SAN DIEGO — Frank Powell, the San Diego Association of REALTORS President Elect sold a University City 4-bedroom home with a waterfall pool and jacuzzi in a little over a week, but he's now seeing more and more homes not sell as quickly as they did earlier this year.
"Now, we're seeing days on the market at 20 days, 25 days and 30 days, that is an indication that everyone realizes that you are pricing it too high,” said Powell, who served as a San Diego lifeguard for 18 years before getting into real estate.
Financial advisor David Reyes at Reyes Financial Architecture says the interest rate hikes are increasing some homeowner monthly payments by 50%, and that interest rate is only expected to get higher in the next six months.
"With a median home price in San Diego at $1 million, and let's say you put 20% down, and you now have an $800,000 mortgage when your payment just a few months ago would've been about $3400 for the mortgage payment, not including tax and insurance, but today, with rates going from about 3% to 6.5%, which is about the average mortgage rate, you are now talking about paying over $5000 a month for the same house,” Reyes said.
Reyes says first time home buyers are getting hit the hardest since they may no longer qualify to buy a home.
"When you raise interest rates, what happens to your debt, your payments go up. Rates went from about .75 to 1% to 1.5% overnight, which is a pretty big jump,” Reyes said.
For those looking to buy a home, Reyes suggests holding off. He says it is more of a sellers’ market even if sellers aren't getting multiple offers like they used to.
“You can't look back even one month ago and say well, the house down the street sold for $200,000 above asking price, those days are gone,” Powell said.
Powell says he's seeing many sellers drop their price dramatically, but he advises don't "chase the market" but do one big drop and leave it there for a while to see what happens.
"If you were going to sell your house, I say sell it now because by all indications, seems that the interest rates are going to continue to climb and gas prices are continuing to climb and inflation is continuing to climb, and all these affect the buyer and what they can afford,” Powell said.
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