How Will Rising Interest Rates Affect Affordability in San Diego in 2015?


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Hello and welcome to 2015! 

Last year was a pretty interesting one for real estate in the San Diego area. We finished the year with the same amount of inventory we started the year with, but saw significantly less buyer demand as 2014 came to an end. What does this trend mean for prices, sales, and real estate in general as we begin a new year?

When we look at the market overall, we're still seeing rates near all-time lows. Interest rates are currently hovering around 3.5%, but we're not expecting that to last much longer. The real estate market, like all markets, is cyclical - it goes up and it goes down. Since the crash and the recession that followed, we've seen great appreciation in the market, and sellers have been making solid gains. 

Our market is in a similar position to where we were in 2003. The Federal Government is incentivizing home buying with low down payment programs, decreasing FHA mortgage insurance premiums, and generally making money more available. Lenders are also stepping up to the plate, making loans easier to get. This is all fantastic news for buyers and sellers today.

The thing to keep an eye on is interest rates - at some point they are going to rise. When they do, we expect the increase to spur home buying activity. Sellers need to see that as an opportunity to make their move. As more sellers and buyers flood the market, it has an impact on prices and thus affordability goes down. This downward trend will happen, as it always does - it's simply a matter of when

No one can know for sure when we'll see these wonderful conditions come to an end. What we know is, as always, the best priced homes, that are staged appropriately and marketed to the right audience, sell every day! 

If you have questions about our market, or would like real estate assistance of any kind, we would love to hear from you! Give us a call or shoot us a quick email, and we'll help you in any way we can!

Thanks, and make it a great day!