Coronado, Calif. offers resort-style living in a location that delivers perfect year-round weather, sparkling white sand beaches, and endless opportunities for enjoying fine dining, luxury boutiques, and cultural activities. Living up to its slogan of "America's Finest City," many residents believe Coronado is one of the best places in the country to live.
The laid-back lifestyle encourages a friendly, small-town vibe away from the hustle and bustle of the busier areas of Southern California. But when you are ready to venture into nearby San Diego, a ferry is readily available for easy access to all the city has to offer.
While the dream of home ownership is attainable, there are a few things a first-time home buyer in Coronado, Calif. needs to consider before sealing the deal.
1. The Coronado real estate market is competitive
According to the Greater San Diego Association of Realtors®, the median price for a detached home in San Diego County is $952,600, with luxury homes costing exponentially more in exclusive areas. Despite a steady decline in home sales in San Diego County this past year, pricing has remained "remarkably stable," indicating the demand for housing is still strong.
Since the pandemic, the housing market has been on a roller coaster ride with rising interest rates, limited inventory, and an influx of international investors. It continues to be extremely competitive, especially for a first-time home buyer in Coronado, Calif.
2. Determine how much you can afford
Before making an offer on a luxury property, it is crucial to secure adequate funding. A firm understanding of your housing budget can save you and the seller a lot of time and energy.
There are several financing options for securing a loan for a high-end property, some of which include:
Jumbo loan: A financing tool is utilized when the amount of money needed exceeds the limits of traditional lending. To qualify, a 20% down payment, a high credit score, and substantial cash reserves are required.
Non-qualified mortgage: Funding is determined by your bank statement history and collateral assets. Banks typically do not require private mortgage insurance, and there is no maximum loan limit, making this an appealing option for many buyers.
Many luxury home buyers are leveraging their assets and stock portfolios to purchase property with cash rather than relying on bank financing that comes with high-interest rates. According to data from the National Association of Realtors®
, "All-cash sales comprised 26% of transactions in November 2022, up from 24% a year earlier."
Getting a pre-approval makes you an appealing candidate to sellers and can help you determine your price range when looking for your dream home.
3. Make yourself attractive to sellers
There are several ways for a first-time home buyer in Coronado, Calif. to get the deal done.
Most housing offers include contingencies, such as:
In a competitive real estate market, removing some or all of your contingencies can make the offer stand out and entice a seller to sign on the dotted line.
Shorten the option window
Housing agreements typically contain a cooling-off option, where buyers can back out of the deal and still receive a refund of earnest money. Shortening the option period can make you more appealing to sellers considering several offers.
Personalize your offer
A handwritten note to the current homeowner expressing why you want to purchase their property can go a long way in winning them over, especially on an emotional level.
4. Find an expert real estate agent that understands the local market
Working with a trusted and experienced real estate company can make all the difference in finding the home of your dreams. Once they understand what you are looking for in a property, they can use their area knowledge to guide you in the proper direction. Knowing your "must-haves" in advance can help a realtor find you a home that meets or exceeds your desired standards.
Realtors are also paramount in negotiating a fair and reasonable price and can close a deal with minimal issues. Hiring a real estate expert that works for you is essential!
5. Maintain a cushion for unexpected expenses
- Down payment: Some financial institutions require a down payment equal to 20% of the home's purchase price to obtain a mortgage. However, a first-time homebuyer in Coronado, Calif. can put down as little as 3% depending on the type of funding secured.
- Tap into your savings: Making a smaller down payment can be a good option for individuals who do not want to tap into their savings, keeping money on hand for unanticipated costs.
- Early withdrawal from your individual retirement account (IRA): Individuals with an IRA can make an early withdrawal of up to $10,000 without penalty, and couples can withdraw up to $20,000.
6. Familiarize yourself with California property taxes
San Diego County
collects a tax rate of 1.05% for property owners living in Coronado. To estimate your monthly tax payment, multiply the purchase price by this rate and divide by 12. Property taxes get paid in two equal installments, with the first payment due on or before November 1 and the second payment due on or before February 20.
The San Diego County Assessor
determines the value of all homes and assesses property tax amounts based on California Proposition 13
, which limits the base tax to 1%, with a guarantee it cannot be increased by more than 2% annually. Exemptions are available for disabled veterans up to $192,262 off the assessment value, and homeowners can receive a $7,000 exemption.
Before purchasing a property in Coronado, have your realtor check the tax records to ensure there are no delinquent taxes, and if there are, determine in advance if the seller or buyer will be responsible for these outstanding payments.
7. Look into home buyer assistance programs
You may qualify for a deferred payment, a low-interest loan up to 17% of the purchase price for the down payment, and up to $10,000 in closing costs assistance.
To be eligible for this program, a first-time home buyer must purchase the property as a primary residence with a price not exceeding $589,000. You must also complete a U.S. Housing and Urban Development-approved homebuyer education class.
Discover more tips for becoming a first-time home buyer in Coronado, Calif.
With the expert team of Coronado realtors
at Del Coronado Realty on your side, owning a home in Coronado can become a reality. We are a full-service boutique brokerage that takes pride in helping our clients buy or sell high-end properties not only in Coronado but also in La Jolla, Del Mar Heights, and the surrounding coastal communities in San Diego.
Contact us to learn more about the services we provide. We have the knowledge and expertise to help first-time home buyers in Coronado, Calif. make their home ownership dreams come true.