What History Has Taught Us
I hear this question almost every day: “Should I buy a home now while rates are higher, or wait until they drop?” The truth isn’t speculative — it’s proven. In San Diego, when mortgage rates drop, home prices rise. We’ve seen it again and again:
- 2020–2021 (COVID rate cuts): 30-year rates fell into the 2–3% range and San Diego prices surged as buyers rushed back into a market with limited inventory.
- 2012–2013 (post-recession recovery): Sub-4% rates helped fuel a sharp rebound; improved affordability brought buyers off the sidelines and pushed prices higher.
- Early 2000s: Rates slipped from ~8% to the mid-6% range and San Diego saw double-digit annual appreciation until the mid-2000s peak.
Buying Now, Even with Higher Rates
Less competition and more leverage. Elevated rates keep many buyers on the sidelines. That means fewer bidding wars and more room to negotiate. I’m seeing sellers in Encinitas and Carlsbad offering credits for closing costs or rate buydowns — concessions that tend to vanish when rates fall.
“Marry the house, date the rate.” If you find the right property, buy it now and refinance later. In the meantime, you’re building equity instead of waiting and watching prices climb when demand returns.
Waiting Until Rates Drop
Yes, your payment may be lower. A 1% rate drop can save hundreds per month and boost your purchase power. But in San Diego, that relief often attracts a wave of new buyers — and the competition pushes prices up.
Waiting for a 7% rate to fall to 6% might sound like savings, but if the home you love is $50K–$100K higher amid bidding wars, the math often nets out the other way.
What This Looks Like Across Our Market
- Encinitas & Carlsbad: Highly desirable coastal markets. When rates dip, multiple offers return quickly and prices firm up.
- Del Mar & La Jolla: Luxury segments where many buyers are less rate-sensitive; price resilience is the norm, and competition ramps when money gets cheaper.
- Oceanside, Solana Beach, Rancho Santa Fe, Carmel Valley: Inventory remains tight countywide. Even modest demand increases can spark price jumps and fewer seller concessions.
Bottom line: In San Diego, lower rates don’t make homes cheaper — they make them more competitive. If the home and neighborhood fit your long-term plan, buying now can be the smarter move.
Request a strategy sessionFAQs
Do home prices go down when rates drop?
Historically in San Diego, the opposite happens: lower rates bring more buyers back into a market with limited supply, driving prices up.
If I buy now, can I refinance later?
Yes. Many clients secure the right property today and refinance if/when rates fall. This approach lets you build equity sooner and avoid future bidding wars.
Which areas do you specialize in?
I serve San Diego County with a focus on Encinitas, Carlsbad, Del Mar, La Jolla, Solana Beach, Rancho Santa Fe, Oceanside, and Carmel Valley.
Note: Real estate markets evolve. I’ll tailor this guidance to your budget, timeline, and target neighborhoods.
