Buy now or wait? House hunters fret prices, rates and prospects for economy

By Jeff Lazerson | jlazerson@mortgagegrader.com | MortgageGrader.com |

Article originally posted in Orange County Register on May 22, 2025

Is the real estate market slowdown a signal to buy or to wait?

Plan to stay in a home purchase eight to 10 years if you are buying in this market.

Mortgage headwinds remain stubbornly high with this week’s Freddie Mac rate at 6.86%. Southern California home prices remain near all-time highs. Home sales are slowing, with March 2025 the third slowest March on record, according to Attom.

Every major California market now has at least 40% more homes available for sale than at the same time last year in May, according to Intercontinental Exchange. If current trends persist, we could see prices fall year over year in even more West Coast markets.

This leaves any rational buyer to wonder about market timing.

—Do I pull the trigger now?

—Do I wait for interest rates to curtail?

—Do I wait for home prices to drop?

—Or does short-term timing really matter at all if I plan on staying for the long haul?

“If you don’t own, you need to,” said Pat Veiling, president and founder Real Data Strategies. “You should plan on staying in what you buy for eight to 10 years. You don’t want to buy and then regret your time horizon if you are forced to sell at a bad time. If the market turns south, you can (should be able to) live through it.”

For example, say you are getting married. It’s not a good idea to buy a one-bedroom if you plan on having children in the near term as you will quickly outgrow what you purchased. Selling and buying (in terms of transaction costs) can be expensive.

Or, what if the economy hits a recession and property values fall. You want to be able to ride out the downturn in the same home.

“I see downward pressure on pricing. One property went from $539,000 to $529,000 to $500,000,” said John Schantz, a broker associate at Harcourts. “I feel prices are coming down, for sure.”

Full Disclosure: I do business with Schantz.

First-time buyers

The median age of a first-time homebuyer is 38, an all-time high. The first-time buyer market share is at a historic low of 24%, according to 2024 data from the National Association of Realtors.

We’re not quite at the point of homebuyer’s advantage (being a buyers’ market compared with a sellers’ market), but at least we’re trending toward market equilibrium — much more so than we have been in years.

This means more choices for home shoppers.

Below are some inventory statistics from Steven Thomas, chief economist at Reports on Housing.

Listings: mid-May 2025 compared with mid-May 2024

— Southern California: 38,997 vs 25,733 last year

— Orange County: 4,575 vs 2,649 last year

— Los Angeles County: 13,855 vs 9,612 last year

— Riverside County: 8,649 vs 5,719 last year

— San Bernardino County: 6,121 vs 4,168 last year

— San Diego County: 5,797 vs 3,585 last year

Expected market time (until the property goes into escrow)

—Southern California: 107 days vs 67 last year

—Orange County: 86 days vs 47 last year

—Los Angeles County: 112 days vs 72 last year

—Riverside County: 114 vs 74 last year

—San Bernardino County: 118 days vs 79 last year

—San Diego County: 94 days vs 56 last year

Beyond 120 days on market is considered a buyers’ market, according to Thomas.

Here’s a fun fact from Thomas: There were 18,000 homes for sale in 2007 during the Great Recession compared with 4,575 in Orange County today.

Contingent move-up buyers

Something I haven’t seen in a long time, but I am starting to see again are contingent buyers. A contingent deal means a home seller agrees to wait until the buyer sells their existing home.

That contingent opportunity is opening as the number of homes available for sale continues to climb.

The move-up buyer tends to be torn between walking away from the low 2% or 3% mortgage rate, and a low property tax base compared with needing larger quarters for a growing family.

What about the older crowd of Baby Boomers and Generation X looking to make a move?

The median age of all buyers in 2024 was 56 years old, according to NAR. The typical home seller was 63 years old in 2024.

“Boomers are selling to and buying from boomers. Houses are bigger than what they need,” said Veiling. “They have the equity to perform in today’s market.”

Boomers moving down may be able to take their property tax base with them. And they are more likely to be paying cash for the new pad. So, interest rates may not matter.

If you are thinking about making a move, I’d heed Veiling’s advice. Plan for the long-term. Real estate is about to get choppy.

Freddie Mac rate news: The 30-year fixed rate averaged 6.86%, 5 basis points higher than last week. The 15-year fixed rate averaged 6.01%, 9 basis points higher than last week.

The Mortgage Bankers Association reported a 5.1% mortgage application decrease compared with one week ago.

Bottom line: Assuming a borrower gets the average 30-year fixed rate on a conforming $806,500 loan, last year’s payment was $43 more than this week’s payment of $5,290.

What I see: Locally, well-qualified borrowers can get the following fixed-rate mortgages with one point: A 30-year FHA at 6.125%, a 15-year conventional at 5.75%, a 30-year conventional at 6.625%, a 15-year high-balance conventional at 6.125% ($806,501 to $1,209,750 in LA and OC and $806,501 to $1,077,550 in San Diego), a 30-year high-balance conventional at 6.99% and a jumbo 30-year-fixed at 6.75%.

Eye-catcher loan program of the week: A 40-year fixed-rate mortgage, interest-only for the first 10 years, at 6.75% with 1 point cost.

Jeff Lazerson, president of Mortgage Grader, can be reached at 949-322-8640 or jlazerson@mortgagegrader.com. His website is www.mortgagegrader.com.

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* Specific loan program availability and requirements may vary. Please get in touch with your mortgage advisor for more information.