Whether it be interest rates or home prices, real estate has been a buzzing theme over the last couple of years. During the height of the pandemic we witnessed record low interest rates which in turn resulted in record high home prices. Interest rates and home prices tend to have a “seesaw” effect; as interest rates lower, buying power increases and so does buyer affordability (More money to offer on homes).
This is the scenario that played out during the pandemic, but on steroids. Fast forward to today, post pandemic; Real estate is still a topic of interest, but for completely different reasons… RATES ARE RISING and just how you may have seen in news headlines, interest rates have officially crossed into the 6 percent range for the FIRST TIME since 2008.
Thus, many are asking, how are interest rates affecting the San Diego real estate market? From my personal point of view and first hand experience, Buyers are still entering the real estate market but at a much smaller rate than before. For example, a home that would have received 12+ offers with outrageous terms at record low rates (100k above list price, no inspections, no appraisals, etc), is now receiving maybe 1-3 offers. What does this mean for buyers? LESS COMPETITION!
As competition dwindles, opportunities increase for buyers.
For starters, buyers are being more selective, because buyers are now able to scrutinize homes due to a slowing market. This means MORE LEVERAGE. Secondly, market times are increasing; more time on market pushes sellers to be more willing to negotiate and in most cases buyers are successfully getting offers accepted at lower purchase prices WITH seller closing costs credited. In addition, buyers are once again able to request seller repairs or mediations to issues that arise during their inspections, something that was unheard of in the last couple of years. And the BIGGEST shift, buyers are no longer paying $40K, $60K, $100k above list price or appraised value… Seller markets are a thing of the past!
In the grand scheme of things, yes the market is shifting, yes interest rates are rising, BUT buyers are still buying and we’re still helping MANY attain their goals of homeownership.