The San Diego Union-Tribune reported last week that the average San Diego rent – in all of San Diego County – is now at $1,618. This is average rent as of March 2016. The vacancy rate was the lowest in at least five years, said MarketPointe Realty Advisors in its latest report.

The average monthly rent for each type of home from a studio to a four-bedroom home is as follows:

What the Average San Diego Rent Can Buy

If we take $1,618 as a monthly housing expense, we can work backwards to determine how much a home buyer could afford. To do this, we must first under stand PITI, or Principal, Interest, Taxes, and Insurance, the components of a mortgage payment.

1. Principal is the money used to pay down the balance of the loan
2. Interest is the charge you pay to the lender for borrowing the money
3. Taxes refer to the property taxes you pay as a homeowner
4. Insurance refers to both your property insurance and your private mortgage insurance – sometimes referred to PMI.

By adding all of the components of PITI, you can understand the total monthly cost, not just principal and interest. Many mortgage calculators only include principal and interest, thus giving you a misleading number.

With a monthly PITI of $1,618, the home price you can afford varies as below, depending on down payment and interest rate. For this exercise, I assume a 30-year mortgage, a fixed interest rate of 3.875%, property tax of 1.25% and insurance of 0.35%.

If you repeat this same exercise with the same assumptions as above and a PITI of $2,109 – the average rent for a 3-bedroom home – then we find the following home prices:

As a point of reference, the median home price in San Diego County as of February 2016 was $530,000. Despite ever rising rents, many San Diego residents still find renting a more affordable housing option – if not the only option in this real estate market.