In 2026, California's homeowners insurance rates are projected to rise by an average of 16%. The California FAIR Plan will increase rates by 29.1% starting October 15. If you're considering investing in a condo in San Diego, you can't overlook these numbers. The monthly expenses you calculated based on the purchase price will increase by the same amount as the rise in insurance rates.

It's also important to look at price trends. As of June 2026, the median sale price for condos and townhomes in San Diego is $670,000, which is a 1.1% increase from a year ago. In the downtown 92101 area, the median price is $795,000, with a price per square foot of $695. However, inventory is stacked at seven months, and about one-third of condos have lowered their prices, remaining on the market for over 70 to 90 days. The pace of the condo market is noticeably slower compared to single-family homes.

One reason for the price stagnation is the combination of rising HOA fees, SB326 structural inspection costs, and increasing insurance rates. After the Surfside condo collapse in 2022, Florida mandated structural inspections and full reserve fund contributions through SB 4-D, while California is following a similar path with SB326 and Civil Code Section 5551. External fixed structures like balconies and decks in buildings over three stories must be inspected by a structural engineer or architect, with the first inspection required by January 1, 2025, and repeated every nine years thereafter. Violations can result in fines of up to $5,000 per incident and personal liability for board members.

When considering a condo for investment, there are clear items to check. Review the last two to three years of financial statements and budgets from the homeowners association, the results of reserve studies, any planned or discussed special assessments, litigation history noted in meeting minutes, and rental restriction regulations. Recently, it's also important to see if the SB326 inspection results have been reflected in the reserve study. If the inspection has been completed but the reserve study has not been updated, it is legally considered incomplete. Some complexes may have rental caps allowing only a certain percentage of units to be rented or set minimum rental periods, so if you're considering short-term rentals, it's best to check these regulations first to avoid any planning issues.

If you're moving to San Diego from another state, you'll need to familiarize yourself with the property tax structure. In California, property taxes are assessed based on the purchase price according to Proposition 13, and the annual increase is capped at 2%. If you're coming from a state with a higher property tax rate, it may feel lower, but the assessed value at the time of purchase will serve as the basis for future taxes. Additionally, the Davis-Stirling Act, which governs condo associations, is unique to California, so there may be differences from HOA regulations or reserve requirements you were accustomed to in other states.

You should also consider loan eligibility. Starting August 3, 2026, Fannie Mae will eliminate the Limited Review process previously applied to existing condo complexes and switch to a Full Review process. This review will examine reserves, budgets, delinquency rates, and any ongoing litigation, and if there is an active structural-related lawsuit, the loan may be denied. After January 2027, the reserve contribution requirement will increase from 10% to 15% of the budget. Complexes that do not meet this standard will be classified as non-warrantable, requiring a down payment of 20% to 30% and interest rates that are 0.5% to 2% higher than standard loans.

Rental demand itself is relatively stable. San Diego has a diverse rental demand base due to its universities, military bases, and biotech industry, making condos particularly attractive to long-distance investors due to lower management burdens compared to single-family homes. However, when calculating rental income, it's essential to factor in not only the increase in purchase price but also the rising management fees and insurance rates to get a more accurate yield. This article does not constitute investment or legal advice, and it's advisable to consult with a real estate professional and accountant before making any purchasing decisions.