The real estate market in San Bernardino County continues to evolve and react to economic factors such as mortgage rates, inflation, and a shortage of homes for sale.
San Bernardino County has a diverse market that caters to a wide range of buyers and offers various housing options across its many cities, including Fontana, Ontario, Rancho Cucamonga, and San Bernardino.
This report will share insights on what is happening in the local market as of March 2024.
The Numbers At A Glance
Pending Sales:
- The most recent pending sales figure is 1,300 for March 2024, which is a 4.1% increase from the previous month but a 17.2% decrease from the same month last year.
- Pending sales peaked in March 2009 at 3,727 and have been generally declining since then, with some fluctuations.
- The year-over-year change has been consistently negative since April 2022, indicating a slowdown in the housing market.
Closed Sales:
- The most recent closed sales figure is 1,342 for March 2024, a 9.6% increase from the previous month but a 10.8% decrease from March 2023.
- Closed sales peaked in June 2009 at 3,561 and have been on a general downward trend since then, with some fluctuations.
- The year-over-year change has been negative since March 2022, suggesting a decline in home sales.
New Listings:
- In March 2024, there were 1,953 new listings, a 6.8% increase from the previous month but a 35.7% decrease compared to three years ago.
- New listings have been consistently lower than the previous year since April 2020, indicating a reduction in the supply of homes for sale.
- The year-over-year and 3-year changes have been predominantly negative since early 2022, suggesting a continued shortage of new listings.
Active Listings:
- As of March 2024, there were 3,938 active listings, a slight 0.9% increase from the previous month but a significant 79.9% decrease compared to three years ago.
- Active listings peaked in August 2018 at 31,842 and have been on a steep decline since then.
- The year-over-year and 3-year changes have been consistently negative since July 2022, indicating a severe shortage of available homes on the market.
Average Sales Price:
- The average sales price in March 2024 was $575,627, a 6.2% increase from the same month in 2023, and a 20.9% increase compared to three years ago.
- The average sales price has been consistently increasing since May 2020, with some minor fluctuations.
- The year-over-year change has been positive since September 2022, suggesting that home prices are still rising despite the slowdown in sales activity.
Now let’s take a deep dive into the economic forces that influence the market, and how they are impacting our local market here in San Bernardino County.
Mortgage Rate Increases
In January 2021, the average 30-year fixed-rate mortgage reached a historic low of 2.8%. This remarkably low-interest rate was primarily driven by the Federal Reserve’s efforts to stimulate the economy during the COVID-19 pandemic. The low rates made homeownership more accessible and affordable for many buyers, as they could secure mortgages with lower monthly payments.
This, in turn, led to increased demand for housing and a surge in home sales across the country, including in San Bernardino County.
Fast-forward to today, April 13th, 2024, and the average 30-year fixed-rate mortgage has risen significantly to 7.3%. This dramatic increase can be attributed to several factors, including the Federal Reserve’s efforts to combat inflation by raising interest rates, economic recovery, and a shift in monetary policy.
As a result, borrowing costs for homebuyers have increased substantially, making it more expensive to finance a home purchase.
The difference between the average 30-year fixed-rate mortgage in January 2021 (2.8%) and April 2024 (7.3%) is a staggering 4.5 percentage points or a 161% increase. This significant rise in interest rates has profoundly impacted housing affordability in San Bernardino County and across the United States.
To illustrate the impact on affordability, consider a $400,000 home with a 20% down payment:
– At a 2.8% interest rate, the monthly mortgage payment would be approximately $1,320 (excluding taxes and insurance).
– At a 7.3% interest rate, the monthly mortgage payment would be approximately $2,197 (excluding taxes and insurance).
The difference in monthly payments is $877, which equates to an additional $10,524 per year or $315,720 over the life of a 30-year mortgage. This substantial increase in borrowing costs has made homeownership less affordable for many potential buyers, particularly first-time homebuyers and those with limited financial resources.
The rising cost of housing has made it difficult for many people to qualify for mortgages or afford the higher monthly payments. As a result, the demand for housing has decreased, leading to a slowdown in the real estate market in San Bernardino County. This slowdown could potentially cause fewer home sales and a decrease in home prices over time.
Impact on Housing Market Activity
Number of Homes Sold
The increase in mortgage rates has impacted the number of homes sold in San Bernardino County. As rates increased, the number of new sales decreased. This can be seen in the data provided, which shows that from January 2021 to April 2024, the average 30-year fixed-rate mortgage rose from 2.8% to 7.3%.
During the same period, the number of closed sales decreased from 2,458 in March 2021 to 1,342 in March 2024, representing a 45.4% decrease in sales activity.
There are several reasons for the decline in new home sales, including affordability, buyer hesitancy, and reduced purchasing power. Higher mortgage rates can increase monthly payments, making it difficult for potential buyers to qualify for a mortgage or afford the higher costs.
New Listings
Homeowners who purchased or refinanced their homes during historically low interest rates may be hesitant to sell and move to a new property with a higher mortgage rate. This “rate lock” phenomenon results in fewer new listings in San Bernardino County, with new listings consistently declining year-over-year since April 2020. In March 2024, there was a 35.7% decrease in new listings compared to three years prior. The limited supply of homes on the market can contribute to a slowdown in sales activity and potentially put upward pressure on home prices.
First-time Buyers
First-time homebuyers are struggling with affordability challenges due to the rapid increase in mortgage rates and stagnant wages. They have limited financial resources and are more sensitive to changes in affordability. The difficulty in entering the market can lead to reduced demand from first-time buyers, who are a critical segment of the housing market and often drive sales activity in entry-level homes.
Market Outlook
Based on current trends, the San Bernardino County real estate market is likely to continue slowing down in the short term due to high mortgage rates, limited inventory, and affordability concerns. However, demand for housing remains strong and will prevent significant price drops. In the long term, the market outlook is positive due to population growth, economic development, infrastructure improvements, and the market’s ability to adapt to changing conditions.
