Mortgage Rates Are Back Above 7%. That Could Give San Diego Buyers an Unexpected Advantage

Mortgage rates are back above 7% by some daily measures.

And I know exactly what a lot of buyers are thinking:

“I'll wait.”

That's understandable.

A higher interest rate means a higher monthly payment. It reduces purchasing power. And for some San Diego families, today's payment simply doesn't work.

If that's you, I wouldn't try to talk you into buying a house.

But if you can comfortably afford today's payment and you're planning to stay in San Diego for a while, there's another side of higher mortgage rates that I think deserves a lot more attention.

What are those rates doing to everyone you're competing against?

Because the same interest rates making you hesitate are making thousands of other potential buyers hesitate too.

And that can create negotiating opportunities.

Not on every house.

Not in every neighborhood.

But on the right property, absolutely.

First, What Are Mortgage Rates Actually At?

You'll probably see several different numbers depending on where you look.

Mortgage News Daily's daily index put the average top-tier 30-year fixed conventional mortgage at 7.19% on September 21, 2026.

Freddie Mac's most recent weekly survey, published September 17, put the average 30-year fixed mortgage at 6.95%.

Neither number is “your rate.”

Your actual rate depends on your lender, loan program, credit profile, loan amount, points and other factors.

And military buyers should pay particular attention to the loan program.

Mortgage News Daily's September 21 index showed its 30-year VA benchmark at 6.83%, compared with 7.19% for its conventional 30-year benchmark.

Again, that's not a quote.

But it illustrates something I tell military buyers all the time:

Don't assume the mortgage rate you see in a headline is the rate you'll receive with a VA loan.

Talk to a knowledgeable VA lender and compare actual loan estimates.

Now Let's Talk About What Higher Rates Do to Your Competition

Imagine 20 buyers are interested in the same type of home.

Rates increase.

A few no longer qualify.

A few decide the payment is uncomfortable.

A few decide to renew their lease.

A few say, “I'll wait until rates come down.”

The house didn't change.

The neighborhood didn't change.

But the number of people competing with you potentially did.

That's where negotiating power can start to appear.

And there are signs that San Diego buyers have become more selective.

Pending home sales in San Diego County fell 13% year over year in August, according to Redfin.

But here's why I'm not going to tell you San Diego suddenly became a buyer's market.

It didn't.

The median San Diego County home still sold for about $962,000 in August.

Homes sold in a median 28 days.

And 35.4% still sold above asking price.

So what's actually happening?

I think there's a much more useful way to describe this market:

San Diego Doesn't Have One Housing Market Right Now

It has thousands of little ones.

A remodeled single-family home in a popular neighborhood that is priced correctly might still receive multiple offers immediately.

That buyer may have very little negotiating power.

But what about the house that's been sitting for 43 days?

What about the condo with a high HOA?

The home that came back on the market?

The property that needs a new roof?

The seller who already reduced the price twice?

The vacant house where the owner has already moved?

Those can be completely different negotiations.

That's why I'm not particularly interested when someone tells me:

“It's a buyer's market.”

Or:

“It's a seller's market.”

When I'm helping someone buy a home, I want to know:

What leverage do we have on this specific property?

That's the question that matters.

And Buyers Are Getting Concessions

This is one of the statistics I'm watching closely.

In Redfin's August 2026 analysis, 57.1% of San Diego home sales in its dataset included some form of seller concession.

Read that carefully.

It doesn't mean sellers were giving houses away.

It doesn't mean buyers received 57% discounts.

A concession could be money toward closing costs, repairs, or help buying down the mortgage rate.

But it tells us something important.

Negotiation is happening.

And when mortgage rates are above 7%, negotiating the right thing can matter a lot.

The $10,000 Question

Let's say we're negotiating on a San Diego home and we believe we can get $10,000 of value from the seller.

What should we ask for?

A $10,000 price reduction?

$10,000 toward closing costs?

Money toward discount points?

Repairs?

Some combination?

A lot of buyers automatically say:

“Lower the price.”

Maybe.

But I wouldn't make that decision until we ran the numbers with your lender.

A relatively small reduction in purchase price may only change the monthly principal-and-interest payment modestly.

Using that same negotiating leverage toward allowable closing costs or a rate buydown could potentially have a bigger immediate impact on your cash needed at closing or monthly payment.

Which option is better depends on your loan, your finances, the seller, lender requirements and how long you expect to own the home.

That's why negotiating a home isn't just about getting the lowest purchase price.

It's about structuring the best overall transaction for you.

This Is Where VA Buyers Can Get Creative

For eligible military and veteran buyers, this conversation gets especially interesting.

VA loans allow buyers and sellers to negotiate certain closing costs.

Depending on the transaction and VA requirements, seller-paid costs can potentially help with allowable closing expenses, discount points or temporary interest-rate buydowns.

There are specific VA rules surrounding seller concessions and what can be paid, so this needs to be structured correctly with your lender and real estate agent.

But think about what this means in practical terms.

A seller has a house that's been sitting.

They want to get it sold.

Instead of only asking:

“Will you take $15,000 less?”

We can ask:

“Where would $15,000 help this buyer the most?”

Maybe it's price.

Maybe it's closing costs.

Maybe it's buying down the rate.

Maybe the property needs repairs.

Maybe it's a combination.

That's a much smarter negotiation.

