A year ago, the three-bedroom craftsman home on 2873 Upas St. would have been one of the hottest on the market, receiving multiple offers and selling within days of its listing.
But today, after sitting on the market for 44 days and four price reductions later, the remodeled 1943 home in the popular North Park-Morley Field neighborhood doesn’t have an offer.
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.
Seattle saw 13.8 percent more price cuts, Las Vegas had 11.2 percent more and Oakland had 8.9 percent.
It’s not happening in all markets. San Francisco, Austin and Wichita are some of the cities where there were fewer price reductions year over year.
The Los Angeles metropolitan area was more similar to San Diego, but had 18.3 percent of homes with a price reduction — 10 percent less than San Diego, but still up 6.3 percent from the year before.
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.
Listing agent April Khamphasouk said the tough thing about selling the house at 2873 Upas St. is that it is basically two homes in one (the property is 1,698-square-feet and has a guest suite above the garage).
She first listed the home for $1.1 million in early October. By mid-October, the price was lowered by $19,000. There were three more price reductions and by Nov.12, the asking price for the home had decreased by $55,900. It is still on the market.
Khamphasouk said the recent price reduction seemed to be greatly increasing interest. Still, she said a lot of the issues in the past month have been related to rising mortgage interest rates.
“There are people saying they are going to put an offer in, and, when I call, they back out because they are scared of the (interest rates),” she said.
Mark Goldman, finance and real estate lecturer at San Diego State University, said even with all the changes in the housing market, he didn’t see the median home price going down much — just slow down in how fast it increases.
“The rate of appreciation has been going down” for several months, he said. “(Sellers) that came onto the market with over optimistic expectations for a price are realizing that they came out too high and are now backing off to sell the property.”
Goldman said interest rates are a major factor but so is affordability. With wages not increasing at the same pace of housing, it was bound to affect sales eventually, he said.