Housing Market

What Happens to House Prices During a Recession?

The frequent appearance of the word “recession” in media headlines has created widespread uncertainty among people, especially those who are planning to buy or sell a home in San Diego.

Common questions that you might be wondering and asking yourself:

Are home prices going to crash?
Will mortgage rates skyrocket?
Should I wait to make a move?

Your concerns about these matters are completely reasonable and valid, you’re not alone because you do share them with many others. The good news is that we can look to some history and data to get some real answers.

Let’s break it down. Shall we?

A Recession Doesn’t Automatically Mean Home Prices Will Drop

Before anything else, let’s clear up a common myth: Here’s the thing: “A recession is not the same as a housing crash.”

Historical data have shown that in 4 out of the last 6 U.S. recessions, home prices actually went up, and in one, home prices dropped less than 2%. The exception for this was in the year 2008—and that was a very specific situation to discuss which involved some risky loans, overbuilding, and a financial system that was already on the brink.

What Happens to Home Prices During a Recession - Bar Graph by Cotality — What Happens to Home Prices During a Recession – Bar Graph by Cotality

So, what usually happens?

Home prices during a recession usually tend to stay on track or just slow down gradually.
Fewer home buyers may jump into the market and take action, but that doesn’t always mean prices will plummet.
Every local market in the United States reacts differently; it usually depends on the supply and demand of how many homes are available and how many buyers are looking to buy a home.

**Mortgage Rates Tend to Go Down During a Recession**

Here’s something most home buyers are excited to hear: Most of the time during a recession, mortgage rates, based on Freddie Mac data, it has shown that rates have declined by a certain percentage in all six of the last U.S. recessions:

What Happens to Mortgage Rates During a Recession - Bar Graph Based on the Data of Freddie Mac — What Happens to Mortgage Rates During a Recession – Bar Graph Based on the Data of Freddie Mac

This is due to the fact that the Federal Reserve has often lowered interest rates to help the economy, which can make borrowing a tad bit cheaper than what we’re used to in today’s housing market.

Now, let’s be real for a second and face the facts, we’re probably not heading back to that super-low 3% mortgage rates we saw last 2020, but here’s something to consider, even the slightest dip in rates can make a big difference in your monthly mortgage payment if you are buying a house in San Diego, so that’s still something to look forward to.

Today’s Homeowners Have Strong Equity Positions

One of the biggest differences between now and the 2008 housing crisis is that homeowners today have managed to build up more of their home equity. Years of solid home price appreciation have created substantial equity cushions for most property owners.

Realtor.com’s analysis of Federal Reserve data shows that:

Even if home prices have dropped 10%, today’s homeowner equity would still be at 69.5% of total value (similar to 2021)
A 20% drop would bring equity levels back to what we saw in 2019
More than half of homeowners ( around 54%) have mortgage rates below 4%, which means they’re not likely to be forced into selling anytime soon.

This is good news for the housing market, as today’s homeowners’ strong equity position means we are unlikely to see waves of distressed sales flooding the market, as we did in 2008. This helps maintain price stability even during challenging economic times.

Final Thoughts

Well, economic downturns often bring up uncertainty and fear, and that’s completely normal since we’re talking about one of your biggest investments. But if we look at and understand the historical data, it has shown that home prices tend to hold steady (or increase), and mortgage rates usually go down. In today’s housing market, we can safely say that homeowners are in an incredibly strong position.

If you’re wondering how this might impact your own plans to buy or sell, let’s chat. The McT Real Estate Group is always here to help you make the best decision for your future—not just based of the headlines.

Homeowner Pitfalls to Avoid in 2025

Ryan Serhant & Barbara Corcoran on the 2025 Housing Market

The real estate experts Ryan Serhant and Barbara Corcoran state that the 2025 housing market is undergoing changes and even greater news is that it is not going to be experiencing a crash like most people are predicting. The process of buying or selling homes in San Diego has undergone significant changes since the previous few years. The market conditions have evolved so much that opportunities still exist but you need to understand what to seek.

It’s Not a Housing Crisis—It’s an Affordability Crisis

CEO of SERHANT, Ryan Serhant rejects the notion that the U.S. is in a full-fledged housing crisis. He made this point in a recent interview with Fox Business, where he said that the real issue is affordability.

“I don’t think there actually is necessarily a housing crisis the way you see and you read about it. I think there’s an affordability crisis.” — Ryan Serhant

What does that mean? Well to simply put home prices are not crashing. But for many homebuyers, out there buying a home has never been more difficult.

