Are You Prepared For the Impending Market Shift in San Diego?

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At the end of each quarter, the California Association of Realtors puts out a survey that tells us what percentage of people can afford to become homeowners of the average-priced home in each county in California. At the end of 2015, only about 24% of people in San Diego County can afford to buy the median priced home.

That’s not a huge cause for concern, as we saw this number hovering around 18% at the peak of the last cycle. Prices are up 2.5% so we’re seeing some nice appreciation, but it has leveled off a bit from the craziness of 2013-2014.

The big player for affordability is interest rates, and they’re still at historic lows.

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The big player for affordability is interest rates.

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We’re preparing our agents here at Keller Williams for an impending shift in the market. With affordability where it’s at, we know that all it will take is about a 1% change in interest rates to push us back to those bubble levels of 16-18% affordability. 

We know that the Federal Reserve’s goal is to raise rates. Usually to spur the economy the Fed would lower rates, but with rates as low as they are now, the Fed is out of tools.

Look for the Fed to raise rates, which will decrease affordability, which in turn will decrease demand, and increase inventory, and ultimately cause prices to suffer slightly. 

We never know how deep or dark a recession or economic downturn will be, but we do know our agents will be prepared. Our agents are getting prepared so they can thrive in the market we’re about to enter -- which we project to arrive in the next 18 months. 

Click the link below to set up a consultation or reach out to us today. We’d love to discuss what our agents are doing to prepare.