There’s more housing inventory on the market, but with mortgage rates just above 5%, that’s one reason a San Diego mortgage broker says some potential buyers are waiting on the sidelines until they make an offer.
Buying your first home can be rewarding and exciting, but it can also be a long journey, especially since housing stock is still quite low and mortgage rates are high. These two factors create the perfect recipe that keeps buyers like Parker Hren from buying a home in San Diego.
Hren moved to Sand Diego from the Midwest nearly six months ago, and he’s looking for his first home.
“So I’ve always rented and always wanted a place of my own,” Hren said.
Between budget and location, and a recent offer he made on a house that didn’t go through, the search wasn’t ideal.
“It’s a tough pill to swallow because I want a spot,” Hren said. “You know, I’ve been renting for so long that I feel like I’m wasting my money and not building equity into anything.”
San Diego mortgage broker Cameron Harper said Parker’s story was not unique and he was not alone.
“The pool of buyers is shrinking. Some buyers have just kept renting. It’s just getting a little too expensive for them,” he said.
He says that’s one reason it’s a good time for those not as affected by current mortgage rates to buy a home.
However, for others, the increase in the mortgage rate could add almost $1,000 to the monthly payment for a house.
“When they were in the middle of the 3, compared to the low 5 on an $800,000 mortgage, about the median price of homes in San Diego. That could mean a $700 increase in the house payment,” Harper said.
He also said homebuyers who manage to escrow have to rethink their purchase because of current rates, something Hren wants to avoid.
“At these rates, I want to find something that I’m really passionate about and feel like I’m getting a lot of value for the property,” Hren said. “I’m going to wait and try to get something I’m really comfortable with.”
Harper also said another trend that’s becoming common is older homeowners choosing to stay in their homes instead of downsizing.
“With rising values and increased interest rates, they could buy a smaller house with a higher payment, that doesn’t make sense,” Harper said. “So they stay put, which prevents a new owner from buying a house.”