While some areas have more homes on their market, much of that inventory is not entry level or budget friendly. In fact, a starter home now costs over $1 million in 237 American cities—a shocking reality for first time buyers. At the same time, renters are also feeling the strain, with rental prices taking up a significant portion of household incomes.

“Over half of all renters are spending more than 30%, sometimes more than 40 or 50% of their paycheck just on their rent.” — Ryan Serhant

Right now based on the data, the money goes toward housing expenses instead of savings or future home buying. People want to buy homes but affordability stands as the main obstacle.

A Couple Looking Worried Infront of a Computer

Why Sellers Are Holding Out

Home prices remain stable because sellers do not feel pressured to sell their properties. Barbara Corcoran explained during another interview that she believes even small mortgage rate drops will not lead to an increase in new listings.

“No one wants to move, and there are fewer houses to choose from at higher rates. So it’s difficult for homebuyers.” — Barbara Corcoran

Consider this situation: A person who secured a 3% mortgage rate during 2020 would probably avoid switching to a 7% interest rate. Homeowners are choosing to maintain their current mortgages, which reduces the number of available homes for sale.

Sellers also tend to avoid reducing their asking prices when homes become available on the market.

“I don’t think it’s in the nature of sellers to be realistic, honestly. Their house is always worth more… I don’t think prices will shake out at all. I think they’ll hold out hoping interest rates will go down again.” — Barbara Corcoran

The market conditions have resulted in properties staying on the market for extended periods of time. The Redfin report shows that 54.5% of active listings during the end of 2024 spent more than sixty days on the market. The market’s reduced activity compared to previous years represents a transition toward balanced market conditions which provide buyers with extended periods to decide without facing intense bidding competitions.

A Couple Shaking Hands with their Realtor

What This Means for You

So, what’s the takeaway? The market isn’t stuck forever—it’s just changing.

For buyers: The market conditions still shows there is affordability challenges but on the up side homebuyers face reduced bidding competitions and extended property listing durations. The current market conditions give homebuyers additional negotiation power and reduced urgency to make immediate buying decisions.
For sellers: Real estate prices continue to inflate but take note that homebuyers have become more selective about their purchases. A competitive listing price combined with a home ready for occupancy will generate the most interest from potential buyers if you need to sell your property.
For renters: Rental prices stay elevated because people choose to stay in their homes but those who will buy real estate during the next few years should begin building their financial strength now.

Every market requires smart moves, which can be achieved through proper planning. The essential factor for success involves staying well-informed while making strategic decisions through collaboration with qualified real estate professionals who can guide you through market changes. Real estate requires individuals to concentrate on their personal targets while seeking suitable prospects that exist for those who know what to look for.

The San Diego 2025 Housing Market

The 2025 Housing Market trends that Serhant and Corcoran mentioned in San Diego are currently active throughout March. The San Diego-Carlsbad metro area shows this affordability crunch through its current median home price of $939,174. The housing market in North Park and South Park continues to attract many buyers despite a minor decrease from last year because these neighborhoods have median home prices of $950,000 and $1.15 million, respectively.

The rental market in University Heights shows the same pressure Serhant explains because renters must extend their saving period before becoming homeowners. The high prices in Pacific Beach at $1.3 million median and Downtown San Diego with one-bedroom rents reaching $3,200 continue to rise because of lifestyle and location preferences despite a small increase in inventory to 4,600 listings from 2,600 last year.

The market trend supports Corcoran’s observation about sellers maintaining their position, but buyers in some neighborhoods now have some room to negotiate prices since homes stay on the market for longer periods.

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Is the Housing Market Waking Up This Spring?

Most people have read about the current situation with the housing market, how mortgage rates still remain high and how our market conditions still remain challenging up to now. Well here’s the thing, the majority of headlines fail to report on the small indications that the housing market is showing some new activity.

The number of mortgage purchase applications continues to grow compared to last year despite interest rates exceeding 6.5% because homebuyers are beginning to show interest again. It’s not a boom. It’s not a frenzy. But it is something to take note of.

A Couple Talking to their Realtor while Explaining Documents

What Are Mortgage Purchase Applications?

The term “Mortgage purchase applications” describes the loan application process for homebuyers who want to finance their property purchases. The indicator leads actual home sales by 30 to 90 days, which makes it an excellent tool for detecting market changes before they become news headlines.

In the first 10 weeks of 2025, we’ve seen:

4 positive weeks
3 flat weeks
3 negative weeks

That might not sound groundbreaking, but most of the weekly data this year is positive, and we’re seeing year-over-year growth for the first time in a long while.

