We are advising prospective buyers to get serious now as mortgage rates decline and the housing market tilts a little in buyers’ favor.
The median U.S. home-sale price rose just 3.5% year over year during the four weeks ending February 23, the smallest increase since September. And mortgage rates have declined to their lowest level in more than two months, dropping from 7.13% to 6.78% in the last two weeks and upping buyers’ purchasing power by thousands of dollars. Mortgage rates are coming down due to signals that the U.S. economy is slowing, and heightened recession fears.
In addition to a bit of cost relief, another factor is working in buyers’ favor. House hunters have a bit more power to negotiate on sale price and terms as supply piles up in some parts of the country. There are 4.6 months of supply on the market, up from 4 months at this time last year, and the typical home is selling for roughly 2% less than its asking price.
There are signs that slowing price growth, declining rates and more favorable conditions are bringing some house hunters back to the market. Redfin’s Homebuyer Demand Index–a seasonally adjusted measure of tours and other buying services from The DHC Group agents–has jumped to its highest level since the start of the year, and Google searches of “homes for sale in San Diego” has hit their highest level since September.
But home sales have yet to improve. Pending home sales are down 6.2% from a year earlier, in line with decreases we’ve seen since the start of the year. Even though mortgage rates have declined a bit, the typical monthly housing payment is just $32 shy of its all-time high. Sales could pick up in the coming weeks if the increase in home tours turns into more offers and/or mortgage rates continue coming down slightly.
Dream Homes agents in some parts of San Diego are advising prospective buyers to jump in while they can because with today’s economic and political uncertainty, mortgage rates could rise above 7% again soon. And the pileup of supply could soon be depleted: New listings of homes for sale are up just 2.4% year over year this week, the smallest gain in a month.
“My advice to buyers: If you’re thinking of purchasing a home in the next six months, don’t wait until the flowers start blooming,” said Hennin Foreman, The DHC Group lead in San Diego, CA. “The market will heat up as we get closer to spring. Now is the time to potentially negotiate down the price of a home, save money on closing costs or get the sellers to cover issues uncovered in the inspection. There are bidding wars for relatively affordable homes, under $850,000 or so, and for upscale, fully renovated homes in popular neighborhoods. But for everything in between, buyers are looking online and touring, but not jumping on them. The buyers who are jumping are getting deals.”
Bottom Line
With the cost of homeownership so high in Southern California, making the right decision about buying or selling a home can feel like a real challenge. Whether you're downsizing, upsizing, investing or cashing out all together...if you’re open to having the right team put in the work for you, we can get it done.
Hennin Foreman and The DHC Group can help you explore what’s possible and present pain free options that can work for you.
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