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Weekly Housing Market Update San Diego
This week brings promising news as mortgage rates take a welcome dip, creating opportunities for prospective buyers. Additionally, the market sees a surge in available homes, offering more options for those in search of their dream property.
The 30-year mortgage rate fell 10 basis points to the lowest level since early April. The housing market is feeling uncertain as rates bounce around while it waits for further news about the U.S. economy and whether the Federal Reserve will cut interest rates.
Home-buying sentiment is at a record low due to high mortgage rates, and low inventory is pushing home prices up.
Lower rates will help ease the lock-in effect and improve affordability, but for that to happen, the Fed needs to signal a rate cut for mortgage rates to come down. The next big economic indicator that the market is watching is on Wednesday, when the government releases the Consumer Price Index.
Homebuyers have a wider selection of homes to choose from now than they had at this time last year, a trend that could help lead to more sales in a market still constrained by a thin inventory of properties.
In the first four months of this year, active listings — a tally that encompasses all homes on the market except those pending a finalized sale — were the highest since 2020, according to Realtor.com.
Some of the increase is seasonal, with more homes typically going on the market just before and during the spring homebuying season.
The pickup in inventory is good news for the housing market, which has been in a slump for two years, partly due to a shortage of homes for sale.
However, the inventory of available homes remains well below the pre-pandemic era. In April 2019 there were roughly 1.1 million homes on the market, or over 400,000 more than last month.
Many factors have contributed to this chronic shortage of homes for sale, including more than a decade of below-average new home construction and demographic trends that have led to homeowners hanging on to their properties longer. The large gap between current mortgage rates and where they were just a couple of years ago has also discouraged many homeowners who locked in rock-bottom rates then from selling.
While home shoppers have more listings to chose from, high mortgage rates remain a hurdle for many.
At the start of last year, investors pulled back; their home purchases plummeted almost 50%, according to Redfin, not too far off from existing home sales, which as we know fell to their lowest point in almost 30 years.
Now, they’re back. “Investor home purchases are rising—albeit slightly—for the first time in almost two years,” according to Redfin. In a newly published analysis, Redfin found investors bought 44,000 homes in the first quarter, up half a percent from a year earlier. (Redfin defines an investor as “any institution or business that purchases residential real estate.”)
Investors bought almost 19% of homes sold in the first quarter this year, so roughly one in five homes, per Redfin. That’s fewer homes than before and throughout the pandemic, but it is the highest share in close to two years, the analysis read.
While their purchases of more expensive homes increased the most in the first quarter, low-priced homes still represent a larger share. So low-priced homes amounted to 47.5% of investor purchases in the first quarter, but high-priced homes amounted to 28.5%, according to Redfin. And a lot of the increase in their more expensive home purchases were driven by investors’ growing presence in California. In San Francisco and San Diego, investors bought more than 23% of homes sold in the first quarter, some of the highest shares apart from cities in Florida, such as Miami and Jacksonville.
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