Recently, interest rates have been increasing to a level that we haven’t seen since 2001. How does that affect our market, and what does it mean for you?

Rates are around 5% for a well-qualified buyer putting down 20%. If you pay the median home price of $820,000 in San Diego and put 20% down, your loan amount would be $656,000. At a 5% interest rate on that loan, you’d be paying $3,522 monthly, which is about $1,000 more than it was a couple of years ago when rates were 2.5%.

That’s certainly affecting buyers’ ability to buy. I’ve had some clients who had to tap out of the market. Others had to shift their expectations by moving to a more affordable area or looking for a smaller home. 

How will this affect the market overall? Prices have continued to go up because the number of active listings keeps decreasing. We’re trending up because we’re entering spring, but we still have very few homes available. In April of 2019, we had around 12,300 listings. Right now, we only have about 2,300. 

What does that mean for this year? I think our low inventory will continue to drive prices up, which will, unfortunately, make homes less affordable. Interest rates are also expected to continue rising, hitting 6% by the end of this year. We’re in a vicious cycle where anyone with a lower rate may just hunker down instead of move.

If you’re a buyer committed to purchasing a home, now’s the time to do it. If you’re a seller who’s leaving the area or buying your next home with cash, it’s a great time to sell too. 

If you have any questions about our interest rates or real estate in general, feel free to call or email me. I’d love to help.