San Diego County’s median home price fell for a fourth month in September, down 6 percent from its peak in the spring.

The median was $795,000, according to CoreLogic. It reached an all-time high of $850,000 in May, but the market — in San Diego and the rest of the nation — has slowed as mortgage rates continue to rise. The median combines all single-family, condo and townhouse sales.

Prices are still up 7.4 percent annually in San Diego County, one of the biggest gains in all of Southern California. Yet rising mortgage rates are taking a toll on potential homebuyers, and sellers are waking up to the reality that prices have to be lowered in many cases.

Higher mortgage rates mean larger monthly payments, making the income required to qualify even bigger. For instance, the monthly cost for a median-priced resale condo at $600,000 — assuming 20 percent down — would be around $3,195, up from $2,281 a year earlier.

Some sellers understand that the market is on the decline, but it is OK because home prices have appreciated so much in the last few years they don’t feel bad about selling right now. However, other sellers are having a hard time accepting their home isn’t worth as much as it was a few months ago.

The median days on market for a San Diego County home to sell was 28 days in September. That’s up from nine days at the start of the year. Also, 45.7 percent of homes listed for sale have had a price drop. That’s up from 12 percent in January.

Most analysts and real estate agents say rising mortgage rates are the biggest factor in the market slowdown. The interest rate for a 30-year, fixed-rate mortgage was 6.11 percent in September, said Freddie Mac, up from 2.9 percent the year before.

Some buyers are taking advantage of buying down interest rates. Lenders often allow purchasers to pay up front to have a lower rate by purchasing points. When you buy points, you instantly get a lower interest rate.

Goldman Sachs Research predicts U.S. home prices will drop 5 to 10 percent from their peak by the end of the year.
“Our economists think it’s unlikely there will be a large wave of forced selling in the U.S.,” Goldman Sachs’ report read, “because a recession would probably be mild, the housing market is tight, mortgage quality is solid and a large proportion of the mortgages have a fixed rate.”

Most analysts are not predicting a major home price crash because the number of available homes is much lower than during the Great Recession — which saw a major building boom before the crash. Also, there are stricter requirements for loans.

Here’s how the San Diego County price changed by home type in September:

• Resale single-family home: Median of $875,000. It is down from a peak of $950,000 in April.
  
• Resale condo: Median of $600,000. Down from the peak of $663,000 in May.
  
• Newly built: Median of $828,000. This figure combines single-family homes, townhouses and condos. Down from the peak of $890,500 in August.
  

With homes sitting on the market longer, it means more options for buyers — even if it is more expensive with rising mortgage rates. There were around 5,100 homes for sale in September, up from a little more than 2,000 to start the year.

Almost all of Southern California saw price drops from August to September. Orange County dropped the most, 3.5 percent, to a median of $950,250. It was followed by Los Angeles County, dropping 2.3 percent to $806,000; Ventura County down 2.2 percent to a median of $762,500; Riverside County, down 0.9 percent to $565,000; and San Diego County with its 0.6 percent drop. San Bernardino County was the exception — increasing 1.8 percent to $504,000.

Source: SDuniontribune by Phillip Molnar