And applications go up, it’s often a sign that more people are getting serious about buying.

Peak Home Sales Came Early in 2023 and 2024

The real estate housing market experienced an initial increase in home sales during both 2023 and 2024 before sales gradually decreased throughout the year. Why?

It came down to mortgage rates.

Mortgage rates exceeded 8% during the late part of 2023 but then decreased to approximately 6.63% during January 2024. The interest rate decrease provided buyers with temporary relief, which led to increased market activity. The market activity decreased when interest rates began to increase.

The sales peaks during both 2023 and 2024 occurred early because homebuyers responded to brief periods of reduced interest rates. The buyers disappeared after the lower interest rates vanished.

Why 2025 Housing Market Feels Different

The year stands out because mortgage applications are increasing despite interest rates remaining steady. The 30-year fixed mortgage rate has reached approximately 6.7% during mid-March 2025, which exceeds the desired levels of most homebuyers.

The current interest rates appear more bearable compared to the 8% market seen during late 2023.

According to Logan Mohtashami from HousingWire Daily Podcast:

“Unlike the last few years when rates have gone up and purchase application data is negative, it’s still positive on the weeklies and the year over year. It was a long time ago since I’ve been able to say that.”

The housing market could experience increased demand if mortgage rates move toward 6% and remain stable at that level, according to many experts.

Final Thoughts on the Housing Market this Spring

The upward trend in mortgage purchase applications shows that buyers remain interested in the market even with constant mortgage rates. The San Diego real estate market demonstrates the same upward trend as the national market. North Park and South Park, along with nearby metro communities, attract San Diego homebuyers who have returned to the market. The areas experience rising buyer interest despite mortgage rates staying at approximately 6.7%. The neighborhoods maintain stable home values because buyers continue to show interest in the market.

Recent data shows that open house attendance has grown, and homes are selling faster in popular neighborhoods in San Diego than they did in late 2024. The real estate market shows consistent interest in single-family homes together with condos and small multifamily properties that have 2 to 4 units.

What does this mean for you?

The current market conditions provide San Diego residents with an opportunity to buy or sell real estate. The market’s revival brings back buyers, which creates selling opportunities for homeowners. Your local San Diego real estate expert will provide timely, neighborhood-specific insights while you monitor the market closely and remain proactive.

Buying a Home Before Spring in San Diego

All About Market Volatility: What You Need to Know

If you’re considering buying or selling a home, you’ve likely felt the unpredictability in today’s housing market. From fluctuating home prices to changing mortgage rates, there’s definitely more movement than usual, and understanding the reasons behind today’s Market Volatility can make a big difference.

Here’s a straightforward look at what’s driving these changes and how you can make informed decisions as you plan your next steps in the San Diego real estate market. Whether you’re aiming to buy or sell, knowing what’s impacting the market right now can help you navigate it with confidence.

Person Looking at His Laptop with Bars and Graphs in the Background

What’s Fueling the Market Volatility?

If you’re tracking the market right now, you’ve likely noticed the ups and downs. Economic data, unemployment reports, decisions from the Federal Reserve, and even the upcoming presidential election are all adding layers of uncertainty. And as uncertainty increases, so does market volatility.

A clear example is mortgage rates, which have been swinging in response to new economic reports and global events. Although experts generally predict rates will decrease over time, day-to-day changes can be sharp. For instance, employment and inflation data, released each month, often prompt sudden rate shifts.

Greg McBride, CFA, Chief Financial Analyst at Bankrate, points out:

“After steadily declining throughout the summer months, I expect more ups and downs to mortgage rates . . . Job market data will be closely watched as well as any clues from the Fed about the extent of upcoming interest rate cuts.”

This means we’re unlikely to see a steady decline; instead, rates may drop overall but with plenty of short-term fluctuations.

Senior Economic Research Analyst at Realtor.com, Hannah Jones, echoes this sentiment, noting:

“Rates have shown considerable volatility lately, and may continue to do so . . . Overall, we still expect a downward long-term mortgage rate trend.”

In addition to mortgage rates, home prices and inventory levels vary significantly by area, which makes the market feel even less predictable. Here in San Diego, some neighborhoods are seeing rising prices with limited inventory, while other areas have more homes for sale, which can stabilize prices. This variability can make it challenging to gauge the market at a glance.

As these factors evolve, having a solid understanding of the market is key, whether you’re looking to buy or sell. And the best way to stay informed? Connect with a local real estate expert who can offer insights specific to your area and goals.

