Monday Market Matters: Mortgage Rates Drop
What's Happening in the Housing Market in San Diego March 3rd
The real estate market is shifting, and there are some key changes you should know about. As we move into the new season, buyers and sellers alike need to stay informed about the latest trends, price adjustments, and interest rate changes that could impact their decisions. Whether you're wondering how is the housing market right now in California or when will prices drop in California, staying up to date on housing market news is crucial.
Home Prices Are Dropping
This past week, new listing prices have fallen by $100,000 compared to the previous week. That’s a significant adjustment, signaling that sellers are starting to price more competitively to attract buyers. This shift could indicate the beginning of a market correction, where home prices stabilize after a period of rapid appreciation. If you have been considering buying a home but were hesitant due to high prices, now might be the time to start exploring your options.
Mortgage Rates Are Finally Coming Down
For those who have been waiting for the right time to buy, this could be the moment to act. Mortgage rates are starting to decline, which means homebuyers may have the opportunity to secure a more affordable monthly payment. Lower rates not only increase affordability but also expand the range of homes that buyers can consider within their budget. If rates continue on this downward trend, it could drive more buyers back into the market, increasing competition for well-priced homes. If you are thinking about buying, it is worth speaking with a lender now to understand your options and determine whether you can lock in a favorable rate.
What's Driving These Rate Changes?
Mortgage rates are like the weather; they change all the time. Several factors influence them, and it's helpful to have a basic understanding of what's going on behind the scenes. Here are a few key elements:
The Federal Reserve (The Fed): The Fed sets the federal funds rate, which is the interest rate at which banks lend money to each other overnight. While this isn’t directly the mortgage rate, it influences it.
Inflation: When inflation rises, mortgage rates tend to rise as well. Lenders want to be compensated for the potential loss of purchasing power over time.
Economic Growth: A strong economy usually leads to higher interest rates, while a weaker economy can push them down.
Investor Confidence: When investors are confident in the economy, they tend to invest in stocks and other higher-yielding assets. This can lead to higher mortgage rates. Uncertainty often pushes rates down as investors seek safer investments like mortgage-backed securities.
Geopolitical Events: Global instability can also indirectly influence mortgage rates, as investors move money toward safer assets in times of uncertainty.
More Sellers Are Adjusting Their Prices
We are seeing more price reductions, with 426 homes adjusting their prices this week compared to 406 last week. This suggests that sellers are becoming more responsive to market conditions and are willing to negotiate in order to attract serious buyers. Many sellers who had initially priced their homes at peak levels are now realizing that they need to make adjustments to compete with other listings. If you are selling, this means pricing strategically is more important than ever. If you are buying, it could mean more opportunities to find a home at a reasonable price.
Rental Prices Remain Steady
Rental prices have remained stable, averaging around $4,100 per month. While there have not been significant fluctuations in the rental market, the combination of adjusting home prices and declining mortgage rates could make purchasing a home a more attractive option for some renters. If you are currently renting and considering homeownership, it may be a good time to explore whether buying could be a better financial decision for you in the long run. With the right strategy and guidance, transitioning from renting to owning could be more achievable than you think.
Is the Housing Market Going to Crash in 2025? What to Know
As we progress through 2025, mortgage rates and inflation have many questioning the stability of the U.S. housing market. Current analyses suggest a modest growth trajectory, alleviating fears of an impending crash.
According to Zillow's real estate market forecast, the U.S. housing market is expected to see modest growth this year. Home values are projected to rise by approximately 0.9 percent, a downward revision from the previously anticipated 2.9 percent increase. This adjustment reflects a higher-than-expected number of new listings and rising inventory levels, which have eased price pressures.
Kara Ng, senior economist at Zillow, told Newsweek that affordability will drive competition in the 2025 housing market, with Buffalo at the top of Zillow's list of the hottest markets. Other top markets include affordable cities like Indianapolis and Kansas City, as well as relatively lower-cost alternatives to pricier metro areas, such as Providence, Hartford, and Philadelphia.
Current expert analyses suggest that a housing market crash in 2025 is unlikely. National Association of Realtors (NAR) Chief Economist Lawrence Yun stated, "A sharp rise in mortgage rates to around 9 percent, combined with significant net job losses, could put severe pressure on the housing market. However, both scenarios are unlikely, making a market crash unlikely."
Danielle Hale, Chief Economist at Realtor.com, also thinks a crash is unlikely, emphasizing the importance of the labor market’s health, which should support housing demand. "Fortunately, the labor market has been resilient, with unemployment registering just 4 percent in the most recent data. Wages continue to grow, which should buoy consumer purchasing power," she stated.
Ng emphasized that the housing market is on solid ground, with pent-up demand from millennials who have been unable to break into homeownership. She expects home values to grow by about 1 percent this year, which should help buyers catch up financially. However, mortgage rates remain a wild card, and high rates are keeping many would-be buyers on the sidelines.
How Is the Housing Market Right Now in California?
California’s housing market continues to experience adjustments, particularly in major metro areas like San Diego. Many potential buyers are closely watching when prices will drop in California, as affordability remains a concern.
According to recent reports, home prices in California have begun softening, particularly in high-priced markets, as more sellers adjust their expectations. While prices are not expected to plummet, steady declines combined with lower mortgage rates could create better opportunities for buyers in 2025.
San Diego’s market, in particular, remains competitive, with a mix of motivated sellers and cautious buyers waiting for more favorable conditions. If you are considering buying or selling in San Diego, it’s essential to stay ahead of market trends and be ready to act when the right opportunity arises.
What This Means for You
If you have been thinking about making a move, now is the time to start paying attention to the market. Whether you are looking to buy, sell, or simply stay informed, having a clear understanding of market trends can help you make confident decisions. The combination of price reductions, lower mortgage rates, and steady rental costs means there could be opportunities on both sides of the market.
If you have questions about your options or want to discuss a strategy tailored to your needs, let’s connect. I am here to help you navigate the changing market and find the best path forward based on your goals. Let’s start the conversation today and create a plan that works for you.
Tristen Campanella is a seasoned real estate professional specializing in the San Diego housing market, helping buyers and sellers navigate the ever-changing real estate landscape with confidence. With a deep understanding of market trends, strategic planning, and the emotional aspects of homeownership, she ensures her clients make informed decisions that align with their goals. Tristen’s holistic approach integrates market expertise with a client-focused mindset, making the process of buying or selling a home seamless and supportive. Whether working with first-time buyers or seasoned investors, she is committed to delivering exceptional service and results. Learn More About Tristen
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