if the property wouldn’t at least break even as a rental, they’re paying too much for housing and they should be renting a smaller place.
It’s not that the value of my house in Temecula will enable me to retire early on the coast, it’s that my $1k mortgage will enable me to save several thousand more per month than I would otherwise, over the next 15 years, all of it reinvested in rental property. Our current property will become a rental as well, and it was chosen with that in mind. For the retirement property we’re thinking 40% down and a 15-year loan, so it won’t be completely mortgage-free, but because other sources of income will cover it, it’s not a concern.
Our current tax rate is 1.5%. There are bonds involved, but I don’t know the details. That’s one of the downsides to this area, but like all the other downsides, it’s minor – that 1.5% is on a house that cost me $250k, so it’s not like I’m paying exorbitant amounts in taxes. We have several rather well off friends in Carlsbad who pay more in taxes than our entire PITI. At the same time, it isn’t a mistake for them to buy on the coast, because they can easily afford it.
Other benefits to TV which aren’t mentioned often are lower child care costs and HOA fees (ours is $46/month, and that includes a community pool). Those two alone make up for the gas used in the commute.
Anything near the coast would be a better long-term investment than TV, if you buy at the right price. In my opinion, we’re not there yet. You also have to consider that part of what makes an investment a good one is if you’re not over-extending yourself, which allows you to put some of your eggs in other baskets.