A 7% Rate Can Be Bad and Still Create Opportunity

Those two things can be true at the same time.

Higher mortgage rates hurt affordability.

I don't like that any more than you do.

But higher rates can also reduce competition.

And anyone who tried buying a home during a period when 10 or 15 people were fighting over the same house knows how expensive competition can become.

You can pay above asking.

Lose the opportunity to negotiate closing costs.

Have less leverage on repairs.

Make faster decisions.

Compete against stronger terms.

So instead of looking at the interest rate by itself, look at the entire transaction.

Think About Two Different Markets

Here's a simple hypothetical.

Market One

Mortgage rates are lower.

Buyers flood back into the market.

You find an $850,000 home you love.

There are six offers.

The home sells above asking.

The seller isn't interested in paying your closing costs.

You have very little negotiating leverage.

Market Two

Mortgage rates are higher.

The same type of house is listed at $850,000.

But fewer buyers are willing to purchase at today's rates.

The property sits.

Now we're discussing price.

We're asking about closing-cost credits.

We're talking about repairs.

We're exploring whether the seller will contribute toward a rate buydown.

Which market gives you the better deal?

You can't answer that by looking at the mortgage rate alone.

You have to look at the whole transaction.

Here's What I'm Looking for Before We Write an Offer

This is where good representation matters more than any housing-market headline.

I want to know:

How many days has this house been on the market?

Has the price been reduced?

How much?

Has it fallen out of escrow?

Are there offers right now?

How does the price compare with recent sales?

Is the property vacant?

Does it need work?

Is there deferred maintenance?

Are there HOA issues or assessments that could be affecting demand?

Does the seller have a timeline?

Has the seller already purchased another home?

What have similar homes actually sold for?

The answers start telling us where our leverage might be.

A house listed yesterday with four offers isn't the same negotiation as a house that's been sitting for 52 days after two price reductions.

Same interest rate. Completely different opportunity.

For Military Families, There's Another Question

Military families don't get to schedule PCS orders around mortgage rates.

If you're receiving orders to San Diego, you might need housing whether rates are 5%, 7% or 9%.

You may be reporting to Naval Base San Diego, Naval Base Coronado, Naval Base Point Loma, MCAS Miramar, Camp Pendleton or another local command.

So I wouldn't start with:

“Is now a good time to buy?”

That's too broad.

I'd ask:

“Given your orders, finances and expected time in San Diego, does buying make sense for your family?”

That's a completely different question.

Maybe buying makes sense.

Maybe renting for this tour makes more sense.

Both can be good financial decisions depending on your situation.

The goal isn't to buy a house.

The goal is to make a good decision.

One Thing I Would NOT Do

I would not buy a home today because somebody told you:

“Don't worry. Rates will come down and you can refinance.”

Nobody knows that.

Rates may decline.

They may stay around these levels.

They could go higher.

And even if rates eventually fall, whether refinancing makes sense will depend on your future loan balance, home value, costs and personal situation.

So here's my rule:

Buy the house only if the numbers work at today's rate.

If rates eventually fall and refinancing makes financial sense, great.

Consider that a future opportunity.

Don't make it a requirement for the purchase to work.

Don't Confuse Negotiating Power With Affordability

This might be the most important part of this article.

Getting $15,000 from a seller doesn't make an unaffordable house affordable.

If the payment stretches your budget too far, don't buy it.

If buying wipes out your emergency savings, we should talk about that.

If you're likely leaving San Diego soon, we should look carefully at whether owning long enough to justify the transaction makes sense.

Negotiating power is useful.

Financial discipline is more important.

So, Would I Stop Looking Because Rates Are Above 7%?

Not automatically.

I'd change what I'm looking for.

I'd pay close attention to homes that have been sitting.

Price reductions.

Back-on-market properties.

Homes needing cosmetic work.

Sellers offering concessions.

Properties other buyers are overlooking.

And then I'd negotiate.

Because sometimes the best opportunity isn't the house everybody wants.

It's the house where we can create the best deal.

The Bottom Line

A mortgage rate above 7% isn't good news for affordability.

Let's not pretend otherwise.

But it also doesn't tell you whether today is a good or bad time for you to buy a home in San Diego.

There's another question worth asking:

What are higher rates doing to my competition?

Because if higher borrowing costs are pushing buyers to the sidelines, the buyers who remain may have opportunities to negotiate price, closing costs, repairs or rate buydowns that become harder to get when rates fall and competition returns.

That doesn't mean you should buy now.

It means you shouldn't automatically decide not to buy based on one number.

Look at the payment.

Look at the property.

Look at the competition.

Look at your PCS timeline.

Look at how long you expect to own the home.

And then look at what we might be able to negotiate.

That's how I'd make the decision.

If you're active duty, a veteran or simply trying to figure out whether buying in San Diego makes sense right now, I'm happy to sit down with you and run through it.

No pressure to buy.

Sometimes buying will make sense.

Sometimes renting will make more sense.

Either way, you should understand the numbers before making the decision.

Ryan Caron
The Caron Group
Real Broker
DRE #02161807

Have questions? Just reach out. I'm always happy to help.

Mortgage rates and housing-market conditions can change quickly. Rate information in this article reflects published benchmarks as of September 21, 2026 and is provided for educational purposes. Your actual mortgage rate, costs and VA eligibility depend on your individual circumstances and lender.