San Diego County homebuying hasn’t been the same since the Federal Reserve’s war on inflation began three years ago.
That’s what my trusty spreadsheet discovered in the March homebuying report from Attom, which tracks the closed sales of existing residences and new construction, houses and condos, dating to 2005.
The Fed’s efforts to cool an overheated economy with pricier financing began in March 2022. It totally iced home sales.
For example, March 2025’s 2,189 sales were the smallest total for the month on record. It’s also 34% below the month’s 20-year average.
Or take a longer-term view of homebuying’s collapse.
In the 36 months since the Fed started its cost-of-living focus, 2,313 San Diego County residences were sold in the average month vs. 3,509 in pandemic-twisted 2019-22. We’re talking a 34% dive that’s also 28% slower than the 20-year average.
It’s not just a local issue. California sales tumbled 29% after the Fed acted, and the drop was 22% nationwide.
The price is wrong
When the pandemic upended the business climate, the Fed came to the rescue with cheap money, and home prices surged.
Then, numerous stimulus efforts and supply shortages boosted inflation to a four-decade high. The central bank ended its cheap money party, and yet San Diego County home prices did not reverse.
Contemplate that San Diego County’s median selling price in March of $900,000 was 2% under the record $915,000 set in June 2024.
Prices have risen 2.7% over 12 months, part of a 61% jump in the last six years.
Mortgage mania
The Fed’s move to raise interest rates helped to explode what house hunters pay.
In the three years of the central bank’s inflation battle, San Diego County home prices rose 9% as mortgage rates soared to 6.7% from 4.3%. That created a 44% boost to a buyer’s estimated house payments.
Contrast that to the three previous years when coronavirus-spun rates gyrated from 4.3% to a historically low 2.9% back to 4.3%. Home prices rose 47% with only a 46% payment jump.
Who can afford this?
Rising home prices aren’t a sign of market strength. They’re the reason why homebuying is frozen.
Over six years, a San Diego County buyer’s typical mortgage check got 109% bigger. In that same period, there was only a 28% increase in San Diego County incomes.
So, what would it take to close the affordability gap? My spreadsheet says 39% price cuts, 2.4% mortgages or 63% pay hikes. Or a mix of the trio.
Then eyeball the budget-busting fallout this way.
Only 12% of San Diego County households could qualify to buy in 2025’s first quarter, according to calculations from the California Association of Realtors.
Six years earlier, this affordability yardstick showed 27% could buy – and this qualification measure has averaged 26% since 2006.
Lansner is the business columnist for the Southern California News Group. He can be reached at [email protected].
