San Diego's starter home prices fall as pricier homes rise
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It's a buyer's market if you can scrape together enough funds. Photo: Claire Trageser/Axios
Prices for San Diego's so-called "starter homes" are falling, according to the First American Data & Analytics Home Price Index. But it's not all good news.
The big picture: That drop is due to higher mortgage rates impacting lower-budget buyers hardest, experts told Axios.
- At the same time, those in the know say those falling prices signal a fresh opportunity for anyone who can scrape enough together to buy.
By the numbers: Prices for starter homes (homes going for less than $1 million) fell by 1.1% since last August, according to the report.
- Meanwhile, homes between $1 million and $1.496 million saw prices rise by 0.5%.
- Same for homes above $1.496 million.
Caveat: San Diego "starter homes" are still not really feasible for many of us.
- Their media price is $775,000, according to First American.
Friction point: Interest rates, which are bouncing around 7.3%, are the kicker, San Diego Association of Realtors president Karen Van Ness told Axios.
- Even if prices go down, mortgage payments are still high.
- Toss in the higher costs of utilities, maintenance, insurance and HOA fees, and many lower-budget buyers are taking a breath and reconsidering their choices, she said.
- They might wait to buy until interest rates come down or look at condos instead.
Interest rates are double what they were during COVID, driving away your typical first-time buyers.
- On top of that, sellers may not want to sell their homes and lose their low rates.
- "The effect of all of these factors has traumatized buyers into freezing plans to purchase until something or someone steps in to help," Van Ness said.
State of play: All of this makes for a buyers' market in San Diego for the first time in years.
- That's because there's less demand for these cheaper homes, First American chief economist Mark Fleming told Axios.
The condo market has also suffered, Van Ness said.
- That's in part because of the steep hike in HOA dues — in some places by 60% to 70% since 2021, she said.
The bottom line: "I strongly suggest that if an individual or a couple can afford a home, that they buy it now," Van Ness said. "Regardless of the interest rate, because interest rates change, but once they lock in a price on a home, it doesn't."