Recent data releases all point to an economy that remains more resilient than many feared, and a housing market that is showing signs of modest improvement. New home sales posted a solid gain in January and listing activity picked up in early February. However, the latest report on personal income and outlays suggests the Fed's intervention is far from over. In its continued effort to curb inflation, the Federal Reserve raised its benchmark interest rate in February by a quarter-percentage point to 4.50% - 4.75%, its 8th rate hike since March of last year. Many expect another increase towards the end of March 2023.
Mortgage rates pave the path for housing. Substantially higher rates have been limiting supply and demand, constraining the number of closed sales. These higher rates sideline many sellers as well. Some homeowners would like to move but choose to hunker down and stay put instead because they have an underlying low fixed rate on their home. Since 89% of all California homeowners with a mortgage have a rate at or below 5%, and 71% have a rate at or below 4% the higher rate environment limits the number of sellers coming on the market.
In San Diego county in 2022, there were 25% fewer sellers or 13,200 missing FOR-SALE signs due to hunkering down trend. In January 2023, there were 45% fewer sellers, or 1,375 missing signs. That is a big chunk of the housing market. As rates drop, the gap between a homeowner's underlying rate decreases and that gap if narrow enough will entice homeowners to sell. Current for sale signs are under 2,300 homes which is alarmingly low. As a result, the market feels exceptionally hot even with higher rates. Many homes continue to receive multiple offers if priced appropriately and are more commonly found in price points $1.5M and below in San Diego. Today's hotter market is a function of the low supply and fewer homeowners coming to market, not record breaking demand.
Today's market is both very interesting for Sellers and Buyers but don't let the macro real estate news influence you too much.........call or email me to discuss what is actually taking place in the local San Diego housing market.
Mortgage rates pave the path for housing. Substantially higher rates have been limiting supply and demand, constraining the number of closed sales. These higher rates sideline many sellers as well. Some homeowners would like to move but choose to hunker down and stay put instead because they have an underlying low fixed rate on their home. Since 89% of all California homeowners with a mortgage have a rate at or below 5%, and 71% have a rate at or below 4% the higher rate environment limits the number of sellers coming on the market.
In San Diego county in 2022, there were 25% fewer sellers or 13,200 missing FOR-SALE signs due to hunkering down trend. In January 2023, there were 45% fewer sellers, or 1,375 missing signs. That is a big chunk of the housing market. As rates drop, the gap between a homeowner's underlying rate decreases and that gap if narrow enough will entice homeowners to sell. Current for sale signs are under 2,300 homes which is alarmingly low. As a result, the market feels exceptionally hot even with higher rates. Many homes continue to receive multiple offers if priced appropriately and are more commonly found in price points $1.5M and below in San Diego. Today's hotter market is a function of the low supply and fewer homeowners coming to market, not record breaking demand.
Today's market is both very interesting for Sellers and Buyers but don't let the macro real estate news influence you too much.........call or email me to discuss what is actually taking place in the local San Diego housing market.
Ben Anderson
License DRE# 01369906
Broker DRE# 01767484
1111 Prospect Street, Suite 100, La Jolla, California 92037
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1111 Prospect Street, Suite 100, La Jolla, California 92037
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