The Impact Of Interest Rates On San Diego's Real Estate Market & How To Navigate

Like elsewhere throughout the country, interest rates in San Diego have risen dramatically within the past few years. It is a trend that impacts individual buyers and sellers while also having more of an effect on the overall real estate market than many people realize.

That said, here’s a breakdown of how to navigate San Diego’s real estate market in our current high-interest world.

Interest Rates in San Diego: Then and Now

As of October 2023, San Diego’s mortgage interest rates are as follows

• 30-Year Fixed: 7.580%
• 20-Year Fixed: 7.546%
• 15-Year Fixed: 6.496%

For the sake of comparison, the average mortgage rates for the state of California in December 2020 were as follows:

• 30-Year Fixed: 2.500%
• 20-Year Fixed: 2.375%
• 15-Year Fixed: 1.875%

As you can see, mortgage rates have risen in a short time, and given that homes in San Diego tend to be costly (the median price is $930,000 ), even a 10% down payment isn’t feasible for many. Combining a high-interest rate, the monthly mortgage payment and the total home purchase cost can price some homeowners out of the market altogether.

For example, if you were looking to purchase a $930,000 home with a 20% down payment and a 30-year fixed mortgage in December 2020 (at a rate of 2.500%), your total cost (excluding taxes, fees, and other expenditures) would be approximately $1,058,292. If you were making that same purchase with today’s rate of 7.580%, you would pay just about $1,887,470.

How to Navigate San Diego's Real Estate Market

Interest rates in San Diego make house hunting substantially difficult, but it doesn’t have to be impossible. Here are a few tips to keep your costs to a minimum:

Negotiate With Sellers

Between rising home prices and rising interest rates, some sellers are having trouble finding buyers. As a result, some are more willing to make a few concessions to make a sale.

Improve Your Credit Score

Lowering your interest rates even very slightly in such a high-priced market can make a major difference. Improving your credit score is one of the best ways to secure a lower rate. Do your best to lower your debt-to-income ratio and resolve any errors on your report.

Think About Adjustable-Rate Mortgages

An adjustable-rate mortgage leaves the possibility that your rate may lower over time. However, these mortgages aren’t without risk, so it’s essential to evaluate your situation holistically before making a decision.

Don’t Be Afraid to Negotiate With Lenders

It might seem like the mortgage a lender offers you is your only option, but if you have a strong overall credit profile, trying to negotiate a better rate might be worthwhile.

Thinking About Buying a Home in San Diego?

High interest rates can be discouraging, but when you work with the right real estate experts , it’s still possible to find your dream home for a fair price. Contact The Selby Team to get the ball rolling toward finding your new home.