Is The Housing Market Cooling Down?

Now that the first quarter of 2022 is in the rear view mirror, noticeable cracks have appeared that illustrate a cooling market. It is not as if housing has suddenly tilted in favor of buyers.....No, multiple offers are still the norm and most homes are flying off the market and into escrow just moments after FOR-SALE signs are pounded into the front yard. Buyers are still frustrated by the lack of available homes to purchase in all price ranges with total inventory at 1 months supply and Sellers remain in the driver’s seat able to call the shots.

Nonetheless, trends have surfaced that highlight a cooling marketplace that will eventually pave the way to a completely different housing scene thanks to a dramatic rise in mortgage rates from 3.25% at the start of the year to 5.35% today (Mortgage News Daily)........with jumbo loan rates slightly lower than conforming loan rates. The recent surge in mortgage rates has reduced the pool of eligible buyers and has caused mortgage applications to decline. 

In spite of the statement above, there is still very strong buyer demand as San Diego rental prices continue to soar.  According to a study from Rent.com, the average price for a studio apartment in San Diego is $2,378, up 21% from last year and a one-bedroom apartment is up 18% to $2,707........and that's the average. 

Discerning Buyers in all price points continue to remain patient and are willing to go all in on a home that checks most of their boxes and most importantly appropriately priced. Many sellers are arbitrarily pricing and stretching the asking price in anticipation of selling for much higher than the most recent pending or comparable sale. While this strategy may have worked over the past couple of years, buyers will become less willing to stretch in price as the year progresses. Many sellers will have to reduce their asking price to find success and in many cases.....more than once if they choose this approach. 

The surge in values is certainly enticing many homeowners to sell but not until they understand what options are available to them.  Please contact me to go over what options are available to you, your friends or family whether looking to sell or buy.