A Businesswoman Explaining Some Paperwork to a Couple

Why Partnering with a Pro Matters

While the market may feel unpredictable, you don’t have to navigate it alone. Working with a skilled real estate agent can make all the difference, helping you stay on top of market trends, adapt to changes, and make informed decisions aligned with your goals.

For example, as mortgage rates fluctuate, your agent, along with a trusted lender, can explain how rate changes affect what you can comfortably budget for in your monthly payment. Even small rate adjustments can impact your long-term costs, and having professionals break it down will help you keep the big picture in focus.

Local market conditions also vary widely from one neighborhood to the next. A seasoned agent knows how to interpret these nuances, whether it’s understanding the level of competition among buyers, analyzing the inventory available, or tracking price trends in your area. Their guidance is crucial to helping you respond to shifts in the market confidently and strategically.

Ultimately, a knowledgeable agent will provide the insights and support you need to navigate any twists and turns the market may take, making your journey smoother and your decisions smarter.

Bottom Line on Market Volatility and What Buyers and Sellers Need to Know

While the housing market may be shifting, don’t let that hold you back from making your move. With guidance from an experienced real estate agent like the McT Real Estate Group here in San Diego and a reliable lender, you’ll be well-prepared to handle any changes and make the most of the opportunities ahead.

By turning uncertainty into an advantage, you can move forward with confidence and make decisions that align with your goals. Now’s the time to take action, knowing you have the support and insights to navigate the market effectively.

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The Great Wealth Transfer: Unlocking New Opportunities

In recent years, the Great Wealth Transfer has dramatically changed how wealth moves between generations. This shift is poised to reshape financial landscapes, particularly in San Diego, as many Baby Boomers prepare to retire, sell businesses, or downsize their homes.

Historically, wealth passed down through families tended to be smaller, often consisting of modest inheritances or savings. However, the current trend is far more significant.
According to a recent Bankrate article:

“The biggest wave of wealth in history is about to pass from Baby Boomers over the next 20 years, and it’s going to have major impacts on many facets of life. Called The Great Wealth Transfer, $84 trillion is poised to move from older Americans to Gen X and millennials. If it’s managed smartly, Americans will be able to grow their wealth and ensure their financial security.”

As these assets change hands, the younger generations have the opportunity to build and grow their wealth. In San Diego, a city known for its vibrant housing market and booming economy, this wealth transfer is likely to fuel new opportunities for both buyers and sellers. This transition will create ripple effects throughout the community, influencing financial futures for decades. The graph below, using data from Merrill and Cerulli Associates, highlights the significant wealth projected to be inherited by 2045.

The Great Wealth Transfer Bar Graph by Merill and Ceruli Associates

Understanding and preparing for this significant financial shift is crucial, especially in a competitive market like San Diego’s.

Impact on San Diego’s Housing Market

Home affordability has long been a challenge for many potential buyers, particularly in San Diego’s most sought-after neighborhoods. With the upcoming increase in generational wealth, we could see these barriers begin to lessen. As assets transfer from older to younger generations, future homeowners are likely to gain greater financial resources, simplifying the process of buying a home in San Diego’s competitive market.

As assets transfer to younger generations, many buyers may become better positioned to afford homes, potentially driving a rise in homeownership and creating opportunities to upgrade or invest in additional properties.

According to a recent article by Merrill:

“While millennials face steep barriers . . . to buying a first home in many markets, ‘that’s a for-now story, not a forever story’ . . . The Great Wealth Transfer should enable more of them to become homeowners — or trade up or add a second home — either through inherited property or the funds for a down payment.”

San Diego, with its desirable location and strong demand, is likely to be at the forefront of this shift, making it an exciting time for both buyers and the real estate market as a whole.

Impact on San Diego’s Economy

The Great Wealth Transfer doesn’t just affect the housing market; it has a far-reaching impact on San Diego’s local economy as well. As significant amounts of wealth shift between generations, this influx of capital opens up new opportunities for aspiring entrepreneurs in the city. For those looking to start a business, these inherited funds can serve as the vital capital needed to launch their ventures. This, in turn, fuels economic growth by allowing the next generation of San Diego innovators and business owners to bring their ideas to life and contribute to the city’s vibrant business landscape. With San Diego’s entrepreneurial spirit already thriving, the wealth transfer could further accelerate the pace of innovation and create a more dynamic local economy.

The Bottom Line on The Great Wealth Transfer

In today’s housing market, affordability continues to be a hurdle for many, especially in vibrant cities like San Diego. The ongoing Great Wealth Transfer is expected to create new opportunities. As wealth transfers and investments occur, it may break down barriers that have previously prevented people from achieving homeownership. In San Diego, where the real estate market is both competitive and desirable, this shift could lead to more opportunities for first-time buyers and fuel growth in various entrepreneurial ventures across the city.

