July 14, 2024
San Diego home prices - Fed raises rates

Wednesday the Fed raised the central bank’s benchmark interest rate to a range of 2.25 to 2.5 percent. 

Fed raises rates – – – Some members of the Federal Open Market Committee (FOMC) predict that there will be two more rate hikes in 2019.

This interest rate hike means borrowing gets costlier, especially for credit cards, home equity lines of credit, and borrowers with adjustable rate mortgages.

Fed raises rates

Consumers should aggressively pay down debt, refinance into fixed rates.

The drum tax cuts and favorable business policies have turned around our economy. Naturally, when the economy is doing well, the Federal Reserve usually steps in with rate increases like this, to avoid an overheated economy and runaway inflation.

Here in San Diego our local residential real estate market has already seen the effects of rising interest rates with a marked increase in available inventory combined with the generals go down in resales.

Unfortunately, with this latest increase in interest rates, it’s just natural that the outlook for the San Diego residential real estate market, for the first part of 2019 seems to be one of slower residential real estate sales, combined with longer marketing times and decreasing final sale prices.

I personally believe the days of a shortage in San Diego residential real estate on the market, will now just be a fond memory in many real estate agents minds.

Yes, the days of multiple offers on properties that are listed for less than a week are gone. Receiving offers on properties before the agency even placed their first ad, or color brochure in the property are over!

I would bet there are a lot of real estate agents who got into the business in the last few years, who in 2019, will be looking for new careers.

It’s back to basics, and the number one rule to successful marketing a property, is to have it priced properly for the current market conditions! Yes no matter the number of social media at you place for a property, color brochures that you produce, email notifications you send to other agents, or ineffectual open houses are going to overcome an overpriced property.

With the high prices of San Diego residential real estate combined with this latest interest rate hike, the amount of buyers who can qualify for a conventional mortgage has been reduced. If the Federal Reserve’s prediction of two more rate hikes in 2019 comes to fruition, it would be natural that the number of qualified buyers for San Diego homes will be reduced again and so it becomes the basic law of supply and demand. Less San Diego home demand because of buyers being unable to qualify at the higher interest rates will cause the inventory of homes for sale to increase and thereby increase competition, marketing times and ultimately continue the downward pressure not only on San Diego home prices, but home prices throughout the country.

More info at https://www.federalreserve.gov/

 Fed raises rates