Soft is not falling. That distinction matters, and most buyers miss it. Falling means values are dropping and you’re catching a knife. Soft means the frenzy is gone. Homes sit longer; sellers negotiate. Buyers get time to think. That’s where San Diego and many parts of California are right now. The San Diego county median was around $919,000 at midyear, up about 1% from a year earlier. Not a crash. Just flat. Meanwhile, listings in neighborhoods like Pacific Beach have been sitting around 74 days, and closer to 81 days in North Park. A year ago, those homes moved in a month (Source: San Diego mid-year housing market review).
Rates are one of the reasons. The 30-year fixed averaged 7.4% in mid-October, the highest since November 2023, up from 6.27% a year ago. That along with high prices priced a lot of buyers out, and the ones left behind have a better opportunity (Source: US Mortgage Rates Hold at Highest Since 2023). Here’s the part nobody tells you, that’s when more equity gets built. Not during the frenzy. Equity is more than appreciation. Most people think equity comes from the market going up. That’s one source. There are five others, and in a soft market four of them are working in your favor at the same time.
The discount is permanent. You can refinance the rate1. You can never renegotiate what you paid. If you buy at $950,000, you own a $950,000 cost basis forever. If you buy the same house at $890,000 because it’s been sitting for 70 days and the seller is tired, you just created $60,000 of equity when values hit the highs once again. Rates come down later you may refinance and the payment will lower. The price never changes. In a hot market, that
negotiation doesn’t exist, you either give the seller what they want or you lose the house. Under Prop 13, your assessed value is set at what you paid, and it can only rise about 2% a year after that. Buy $60,000 cheaper and you’re saving roughly $750 a year in property tax. Every year. For as long as you own it. Over twenty years that’s $15,000 you never spend, and it compounds against a rising assessment you avoided.
Seller concessions beat price cuts; most buyers don’t know to ask for this. Say you’re buying at $1,000,000 with 20% down. An $800,000 loan at 7.4% runs about $5,539 a month in principal and interest. Option one: you negotiate $30,000 off the price. Your loan drops to $776,000. New payment, about $5,373. You saved $166 a month. Option two: the seller gives you $30,000 as credit and you use it to permanently buy the rate down to roughly 6.4%. Same $800,000 loan. New payment, about $5,004. You saved $535 a month. Same $30,000. Three times the monthly benefit. Those are illustrative numbers, and what a point actually buys moves with the market. But the direction holds every time, and the reason is simple. A price cut shaves a sliver off your balance. A buydown attacks the rate on the whole loan. The catch is that sellers only do this when they have to. In 2022 they laughed at you. Right now, with homes sitting 70 and 80 days, a lot of them will take it. Ask. The worst they say is no.
(Sample rate provided for illustration purposes only and is not intended to provide mortgage or other financial advice specific to the circumstances of any individual and should not be relied upon in that regard. OriginPoint cannot predict where rates will be in the future )
Time to think is worth money. In a soft market you get your inspection contingency back, your appraisal contingency back, your loan contingency back. They’re the difference between having to decide now and being able to make sure the home is
the right fit. Buyers waved all of that for years because they had to. Think about it, you get to see the house twice. Sleep on it, walk the neighborhood at 7pm on a Tuesday. Everyone left in the market is serious, high rates clear out the tourists. The buyers still shopping genuinely want to move. The sellers still listed genuinely want to sell. Nobody’s testing the market to see what they can get. That makes negotiation honest. You’re across the table from someone with a real reason to close, not someone fielding eleven offers and picking the one that waived the most or offered the most.
You may have heard “marry the house, date the rate.” I do not really like the saying however it’s true, and it’s also where people get hurt. If rates drop to 6% in two years, you refinance and your payment improves. If they don’t, you keep the payment you have. The only question that matters is whether you can live with today’s payment if nothing ever changes. If yes, the refinance is an upside. If not, don’t buy on the hope. Rate forecasts are wrong constantly, a refinance has costs and qualifying, and you need to hold long enough if they don’t. The same test applies to a 2-1 buydown. It’s a useful tool, but it’s temporary. Be sure you are prepared for the real payment, not the first-year payment2.
Fair is fair, the risks. Soft can stay soft. If you buy with 5% down and values drift sideways for three years, you have almost no equity and selling costs 5-7%. This only works if you’re staying put. Under five years is a gamble. Over ten not so much. Early pay down of principal at 7.4% is brutal. Very little of your first few years goes to principal. You’re building equity through the discount you negotiated and the tax basis you locked, not through the loan balance. Appraisals get conservative when prices flatten.
The buyers who did best in 2010 weren’t the ones who timed the bottom. They were the ones who bought when it was quiet, purchased a home, negotiated hard, and stayed. You can’t control rates. You can control what you pay, what the seller contributes, and how long you own it.
Let’s Connect!
Have questions or ready to take the next step in your home financing journey? I’m here to help.
Call: (858) 526-3037
Email: carl.spiteri@originpoint.com
Carl Spiteri
Producing Partnership Branch Manager
NMLS ID: 286890
Licensed in: AZ, CA, CO, FL, ID, MI, MT, NV, OR, SC, TN, TX, WA, WY
OriginPoint LLC; NMLS #2185899; For licensing information visit nmlsconsumeraccess.org. Operating in the state of California as OriginPoint Mortgage LLC in lieu of the legal name OriginPoint LLC.
- By refinancing, you may pay more in costs and interest over the extended term.
- Both temporary and permanent RateReduce options are available from participating builders and
sellers on select properties. Buyer paid RateReduce options are also available for qualified
borrowers on any approvable property per loan product restrictions.
Sources:
County median around $919,000, up about 1% year over year
San Diego mid-year housing market review — Stacker/Redfin
Days on market: 74 in 92109, 81 in 92104
Resideline ZIP-level snapshots dated October 5, 2026. Both ZIPs also show pending-to-active ratios around 0.08 to 0.11, which is what puts them in balanced-market territory. 92109 · 92104
30-year fixed at 7.40%, highest since November 2023, versus 6.27% a year ago.
US Mortgage Rates Hold at Highest Since 2023 — Trading Economics
