After months of hesitation, many homebuyers in San Diego and across the country are finally seeing a window of opportunity to enter the market. Previously, high mortgage rates and affordability issues pushed many potential buyers to the sidelines. However, with rates starting to trend downward and as rates to drop, today’s market could be the perfect time to make a move. This favorable condition might not last long, so now could be your chance to get ahead.
If you’ve been holding off on your plans to buy a home, here are some reasons you might want to reconsider. As you weigh your options, think about this: What do you think other buyers are going to do in this market?
The reality is, if rates continue to drop—as many experts predict—more buyers will rush back into the market. According to a survey from Bankrate, over half of homeowners say they would be motivated to buy this year if mortgage rates fall below 6%. In San Diego, where housing demand already runs high, a surge of interested buyers could create a more competitive environment and drive prices up. Therefore, getting a jump on the market now might give you a significant advantage.
So, if you’ve been keeping your home search on hold, don’t wait too long. This current “sweet spot” for buyers may close sooner than you think.
The Impact of Dropping Rates: Why Waiting Could Cost You in San Diego’s Market
With mortgage rates currently hovering in the low 6% range, we are not far from the point where they could dip into the 5s. When that happens, the real estate market will likely see an influx of buyers, leading to increased competition, especially in areas like San Diego. This surge in buyer activity could have a direct impact on home prices.
As demand rises, home values are expected to climb, potentially offsetting the advantage of securing a slightly lower interest rate.
Nadia Evangelou, Senior Economist and Director of Real Estate Research at the National Association of Realtors (NAR), provides some insight into this trend:
“The downside of increased demand is that it puts upward pressure on home prices as multiple buyers compete for a limited number of homes. In markets with ongoing housing shortages, this price increase can offset some of the affordability gains from lower mortgage rates.”
In San Diego, where housing inventory remains tight, this effect could be even more pronounced. So, while waiting for a minor drop in interest rates might seem like a smart strategy, it carries the risk of being outpaced by rising property prices. In the end, what you might gain from a slightly lower rate could be quickly lost if home prices continue their upward march.
What Dropping Rates Means for You
Right now, you have a unique opportunity to get ahead in the real estate market. Currently, it’s a buyer’s sweet spot. Here’s why: many potential buyers are sitting on the sidelines, which means fewer people are actively searching for homes. In turn, this gives you a much-needed edge with less competition.
Additionally, affordability has improved significantly in recent months. The recent dip in mortgage rates has made homeownership more attainable than before.
In fact, according to Mike Simonsen, Founder of Altos Research:
“Mortgage payments on the typical-price home are 7% lower than last year and are 13% lower than the peak in May 2024.”
This decrease in mortgage payments and as rates to drop provides a little breathing room for many prospective buyers. While the housing supply remains relatively low, it’s higher than what we’ve seen in previous years. Ralph McLaughlin, Senior Economist at Realtor.com, states,
“The number of homes actively for sale continues to be elevated compared with last year, growing by 35.8%, a 10th straight month of growth, and now sits at the highest since May 2020.”
This growth means you have more options than you’ve had in a long time, and here in San Diego, that variety is key. From charming bungalows in North Park to spacious family homes in South Park, the inventory is offering something for everyone.
With fewer buyers in the market, improved affordability, and a wider selection of homes to choose from, now might be the perfect moment to find your ideal property in San Diego before competition ramps up.
Why Waiting to Buy Could Cost You in the Long Run
Many prospective homebuyers try to wait for the “perfect” time to make a move, hoping to catch the market at its lowest point. However, timing the market is nearly impossible, especially in a dynamic city like San Diego. Real estate trends can change rapidly, and the longer you wait, the higher the chances that market conditions will shift in ways you might not expect.
Here’s something to keep in mind: waiting could mean facing a market with higher prices, fewer options, or increased competition from other buyers. Greg McBride, the Chief Financial Analyst at Bankrate, sums it up perfectly:
“It’s one of those things where you should be careful what you wish for. A further drop in mortgage rates could bring a surge of demand that makes it tougher to actually buy a house.”
This means that even if rates drop, the resulting uptick in buyer interest could drive up home prices and make it harder to secure a property in competitive neighborhoods like North Park or South Park.
In San Diego’s ever-changing market, waiting might end up costing you more than acting now. Instead of trying to predict the market’s next move, focus on your own readiness and goals. This way, you can navigate the buying process with more confidence and flexibility, regardless of market shifts.
Final Thoughts
Now is the perfect time to make your move in the real estate market. Waiting could mean facing stiffer competition and potentially higher home prices down the line. Currently, buyers are in a unique sweet spot with dropping rates, especially in vibrant communities like San Diego. With its appealing neighborhoods and lifestyle, homes here don’t stay on the market for long. Chat with a trusted local realtor here in San Diego like the McT Real Estate Group and let’s explore your options to help you take advantage of today’s market conditions before things heat up even more. Reach out, and let’s turn your homeownership dream into reality.