SAN DIEGO – After months on the rise, the median home price in San Diego County has recently dropped an estimated 2.9%, according to one real-estate official.
“We’re finally starting to see a slow down in home prices,” said Phillip Molnar, a business writer for the San Diego Union-Tribune. “They’ve been on a tear for about two and a half years.”
Molnar says that recently released data shows that the current median home price is now $825,000, down from the May 2022 price of $850,000. The nearly 3% drop from May to June represents the biggest decrease in Southern California in recent history, according to Molnar.
“We kind of expected home prices to go down at the start of the year, but unfortunately, what happened for a lot of buyers is people are nervous about interest rates going up so they rushed into the market and bought whatever they could, doing these crazy deals going over asking price and all that stuff,” Molnar said.
The panic drove the prices even higher, but also caused interest rates to rise, sitting around 5.7% for a 30-year-fixed home loan. The sky-high market couldn’t sustain itself, however, which caused the slight cooling period seen between May and June, according to the experts.
“Basically, price reductions and all these people pushed out of the market because of affordability reasons,” Molnar said.
While any decrease in price is welcome, it may not help as much as people think. Molnar says that the still increasing interest rates are locking many in the area out of the home-buying market.
“It might not matter as much with prices going down because if interest rates keep going up, that’s still increasing your monthly payment. So it’s a rough situation for a buyer right now. On the one hand, you have a lot less competition and you have more options– you probably don’t have to go way over your asking price to get a new house– but with interest rates being where they’re at right now, you’re still kind of in a rough spot trying to make that payment work,” Molnar said.
And the business writer says you can expect the market to stay this way for the foreseeable future due to a host of circumstances, starting with the lack of new construction.
“The consensus is forming that the pace of increases is going to slow, but not that we will see a crash. We see it across the nation and especially here in San Diego, we haven’t been building enough houses to keep up with the growing population,” the Union-Tribune writer said.