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By E.V. Small

February 5, 2013 (San Diego County)--For the past two years this question was extremely easy to answer. The combination of historically low interest rates and abundant inventory due to the record number of foreclosures has resulted in the lowest housing cost in decades.

The average sales price of a home in San Diego County during November 2012 was $358,000, which is a 13% rise from November 2011.[1]  Although housing prices in San Diego are steadily rising, they will begin to slow as interest rates start to rise. In an effort to assist with anemic economic recovery, the Federal Reserve has held interest rates artificially low but this is merely a short- term solution and interest rates will eventually rise again.

For example, if the interest rate rises from 4% to 6%, a monthly mortgage payment of $1,432 will jump to $1,795. That is the equivalent of receiving a yearly salary decrease of $5000, or an 8% pay cut for San Diego’s median income families. 

Cash Buyers-

 If you are in a financial position to pay cash for a house, now is definitely the time to purchase a new home or acquire investment property.   However, the opportunities for purchasing investment properties are shrinking because the banks are becoming more reluctant to foreclose, so the volume of inventory reaching the market is dwindling[2].   Semi-savvy investors are still expected to generate 12%-25% profit margins during 2013[3].

Financed Buyers-

Move quickly! – You may never find a better combination of inventory and low interest rates. 

As the market continues to slide towards a ‘seller’s market’, housing prices will continue to rise. There are still plenty of great deals throughout San Diego County. It is my opinion that the next six months will be the best time to solidify a home purchase because you are more likely to get ‘more bang for the buck’. 


The San Diego housing market has recovered, and the low interest rates have introduced a whole new segment of qualified buyers to the market.  Sellers are likely to receive multiple offers, and those offers are likely to be 2%-10% higher than the neighborhood’s most recent home sales[4].

For questions or comments about this article, or if you would like advice on your particular situation- Please email info@smallworldms.com or call 888-938-5453.

[1] Factual data collected from  DQNEWS.COM

[2] Factual data collected from REALTYTRAC.COM

[3] Factual data collected from FORECLOSURERADAR.COM

[4] Factual data collected from REALTYTRAC.COM


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