Is it better to rent or buy in San Diego?
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It depends on your situation. Buying makes sense if: you'll stay 5+ years, have stable income, and can afford 10-20% down. Renting makes sense if: you might move within 3 years, are saving for a better opportunity, or buying would stretch you too thin. San Diego's high prices mean the break-even point is typically 4-6 years.
What is the 5% rule for renting vs buying?
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The 5% rule compares your total unrecoverable costs of owning (property taxes, maintenance, cost of capital) to rent. If annual rent is less than 5% of the home price, renting may be better financially. For a $700K San Diego home: 5% = $35K/year or $2,917/month. If you can rent similar for less, renting wins financially.
How much do I need to buy a home in San Diego?
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To buy in San Diego you'll need: Down payment: $35K-$140K (5-20% on a $700K home). Closing costs: $14K-$21K (2-3%). Cash reserves: $10K-$20K. Total upfront: $60K-$180K. Plus income sufficient for monthly payments of $4,000-$5,500.
What are the hidden costs of homeownership?
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Beyond your mortgage, budget for: Property taxes (1.1% in San Diego), Insurance ($1,500-$3,000/year), Maintenance (1-2% of value/year), HOA fees ($200-$500/month if applicable), Repairs (budget $3K-$5K/year for unexpected issues).
Does renting mean I'm throwing money away?
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No. Renting provides flexibility, no maintenance costs, and no market risk. The key is what you do with the money you save by renting. If you invest the difference between renting and owning costs in the stock market, you can build comparable wealth — sometimes even more, depending on the housing market.