In San Diego and Southern California right now, subprime mortgages (which are designed for individuals with low credit scores) are getting stricter as far as lending standards go, which is making some would-be homebuyers turn to renting. Many new condo and home buyers are facing larger downpayments and higher monthly payments, because lenders (locally and nationally) recently raised underwriting standards to stabilize increasing loan defaults. With an overall occupancy rate in San Diego unchanged in the past year of 96.5%, landlords are expected to see increased earnings based on steady job growth and continually increasing economic activity.
But will these loan market issues really make renting a more affordable option than owning? Not necessarily, and this is why. Now that a subprime crackdown has occurred, more and more would be homeowners are being pushed towards rentals. But this new demand for rentals is resulting in an increase in rental prices accross the board for Southern California. As rental prices rise, mortgages may begin to start to look attractive again, even in the subprime mortgage market. With average two-bedroom units renting at an average of $1,300/month this year in San Diego, we have already seen a 2.5% increase in rental costs in the past year. Should this continue, we may start to see rental units begin to catch up with mortgage payments, making owning a viable option once again. Check out over 80 new and pre-construction projects throughout San Diego County at www.newcondosonline.com
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