As local San Diego property managers, we have seen a lot of trends in the sales and the rental markets. The real estate market is always changing, and with everything that’s going on right now, it’s hard to say where we’ll be as buyers, sellers, investors, and owners at the end of the year. Anyone who owns San Diego real estate is probably feeling pretty comfortable because this is a stable market that has weathered recessions and downturns before.
Today, we’re discussing why San Diego has grown in popularity as a place to invest in rental real estate. There are a number of reasons for this market trend, and we expect it will continue to impact the rental market throughout 2020 and beyond.
San Diego is Always a Strong Economy
One excellent reason to invest in the San Diego market is the strength of the local economy. We are California’s second largest city, and the opportunities for growth are continuing to present themselves. The employment rate has remained high, and our military bases have sustained the local economy even during periods that the private sector has struggled.
Military personnel from the Navy and Marines especially are coming into the area on a regular basis, and data on the local economy is continuing to outpace nearly every national average. We’ve always had steady job growth and a stable market in San Diego. Investors know that when they buy property, they will have access to a financially secure tenant pool.
San Diego Real Estate is Diverse
Talk to any local property manager and you’ll hear about the abundance of residential single-family homes and multi-family properties. There’s new construction and established neighborhoods. There’s even plenty of commercial real estate.
You can find nearly every type of real estate investment in San Diego. Investors can take the time to diversify their real estate portfolios or add an asset that cannot be found in other markets. Whether you’re looking for residential or commercial real estate, you’ll be able to find something that fits your investment goals in San Diego.
Strong Pool of San Diego Tenants
Landlords are quick to invest in San Diego because of the tenants. There are a lot of military families looking for housing, and there’s also a heavy population of tenants who work in the healthcare and tech fields. There are students and academics.
Investors have access to a pool of tenants with stable financial histories and a good track record of maintaining rental homes. Demographically, San Diego is at an advantage. It’s one of the most desirable retirement destinations in the country, and a lot of people in that age group are choosing to rent or downsize. They enjoy the flexibility and the low-maintenance that comes with a rental lifestyle. This gives investors and landlords a lot of opportunity in terms of tenant access.
Rental Rates Have Been High
There may be some concern statewide about the rent control that’s in place, but we don’t know a lot of landlords who plan to raise the rent on their good tenants more than seven or eight percent a year anyway. We’re also comfortable that the rental market will be stable, even with the global economy shifting in response to the latest pandemic.
In the last few years, the cost to rent a one-bedroom apartment was over $2,100. Rents are even higher in San Diego suburbs such as La Jolla. Even as rents stabilize and even if they drop a bit, investors will still be able to rely on a strong investment position especially as the economy builds itself back up to where it was before things began to slow.
Investing in real estate brings you a number of financial and tax benefits. When you’re looking for a great place to buy your next investment property, consider contacting us at Mercer Properties. We’d be happy to serve as your local San Diego property management resource.