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Foreclosures Ahead for San Diego Housing Market?

Despite data showing inflation is cooling, many people are still feeling the pinch in their wallets. These high costs on everything from gas to groceries are fueling unnecessary concerns about more people struggling to make their mortgage payments. However, does that mean a big wave of foreclosures is coming?

The Stability of San Diego Homeowners

In San Diego, there aren’t many homeowners seriously behind on their mortgages. This stability contrasts sharply with the last housing crash when relaxed lending standards allowed many to secure mortgages they couldn’t afford. Back then, lenders were less strict about credit scores, income levels, employment status, and debt-to-income ratios.

However, the scenario has changed dramatically. Today, lending standards are much tighter. Lenders now conduct thorough assessments of applicants, ensuring that only well-qualified buyers receive home loans. This shift means there are fewer risks of defaults.

As a result, data from Freddie Mac and Fannie Mae indicates a steady decline in the number of homeowners who are seriously behind on their mortgage payments, commonly referred to as delinquencies. This trend is evident in the accompanying graph.

Serious Delinquencies on a Decline, Percentage of Mortgage Loans in the Process of Foreclosure Graph by Fannie Mae and Freddie Mac

For San Diego homeowners, this means that not only are borrowers more qualified, but they are also effectively navigating financial challenges. Many are exploring repayment options or leveraging their substantial equity to sell their home and avoid foreclosures. This proactive approach contributes to the overall health and stability of the San Diego housing market.

The Truth About Foreclosures: No Wave on the Horizon for San Diego

There is no indication that a wave of foreclosures is approaching. For a significant rise in foreclosures to occur, a large number of homeowners would need to default on their mortgage payments. However, this scenario is unlikely because the majority of homeowners are successfully making their payments, and many have accumulated substantial equity in their properties.

In the context of San Diego, where the housing market remains robust, the risk of a foreclosure wave is even lower. The city’s strong economy and high demand for housing contribute to the stability of homeownership. Buyers in San Diego are generally well-qualified, and the lending practices have been stringent, ensuring that mortgages are manageable for most homeowners.

Housing market expert Bill McBride of Calculated Risk, who accurately predicted the foreclosure crisis of 2008, assures us that we will not see a surge in foreclosures that could significantly impact house prices. According to McBride:

“We will NOT see a surge in foreclosures that would significantly impact house prices (as happened following the housing bubble) for two key reasons: 1) mortgage lending has been solid, and 2) most homeowners have substantial equity in their homes.”

Thanks to solid mortgage lending practices and significant homeowner equity, a foreclosure wave is not on the horizon for San Diego or the broader housing market.

Bottom Line

If you’re concerned about a potential foreclosure crisis, rest assured that current data does not support this fear. In San Diego, the housing market is showing strong signs of stability. Buyers today are more qualified than ever before, which significantly reduces the risk of them falling behind on mortgage payments. This is a positive indicator of the overall health of our local real estate market. So, if you’re thinking about buying or selling in San Diego, the outlook remains promising and secure.

For any real estate needs or inquiries, don’t hesitate to reach out to the McT Real Estate Group. We’re here to provide expert guidance and help you navigate the San Diego housing market with confidence. Contact us today!

Housing Inventory 2024 vs. 2008: San Diego Housing Market

Foreclosure Rates in San Diego: 2024 Insights vs. 2008 Crisis

If you’ve been staying updated on current events, you’ve likely stumbled upon reports discussing the rising trend of foreclosure rates in today’s housing market. This might stir up memories of the housing crash in 2008, possibly leaving you feeling concerned about what lies ahead, particularly if you experienced homeownership during that tumultuous time and saw how many San Diego foreclosures there were during that time period.

However, it’s essential to understand that despite the uptick, we’re not heading towards another foreclosure crisis. Let’s delve into the latest statistics and compare them with historical data to provide a clearer picture of the situation, especially in San Diego.

Unveiling the Truth: Putting the Current Foreclosure Rates into Perspective

Despite alarming foreclosure trends in San Diego, it doesn’t herald a crisis akin to 2008. Understanding the situation requires a closer look beyond sensationalism.

Firstly, let’s address the context. San Diego’s foreclosure surge contrasts sharply with historically low rates. Just a few years ago, initiatives like moratoriums and forbearance programs shielded countless homeowners, keeping foreclosure rates unusually low. With these protections now expired, it’s natural to see an increase in foreclosures. However, this uptick is expected and not cause for alarm. A rise in filings of foreclosed homes in San Diego doesn’t spell doom for the housing market.

