If you've been following real estate over the past few years, you've probably heard the same story over and over:
"Nobody's buying because interest rates are too high."
Like most headlines, there's some truth to it—but it misses a lot of what's actually happening here on the Peninsula.
The markets in Point Loma (92106) and Ocean Beach (92107) don't always behave like the national housing market. In fact, many of the trends making headlines across the country simply don't play out the same way here.
So how are today's interest rates really affecting buyers and sellers in Ocean Beach and Point Loma?
Let's take a look.
Yes, Higher Interest Rates Have Changed the Market
There's no question that affordability has been impacted. A buyer who could comfortably qualify for a $1.8 million home a few years ago may now be shopping closer to $1.4 or $1.5 million, even if their income hasn't changed.
That has caused many buyers to pause, rethink their budget, or wait for rates to come down. But something interesting has happened at the same time. Most homeowners in Point Loma and Ocean Beach are doing exactly the same thing.
The "Golden Handcuffs" Effect
Many homeowners refinanced or purchased when mortgage rates were between 2.5% and 4%. Today, replacing that mortgage with one around 6% or higher can significantly increase their monthly payment, even if they buy a similarly priced home. As a result, many homeowners who might otherwise have sold have decided to stay put.
The result?
Fewer homes are coming onto the market.
That reduced inventory has helped support home prices despite higher borrowing costs. If you've wondered why prices haven't fallen dramatically despite higher interest rates, limited inventory is a big part of the answer.
Less Competition Doesn't Mean No Competition
One of the biggest misconceptions I hear is that buyers have no competition anymore. That's not really what's happening. Instead, the market has become much more selective.
Homes that are overpriced, poorly prepared, or simply average tend to sit longer than they did a few years ago. Well-priced homes in great locations, however, still attract strong interest. On the Peninsula, truly desirable properties remain surprisingly competitive because there simply aren't many of them available. In other words, buyers have become more selective—not less interested.
Ocean Beach and Point Loma Have Something Working in Their Favor
Not every neighborhood responds to higher interest rates the same way. Ocean Beach and Point Loma benefit from something that economists call supply constraints.
There are only so many homes that can be built here. The Pacific Ocean isn't moving. San Diego Bay isn't moving. The Peninsula is largely built out. That means demand has to compete for a relatively fixed supply of housing.
When inventory is already limited, even a slowdown in buyer activity often isn't enough to create the dramatic price declines people expect.
Today's Buyers Are Different
The buyers still shopping today tend to be highly motivated.
They're relocating.
Their family has grown.
They're downsizing.
They're moving closer to work.
They're retiring.
Or they've simply decided that waiting indefinitely for lower interest rates doesn't fit their life anymore. That makes today's market feel different than the frenzy of 2021, but it doesn't mean the market has stopped. People are still moving. Life still happens.
Sellers Need a Different Strategy
A few years ago, almost every home attracted multiple offers. Today, presentation and pricing matter much more. Buyers have become more patient. They're comparing properties more carefully. They notice deferred maintenance. They notice outdated finishes. They notice pricing that feels optimistic. The homes that sell the fastest today are usually the ones that are well prepared, professionally marketed, and priced realistically from day one. That's especially true in Ocean Beach and Point Loma, where buyers often have high expectations.
Buyers Have More Leverage Than They Think
One advantage for today's buyers is that they're often negotiating in ways that weren't possible a few years ago. Depending on the property, buyers may be able to negotiate repairs, closing cost credits, or even mortgage rate buydowns that help reduce monthly payments during the first few years of ownership. Those opportunities were almost nonexistent during the peak of the seller's market.
Today's buyers may be paying a higher interest rate, but they're also facing less competition on many properties and have more room to negotiate favorable terms.
Should You Wait for Rates to Come Down?
This is probably the question I'm asked most often. The honest answer is...
No one knows exactly where interest rates are headed.
But here's what I think buyers should consider. If rates eventually fall meaningfully, there's a good chance more buyers will re-enter the market at the same time. That increased demand could create more competition and put additional upward pressure on prices.
If you find the right home today and it fits your budget, you can always refinance later if rates improve. You can't go back and buy today's home at today's price if values continue to rise. That doesn't mean everyone should buy immediately. It simply means that waiting for lower rates isn't automatically the lowest-cost decision. Sometimes the total cost of waiting ends up being higher than buyers expected.
Real Estate Is About More Than Interest Rates
One mistake I see people make is allowing one number to drive the entire decision. Interest rates matter. Monthly payments matter. But so do appreciation, lifestyle, commute times, schools, neighborhood fit, and long-term goals.
I've worked with buyers who stayed in homes that no longer met their needs because they were focused entirely on preserving a 3% mortgage. I've also worked with families who moved despite higher rates because the new home better supported the life they wanted to build. Years later, very few of them talk about the interest rate. They talk about birthday parties in the backyard, walking to school, hosting holidays, or finally having enough space for everyone. That's the return that never shows up in a mortgage calculator.
Final Thoughts
Higher interest rates have absolutely changed the housing market in Ocean Beach and Point Loma. Homes aren't selling the way they did in 2021, buyers are more selective, and affordability has become a bigger part of the conversation. But the fundamentals that have always made the Peninsula desirable haven't changed. There is still limited housing supply. There is still strong long-term demand. And there are still people who want to live in one of San Diego's most unique coastal communities.
If you're thinking about buying or selling in 92106 or 92107, don't let national headlines make the decision for you. Every market is local. And on the Peninsula, understanding what's happening on your street is often much more valuable than knowing what's happening across the country.
Check out this article next
