This week the Mortgages Bankers Association reported that mortgage application volume is 22 percent lower that compared to the same week last year and 3.2 percent lower than the previous week. I am not surprised. We are feeling it here in San Diego.
Yes, there are still plenty of buyers out there but things have been softening since August - even more so than usual for this time of year.
It appears potential home buyers are worried about rising interest rates and the volatility in the financial markets. With rates for a 30 year conforming fixed-rate mortgage at 5.17 percent we are still at historically low rates. San Diego's economy is good with September's unemployment rate at 3.2% according to the EDD. This is the lowest it has been since 2000. I think we will see a strong uptick in spring buyers, as we always do, but possibly a continued correction in home prices if interest rates continue to rise.
This is a free market. There will always be buyers and sellers. Pricing and the economy will determine how many. A slight price correction could help get more buyers off the side lines. If you are a seller most likely you are a buyer too so don't forget even if your property goes down a bit in market value the property you are buying will also be less expensive meaning a lower purchase price for you as well as lower income taxes. Not a bad deal.