To put things in perspective, let’s compare the aftermath of the 2008 crash, which is still fresh in many minds. Data from leading property data provider ATTOM shows a consistent decline in foreclosures since then. This broader view highlights the market’s resilience and dispels fears of a repeat crisis.

Foreclosure Activity Increases But Still Below Pre-Pandemic Levels Graph

San Diego’s Foreclosure Landscape: A Tale of Resilience and Recovery

The current data starkly contrasts with the conditions during the housing crash era. Unlike the alarming spikes in foreclosure filings, notably exceeding 1 million annually, San Diego’s foreclosure trend in 2023 reveals a considerably lower figure of approximately 357,000 filings. This significant disparity underscores a positive shift in the market dynamics.

Transitioning from the red bars symbolizing the distressing foreclosure peaks of the past to the present scenario unveils a notable improvement in San Diego’s real estate climate. In contrast to the tumultuous events of the housing crisis, characterized by widespread economic turmoil, the current situation reflects a more stable and resilient market.

A recent article from Bankrate delves into one of the key factors contributing to this stark contrast. By analyzing trends and data specific to San Diego, the article sheds light on the region’s robust recovery and the mitigating factors that have steered it away from the tumultuous conditions of the past.

“In the years after the housing crash, millions of foreclosures flooded the housing market, depressing prices. That’s not the case now. Most homeowners have a comfortable equity cushion in their homes.”

In essence, the data not only illustrates the stark differences between past and present but also underscores San Diego’s real estate market’s resilience and adaptability. Understanding these nuances is crucial for effectively navigating today’s real estate landscape. Below is a chart illustrating the number of distressed properties in San Diego. You can see there are not many.

Wrapping it All Up

San Diego foreclosures today contrast starkly with the turmoil of the 2008 housing crash. Unlike in the past, many homeowners in our region now hold substantial equity in their properties, acting as a sturdy defense against foreclosure risks. This positive development not only benefits homeowners but also enhances stability within the local real estate market.

Upon closer examination of the data, it becomes clear that San Diego’s current housing scene differs significantly from the foreclosure crises of the past. Instead, it portrays resilience and vigor, signaling a path diverging significantly from the challenges endured during previous economic downturns. While there is a noticeable increase in foreclosure homes in San Diego, it’s important to emphasize that this surge doesn’t reach the crisis levels witnessed during the housing bubble burst. This rise in foreclosures does not forebode an imminent crash in home prices in San Diego or elsewhere.

Fed Tax Return for Home Buying in San Diego

San Diego Real Estate: Why We’re Not Facing a Housing Crash

If you’re eagerly awaiting a housing market crash to bring San Diego’s home prices back down, it’s time to reassess and look at some data. The current data that we have paints a clear picture: a downturn isn’t on the horizon anytime soon. In fact, real estate experts predict that home prices will continue their upward trajectory through the coming months and years. Comparing today’s market to the pre-2008 housing crash reveals stark differences. This distinction is crucial in understanding why a repeat scenario is unlikely.

San Diego’s Evolving Mortgage Landscape: Navigating Stricter Standards for Homebuyers

Securing a home loan has become a more rigorous process in today’s real estate landscape, and surprisingly, this shift towards stricter lending criteria is a positive development. This is unlike the prelude to the 2008 housing crisis, where obtaining a mortgage was relatively effortless due to lenient standards set by banks. Banks have tightened their lending standards considerably, presenting a more selective environment for potential homebuyers. Unlike the past era, where almost anyone could qualify for a mortgage, today’s borrowers encounter heightened requirements from mortgage companies.

The Mortgage Bankers Association (MBA) data clearly shows this evolution in lending practices. A glance at the graph reveals a significant contrast in lending standards between then and now. The peak in the graph reflects a time when obtaining a mortgage was far less arduous, indicating lower barriers to entry into the housing market. However, the lax lending standards of the past era came with severe consequences. The surge in mortgage approvals without thorough vetting exposed borrowers and lending institutions to substantial risks. As a result, the market witnessed a wave of defaults and foreclosures, contributing to the infamous housing crash of 2008.

Today, San Diego’s real estate landscape is characterized by a more cautious approach, with lending institutions prioritizing responsible lending practices. This shift not only protects borrowers from entering unsustainable financial commitments but also safeguards the stability of the housing market. By imposing stricter standards, lenders mitigate the likelihood of another housing crisis, ensuring a more sustainable and resilient real estate environment for all stakeholders involved.

