San Diego County home sales dropped 17.5 percent to the lowest level in 11 years for a September in the first significant sign of a slowdown in the market, real estate tracker CoreLogic reported Tuesday.
Last month, 2,942 homes sold in the county, down from 3,568 sales a year ago. It was the lowest number of sales for a September since just before the Great Recession when 2,152 sold in September 2007. Also, last month’s median home price dropped to $575,000 — the first decrease since January — after hitting an all-time high of $583,000 in August.
Most experts attributed the slowdown to a rise in mortgage interest rates, and the sale price reduction to potential buyers balking at higher monthly payments.
“Mortgage rates (are) another thing that is going to add cost, and temper demand,” said Cheryl Young, senior economist at Trulia. “Rates are hovering around a seven-year high so people are really, possibly, taking a step back before they jump into home buying.”
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If you’ve been distracted by the federal government shutdown, political dysfunction, stock-market volatility and reports of rising mortgage rates, it wouldn’t be surprising if you concluded: No way is this a good time to even think about buying a house or putting one on the market. Things are too crazy. Nobody’s paying attention to real estate anyway.
But take another look. Some of the real-estate fundamentals have been changing for the better. Take mortgages. They’ve gotten cheaper. As of last week, you could readily find conventional rates averaging 3.87 percent for five-year adjustable-rate home loans, or conventional 30-year loans at fixed rates of 4.45 percent, according to investor Freddie Mac. That compares with late last year, when they were at 5 percent or higher, depending on an applicant’s credit profile.
Sure, rates are slightly higher than they were a year ago, when the 30-year fixed rate averaged 4.2 percent. And yes, when you take out a five-year adjustable loan, your payments are fixed for the first 60 months and then are subject to adjustments — up or down — once a year. So you take on future rate risk in exchange for a super low rate the first five years.
But combined with other recent trends — growing inventories of homes available for sale, slower price inflation and even modest price reductions — the decline in mortgage rates should be encouraging for anyone seriously in the market for a home. And even for heads-up owners looking to sell.
Real estate website and brokerage Redfin has launched a 1 percent listing fee in San Diego that could save home sellers hundreds of dollars in commission costs.
It’s not the first time the website has rolled out the feature — or the only city — but this is its first time in California. It previously had an already below average listing rate of 1.5 percent.
Low listing fees are often associated with agencies that don’t do as much for clients. But, Redfin says its business model allows it to charge less and do as good of a job as traditional agencies.
The typical listing fee is about 2.5 percent, which can mean thousands of dollars in a high-priced market, and also usually means an additional 2.5 percent for the buyer’s agent.
For a San Diego County median priced home of $525,000, a buyer would typically expect to spend around $26,000 in commission fees. Under Redfin’s deal, one could conceivably save nearly $8,000.
Redfin spokeswoman Alina Ptaszynski said the move is possible because of its emphasis on technology and a different real estate agent model.
“We’re delivering the same level of service — we would argue higher level of service,” she said.
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