AREA LEADS THE NATION WITH THE MOST PRICE REDUCTIONS THIS YEAR
This isn’t a sign that the bottom is falling out of the market. Instead, after years of rapid price increases, experts say the market is becoming more stable and for the first time in quite a long time, it is shifting in favor of buyers.
That shift is most evident when you look at the number of times sellers have reduced prices. The share of home listings with a price cut grew to its highest level in at least eight years, says a recent analysis from Trulia. San Diego had the most reductions — 20.5 percent — of the 100 biggest metro areas in the United States so far this year. (It tied with Tampa, which also saw 20.5 percent of homes with a price cut.)
“Three months ago, the feeling was, ‘I better make an offer on that house before somebody else does and how high do I need to go?’”said Gary Kent, a La Jolla-based real estate agent. “The psychology has really changed to, ‘You know what, how much can I get off from the price?’”
Driving the change? Rising mortgage rates, which combined with increasing prices have made purchasing a home more expensive.
Take the mortgage rate for a 30-year, fixed-rate loan at 4.78 percent, up from 3.99 percent a year ago. That increases the monthly mortgage payment on a median-priced home in the county by $268.
And that uptick in turn has helped slowed sales. In September, for example, sales in San Diego County dropped 17.5 percent, the lowest in 11 years for a September. That has helped to turn around inventories, which have been lagging demand for years.
Homes are also starting to stay on the market longer. In October, the average was 38 days, up from an average of 29 days in April, May and June. In October 2017, the average time on market was 35 days.
The San Diego region was not isolated in price reductions. Nationally, Trulia said the share of home listings with a price reduction was at its highest level since 2014.
A few examples of price cuts in San Diego:
- 7171 Terra Cotta Road — $545,000. The four-bedroom house (1,804 square feet) in the Bay Terraces area has had four price reductions, starting at $569,000 at the beginning of November.
- 4225 Florida St., Unit 4 — $395,000. The two-bedroom condo (794 square feet) in University Heights has had three price reductions, starting at $425,000 in mid-October.
- 3655 Ash St., Unit 2 — $322,100. The two-bedroom condo (824 square feet) in Fairmount Park has had six price reductions, starting at $330,000 in mid-September.
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