San Diego’s Housing Market Stability: A Closer Look at Inventory Trends

In today’s San Diego real estate market, we’re witnessing a significant shift from the conditions that led to the housing crash of the past. Back then, the market was flooded with an excess of available homes, many of which were distressed properties like short sales and foreclosures. This surplus in inventory drove home prices to plummet dramatically, causing widespread economic turmoil.

However, the landscape looks much different now. There’s a noticeable shortage of available homes for sale, creating a vastly different scenario from the conditions that precipitated the housing crisis. According to data sourced from reputable organizations such as the National Association of Realtors (NAR) and the Federal Reserve, the current inventory levels are strikingly low compared to the peak of the crisis.

For instance, the graph below illustrates the contrast between the months’ supply of homes available now (depicted in blue) versus during the housing crash (highlighted in red). Today, the unsold inventory hovers at a mere 3.0-months’ supply, a stark comparison to the peak of 10.4 months’ supply witnessed in 2008. This significant disparity indicates that there’s currently insufficient inventory on the market to precipitate a collapse in home prices akin to the events of the past.

Housing Supply is Lower Than Before Graph

In essence, the limited supply of homes for sale throughout the country safeguards against the risk of a housing crash, offering stability and confidence to buyers and sellers. As we navigate these evolving real estate dynamics, it’s evident that San Diego’s housing market is resilient and poised for continued growth and prosperity.

Fortifying Financial Resilience in Today’s Market

In the era leading up to the housing crash of the early 2000s, many homeowners utilized their homes as financial reservoirs, tapping into equity to fund various expenditures like new cars, boats, and extravagant vacations. Consequently, when property values plummeted, and housing inventory surged, numerous homeowners found themselves submerged in mortgages exceeding the value of their homes.

Fast forward to today’s real estate landscape in sunny San Diego, and a marked shift in homeowner behavior is evident. Despite the meteoric rise in property prices over recent years, homeowners exhibit a newfound prudence, refraining from extensive equity extraction akin to the pre-crash era.

According to data from Black Knight, tappable equity—representing the amount of equity accessible to homeowners before reaching an 80% loan-to-value ratio—has presently reached unprecedented levels. This surge in equity signifies that homeowners collectively possess more financial leverage than ever before, bolstering their financial resilience in the face of market fluctuations.

Tappable Equity at an All-Time High Graph

Moreover, Black Knight’s findings underscore this positive trend, revealing a significant decline in underwater mortgages.

“Only 1.1% of mortgage holders (582K) ended the year underwater, down from 1.5% (807K) at this time last year.”

With homeowners on firmer financial ground, the prospect of foreclosure diminishes, thereby curbing the influx of distressed properties into the market. Consequently, the absence of a deluge of inventory serves as a buffer against precipitous price declines, safeguarding the stability of San Diego’s real estate market.

Wrapping All Things Up

In summary, it’s normal to expect housing prices to drop, particularly in a lively city like San Diego. However, recent data shows otherwise. Unlike past downturns, San Diego’s real estate market is strong today. The newest studies clearly show that we’re not about to experience a housing crash like before. So, while people still want cheaper housing, the proof indicates that a crash isn’t coming soon.

San Diego 2024 Home Price Forecast: Expert Revision

San Diego’s Housing Market: The Perfect Seller’s Window

Are you still thinking about whether or not to put your home on the market for sale in San Diego? With what’s going on in the current real estate landscape, it presents a few compelling reasons to make a move. Let’s delve into the numbers, shall we? Recent data from an article by Calculated Risk reveals a notable 15.6% uptick in available homes compared to last year, signaling a growing inventory and more listings gradually coming into the market. However, compared to 2019, a year deemed more typical for the market, there’s still a 40% decline in the available housing stock for buyers to choose from. This shift creates a golden opportunity for sellers and even those on the purchasing side. Let’s explore how this advantageous scenario works to your benefit.

Inventory is Rising, But It's Still Low Graph — Inventory is Rising, But It’s Still Low Graph

Expanding Opportunities: Navigating San Diego’s Growing Housing Market

Are you considering selling your home due to space constraints or shifting preferences? Well, here’s the exciting news and catch: With the continuous growth in the housing market, your options are slowly expanding! Whether you’re in dire need of a larger house, maybe contemplating downsizing, or simply just craving a change, the increasing inventory means you’re more or less likely to find your ideal home that fits your preferences.

If concerns about finding the right property were holding you back before, fret not. This surge in options eliminates those worries and opens up many possibilities and new listings. Partnering with a local real estate expert in your area also ensures you’re kept abreast of the latest listings in San Diego when or before they even hit the market. Seize the opportunity presented by today’s thriving market and embark on your home-selling journey with confidence!

