In today’s real estate market, people looking for a new home frequently wonder whether to rent or buy. It’s a difficult question to answer. Real estate prices in San Diego are relatively high, whereas rents are lower in comparison when it comes to a monthly payment. However, just because the cost of something is lower doesn’t mean it has more value. Today we will be looking into renting vs. owning in San Diego and deciding what’s smarter in 2022.
If you haven’t decided whether you want to buy or just rent, look around and see what’s available in San Diego. If you’re going to make the best decision possible, you must first understand what is available.
Before We Begin
Before deciding whether to rent or own in San Diego, you should always learn everything you can about the location you’re moving to. People are easily swayed by the idea of moving to a new location without looking deeper than the surface level. Before you relocate, consider the following:
- The cost of living
- The economic growth potential
- What the weather and climate are like
- What the traffic is like
- How the public transportation works
These are just some things you should know about San Diego prior to making it your home permanently. Of course, bear in mind that these are only the key aspects to look into before moving to this area, as life in an area is much more than just the traffic and the cost of living.
The Benefits of Renting in San Diego
Renting may not seem like progress, but that doesn’t mean it’s not the best option for you right now. The truth is that there are several significant advantages to renting, including the fact that you are not tied down to a house or how your local real estate market performs.
Flexibility mostly comes down to the type of person you are. For people who like to travel and discover new areas and places, renting is the best option. If you don’t want to be tied down to just one place, renting is the way to go. Renting is also a better option if you change careers or jobs often. Purchasing a property in San Diego may restrict your ability to pack up and relocate in the near future.
Avoiding the Costs of Homeownership
Every homeowner is well aware of the possibility of unexpected bills on top of the monthly mortgage payment. According to HOA estimates in San Diego, monthly HOA dues could range between $400 and $800. Approximately $6,000 per year is spent on average on property taxes in San Diego. Take into consideration the costs of furnishing and decorating your home as well as the costs of fixing problems with the property, plumbing, landscaping, and general upkeep. The benefits of owning a home are available to you as a renter, but you are not responsible for the financial obligations of home maintenance.
In general, you can’t transform a property into cash instantly. Many individuals place their entire life savings into a property, placing the majority of their net worth into an illiquid asset. There is a danger in investing a significant amount of your capital in such an asset. Renting provides you with freedom as well as other investing opportunities.
Increasing Your Credit Score by Renting vs. Owning in San Diego
Everyone needs a good credit score for almost everything we do. No matter if you want to get a big 4K TV or you need a new car. While renting may not improve your credit as much as buying a house, building a history of on-time rental payments can help you qualify for a mortgage in the future. However, you need to have your landlord send your payment information to a credit bureau to make this work. There are also third-party services that may assist you in reporting this information on your behalf.
The Benefits of Buying a Home in San Diego
Renting may have its benefits, but there are also a lot of benefits to owning a house in San Diego in 2022. The obvious advantage is that you can have something of your own. When you own a home, you are not at the mercy of a landlord who can change the terms of your lease or, worse, sell the property without warning. The flexibility that renting offers comes with a lot of risk and uncertainty.
Less Fluctuating Costs
Your landlord decides how much the rent will cost. They don’t have to warn you or justify themselves when they increase the rent. However, if you take out a mortgage, you can be sure that it will not increase over time if you are making the payments on time. This is in stark contrast with rent, which increases following the property’s market value plus inflation.
Benefits from Taxation
In your capacity as a homeowner, you may be able to deduct a variety of associated expenses from your taxable income. Aside from that, all interest paid on a mortgage is tax-deductible up to $750,000. Additionally, deducting expenses such as mortgage interest may help you avoid IRMAA surcharges while also lowering your overall tax liability.
In the same way that you can invest in stocks and other similar assets through brokerage and retirement accounts, you can also use real estate as another asset class to diversify your portfolio. Apart from that, because it is a physical asset, real estate appeals to many other people willing to invest or buy the property.
You Can Sell or Rent Your House In The Future
It is possible to build equity in your home by paying down your mortgage over time. If you own the house, you can invest in it, remodel it, and increase its value. After that, you can sell it for more than you paid for it. You can do whatever you want with it when you own the house outright. So, if you ever decide to relocate, you can make money from it. And when deciding whether renting vs. owning in San Diego is the better choice, one ought to think about the future.
So, renting vs. owning in San Diego – what’s smarter in 2022? As you can see, the answer is not so simple. Depending on the type of person you are, your goals, and your preferred lifestyle, you may need different things. However, in our opinion, it is always a better idea to buy if you have the means. If you don’t have that option, you should try to save so that you can make it happen in the future.
If you are thinking that buying or selling your home in San Diego, contact the McT Real Estate Group. We are here to help with the process.