For those who have owned real estate anywhere in the San Diego area, prices have been ascending quite nicely. While older California neighborhoods are gentrifying to the point that recent purchases lead many to overbuy (paying more than the home is worth), those in the San Diego area have been able to purchase growing assets at fair market prices.

But that is the past. The question on many investors’ minds is, what does the future hold?

Median Values Are Going to Rise

The median value of a San Diego home is about $500,000. The result is that many homeowners are able to cash out of the home they raised their family in and scale down their lifestyle with some cash to boot.

Having said that, the San Diego market is not hurting from high prices. In fact, in January, 2017, the city was noted as being the 5th hottest market in the US.

For people wanting to raise a family, this might make it hard to buy a home, but for investors, a rare opportunity exists in the ability to provide good housing at affordable rates. One such investor, named Than Merrill, who runs a Real Estate education company out of San Diego called Fortune builders (http://www.fortunebuilders.com/about/than-merrill) expects the market to continue to flourish for investors. “I maintain that home prices have yet to reach a point in which it’s too enticing not to sell,” he said. “I wouldn’t expect homeowners to consider selling until prices resemble that of the latter end of 2005, when the median home price eclipsed $517,000.”

More Multi-Family Homes

When the average family cannot afford to buy in a desirable neighborhood, they rent. However, the cost of renting a $500,000 home can be prohibitive. For this reason, San Diego investors have begun to mimic the best practices of areas like Babylon, NY.

Babylon, NY is a small town on the south shore of Long Island. It has an excellent school district and a small town feel. Additionally, public transportation to New York City is among the best in the tri-state area. However, like in San Diego, homes cost about $500,000. The result is that investors have made a great living by turning high ranches into two-family homes, and renting them out for about $2,000 each.

The rise in two-family homes in San Diego is no different, nor is it a coincidence.

San Diego real estate prices are going to continue to rise because people want to live in the area. While many can purchase a home with how low current interest rates are, many more do not have the down payment necessary to make it to the closing table. The result is that investors can do very well, and have been.