San Diego’s Housing Market: Low Competition, High Potential

Furthermore, even with the uptick in available homes for sale, competition continues to remain notably subdued, particularly when contrasted with usual market dynamics. Remember the data from the Calculated Risk we mentioned before: San Diego’s housing inventory presently stands at approximately 40% below its 2019 levels. This substantial shortfall isn’t expected to be rectified swiftly. A recent article from Realtor.com underscored this ongoing trend, emphasizing the enduring impact on the local housing landscape.

“. . . the number of homes for sale and new listing activity continues to improve compared to last year. However the inventory of homes for sale still has a long journey back to pre-pandemic levels.”

This translates to an advantageous situation for people on the seller’s side. By collaborating with an agent to accurately price your property to sell, you can attract considerable interest from eager buyers, potentially leading to a swift sale. In essence, finding the optimal listing price, in conjunction with effective marketing strategies, can significantly increase the visibility of your home and expedite the selling process.

Wrapping it all Up

To sum all things up, for homeowners still contemplating putting their property on the market, San Diego’s current real estate landscape offers an exceptional chance for this exciting opportunity. The market is ripe with various options for your next dream home, and competition from other sellers remains relatively subdued. Seizing this advantageous moment could be the key to maximizing your selling potential. So if you are ready and well-prepared to embark on this exciting journey, please don’t hesitate to get in touch with a trusted local realtor in your area like the McT Real Estate Group here in San Diego, and let’s kickstart this endeavor together.

San Diego’s Market Trends: Home Price Headlines

San Diego Mortgage Rate Forecast: Rates to Dip Below 6% Soon

In the ever-evolving landscape of San Diego mortgage rates, clarity amidst the confusion is crucial, especially for those eyeing the real estate market. Amidst the fluctuations, one trend stands out: a downward trajectory in mortgage rates compared to the near 8% peak experienced last fall. This trend bears significance for both prospective buyers and sellers alike, signaling a favorable environment.

While short-term volatility may sway rates based on economic indicators like inflation and reactions to the consumer price index (CPI), it’s essential not to lose sight of the bigger picture. Experts concur that the overarching trend points downwards, a reassuring sign for those navigating the housing market.

Looking ahead, projections hint at a potential milestone: mortgage rates dipping below the 6% mark later this year. Senior Economist Dean Baker of the Center for Economic Research lends credence to this outlook, suggesting a notable decrease from pre-Great Recession standards. Moreover, Fannie Mae’s latest projections align with this sentiment, offering optimism for prospective homebuyers (as illustrated in the chart below, highlighting projections in the green box).

“They will almost certainly not fall to pandemic lows, although we may soon see rates under 6.0 percent, which would be low by pre-Great Recession standards.”

Take a glance at the latest mortgage rate predictions for 2024, straight from Fannie Mae. This chart compares their December projection with the updated forecast just a month later. What catches the eye? A clear downward trend in the projections.

It’s standard practice for experts to revise their forecasts as they closely monitor market dynamics and broader economic indicators. What’s evident here is a growing confidence among experts that mortgage rates will keep sliding, particularly if inflation eases.

In San Diego, where real estate trends often mirror national patterns, this shift could have significant implications for homebuyers and sellers alike. Lower mortgage rates typically mean increased affordability and heightened market activity, potentially sparking a surge in housing demand across the region.

What Does This Mean for You?

Remember that predicting the future of mortgage rates is not an exact science. Short-term fluctuations are normal, so it’s essential not to let minor changes unsettle you. Instead, maintain focus on the broader perspective. In today’s competitive San Diego market, finding a home that fits both your budget and your preferences can be challenging. If you’ve discovered a property you adore, waiting for rates to dip below 6% might not be the best strategy.

Considering current rates are already lower than last fall, you’re presented with a prime opportunity. Even a modest quarter-point decrease in rates can significantly enhance your purchasing power. So, seize the moment and make informed decisions based on market conditions.

To Wrap Things Up on the San Diego Mortgage Rate Forecast

In conclusion, if you’ve been delaying your move, anticipating a drop in mortgage rates, the current scenario suggests that the wait might be over. With rates potentially dipping below 6%, seizing the opportunity now could be the smart move. Ready to take the next step? Connecting with a trusted local real estate team like the McT Real Estate Group in San Diego can help you kickstart the process. And hey, if you’re considering a move in the vibrant San Diego area, there’s no better time to explore your options!