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Stay Competitive with a VA Home Loan in San Diego

San Diego is a red-hot market. Homes sell fast, often purchased at totals well above the asking price. Buyers, especially recently, often feel frustration when trying to purchase a San Diego property; they either can’t afford a home in the area or the homes they can afford are purchased before they can even tour the house.

San Diego is also a military city. With numerous bases and thousands of veterans and active service members, a VA loan is a typical financing option in our area. These loans offer numerous advantages to eligible buyers, including no downpayments and lighter qualification standards for those who have served.

To buy a home in San Diego, you need to use every available resource, act quickly when an opportunity arises, and have a high-quality loan ready at a moment’s notice. It may surprise some borrowers, but when used properly a VA loan can actually be an advantage in San Diego.

How a VA Loan Can Help You Stay Competitive in the San Diego Market

A VA loan is an extremely useful mortgage. When structured properly (and with good communication to the seller), it can actually be an advantage when you are trying to purchase a home in the San Diego market.

The Challenges of the San Diego Market

Why is it so hard to purchase a home in San Diego? For years, this has been one of the most competitive markets in the county. Frankly, it’s a gorgeous, welcoming, exciting, vibrant place to live. It’s not just the pleasant weather, but also the culture and opportunities that bring people to our area. People visit here as tourists and like it so much that they often decide to stay. Veterans are often stationed in or around San Diego County, living in the area while on duty. Once they leave the Navy, Army, or Marine Corp, they simply can’t imagine living anywhere else.

It’s always been a competitive market, but over the past year it’s become aggressively fast-paced. “Cut-throat” might be a bit over the top, but this market certainly has a win-or-lose mentality.

Pricing is one factor (which we will examine below), but time on the market is one of the most frustrating issues for San Diego buyers, even those who are using a VA loan in San Diego. In the past, time on the market (the time it takes to go from listing a home to accepting an offer) was usually around 20 to 30 days. While it could dip higher or lower for short periods, San Diego homes usually stayed on the market for about three weeks according to Redfin, a major real estate listing and information site. In early 2019, time on the market went as high as 41 days. Now, the market is seeing much shorter listing times, giving buyers fewer chances to search, browse, and purchase homes. Buyers have to act quickly, often with near desperation, to purchase a house. 

Most of this competition, as well as the high prices, comes from a low inventory. According to the Federal Reserve Bank of St. Louis, the total number of active listings has plummeted since the Spring of 2020 and the start of the COVID pandemic. In a typical year, active listings are highest in the summer. In August of 2016, there was a high of over 7 million active listings in San Diego County. In 2018, there was a high over 8 million. 2019 also saw over 7 million listings in San Diego County.

With fewer options and less time to act, buyers need to take drastic measures. This usually means offering more money. Redfin states that the median sale price for a San Diego home is now $800,000. In January of 2020, that number was only $609,000. Over the past year, there has been a 16% rise in sale prices for San Diego properties.

Our city is not the only region experiencing this issue. Markets all across the country are seeing higher prices, shorter listing times, and low inventory.

All of these factors make it tough to buy a home. You’re likely competing with dozens, possibly hundreds of other buyers. A VA loan may be able to set your offer apart and help you win the San Diego home you deserve.

California is one of the most competitive states for home buying.

Why a VA Loan in San Diego Can Help

In a competitive market, you need to give yourself every opportunity possible. While a VA loan can’t guarantee an accepted offer (nothing can, after all), it can be an important tool for winning the San Diego home.

First of all, you may be able to reach approval for a larger home with a lower downpayment. In San Diego, as we have stated, the median home is currently around $800,000 according to Redfin. If you were to use a typical loan, such as an FHA loan or Fannie Mae-backed loan, you’d likely need about 5% to 10% for a downpayment. At an $800,000 purchase price, this would mean $40,000 to $80,000!

With a VA loan, you could secure funding with no downpayment. This could make your purchase more affordable and allow you to place bids on more homes, including homes that might otherwise be out of reach. By expanding your options, you’ll be more competitive when searching for a home in San Diego.

VA loans can also be used with certain contingencies removed. You likely won’t be able to remove the appraisal requirement, but you could secure a loan without inspections and other details that slow the process. Talk to your lending agent about having certain contingencies removed from your VA loan so you can stay competitive in this market.

Use a VA Loan in San Diego to Win Your Next House!

You deserve an affordable loan that helps you purchase a wonderful San Diego property. Contact our staff today to learn more about VA loans. If you are an eligible veteran or active service member, these loans could unlock (almost literally) your next San Diego property!