Interest rates are around 6%, and for some San Diegans, that is still too much for purchasing a home.
Although interest rates are high, Cameron Harper of California Mortgage Lending said home prices took a dip in August by about 6%. According to Harper, the average home price fell to $910,000 from $970,00.
Harper attributed the fall to higher rates, which some potential homebuyers, like Jake Zimmerman, are still grappling with.
”One thing that’s coming up is the interest rate,” Zimmerman said.
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With higher mortgage rates up, it’s making some buyers think twice.
”Now, with that being a lot more is definitely a deterrence,” Zimmerman said.
Harper said even just a 1% increase in rates can really make an impact.
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“For every 1% increase in rate, a buyer qualifies for about 10% less home,” Harper said.
Here’s how Harper breaks down that interest rate hike for potential buyers.
“If they qualified for a $900,000 loan when rates were at 5%, when they go up to 6% there is a 10% drop in the sales price or loan amount they are going to qualify for so they’re only now going to qualify for $810,000,” Harper said.
On the flip side, those higher rates are impacting home sale prices in the county. It’s a ripple effect Jason Rooney experienced when he sold his home this summer.
”Yeah it was a little frustrating,” Rooney said. “More trying to sell our old home versus buying a new home.”
He shared that he ended up lowering his selling price by $150,000.
“It was just trying to get the price point we wanted for it because the market was slowing down or people weren’t as eager to buy,” Rooney said.
It's a trend that Harper said could continue through September.
