Like most metropolitan areas in the United States, San Diego is susceptible to rising interest rates.
The average interest rate on a 30-year fixed-rate mortgage was 7.49% as of Oct. 5, up from an average of 2.8% as of Oct. 8, 2020, according to Freddie Mac.
“When interest rates rise, it becomes more expensive to borrow, especially in expensive areas like San Diego, where most people can’t afford to buy a home with cash, so they need to take out a mortgage,” says University of San Diego. Economics Professor Alan Jin said: “If interest rates rise, some people will have to pay more interest, making their monthly payments much higher and forcing some people to exit the housing market.”
Real estate transactions are decreasing due to rising interest rates.
“What we’re seeing is a bit of a slowdown in terms of transactions. People can’t afford to buy homes, so there’s less demand for housing, and that’s impacting other parts of the economy.” said Jin.
The US Federal Reserve has been raising interest rates to combat inflation. Many economists expect interest rates to stabilize or fall in 2024 as inflation cools.
Many real estate agents say there are opportunities in the meantime.
“At this point, it might be a good idea to literally walk in,” real estate agent Destiny Roxas told NBC 7. Because of the high prices, some vendors are willing to make concessions to incentivize buyers. ”
