There’s more housing inventory on the market, but with mortgage rates sitting at just above 5%, it’s one reason one San Diego mortgage broker says some potential homebuyers are waiting on the sidelines until they put in an offer.
Buying your first home can be rewarding and exciting, but it can also be a long road, especially as housing inventory is still pretty low and mortgage rates are high. Those two factors create the perfect recipe that is keeping homebuyers like Parker Hren from purchasing a home in San Diego.
Hren relocated to Sand Diego from the Midwest nearly six months ago, and he’s on the hunt for his first home.
”So, I’ve always rented and I’ve always wanted a place of my own,” Hren said.
Between budget and location, and a recent offer he made on a home that didn’t go through, the search hasn’t been ideal.
”It’s a tough pill to swallow because I do want a place,” Hren said. “You know, I’ve rented for so long that I feel like I’m throwing my money away and not building equity in something.”
San Diego mortgage broker Cameron Harper said Parker’s story isn’t unique and he’s not alone.
"The buyer pool is shrinking. Some buyers have just continued to rent. It is becoming just a little too expensive for them," he said.
He says it’s a reason it’s a good time for others who aren’t as impacted by the current mortgage rates to buy a home.
However, for others, the increased mortgage rate could add nearly $1,000 to a monthly house payment.
“When they were in the mid-3s, compared to the low 5s on an $800,000 mortgage, about the median home price in San Diego. That could mean a $700 increase in the house payment,” Harper said.
He also said that homebuyers who make it to escrow are having to rethink their purchase because of the current rates, which is something Hren wants to avoid.
”At these rates, I want to find something that I’m really excited about and I feel like I’m getting a lot of value for the property,” Hren said. “I’m gonna wait and try to get something I’m really comfortable with.”
Harper also said another trend that is becoming common is older homeowners choosing to stay in their homes instead of downsizing.
“With the increase values and increased interest rates they might buy a smaller house with a higher payment, it doesn’t make sense,” Harper said. “So they’re staying put, which is preventing a new homeowner from buying a house.”