Some of the most qualified home buyers in Southern California aren’t shopping for homes right now. They’re renting. According to Carly Zamani, founder and broker of zRE Group in Laguna Niguel, California, many homeowners who sold in the past three to four years are now leasing while they wait for mortgage rates to come down. Their presence is reshaping the region’s rental market.
“There’s a lot of highly qualified tenants right now in the Orange County area,” Zamani says, “because there’s a lot of sellers that have become renters recently because they’re waiting and trying to time the market.”
The math behind the decision is straightforward. The 30-year fixed mortgage rate was recently around 6.95 percent, up nearly seven-tenths of a point from a year earlier. In Orange County, entry-level single-family homes typically start between $1.1 million and $1.4 million. At that price and that rate, the monthly payment on a new purchase can look very different from the one these owners left behind. For former owners with sale proceeds in hand and no pressing need to buy, renting has become a holding pattern.
The result, Zamani says, is a rental market that has become intensely competitive. She currently has several lease listings and describes demand as unusually strong. “The rental market here is insane,” she says.
What stands out is who’s applying. These aren’t typical first-time renters stretching to qualify. Many are former owners with equity, established credit, and the financial profile of buyers. For landlords, that means a deeper pool of tenants who can reliably pay and who may stay for years if rates remain elevated.
That tenant pool changes the calculation for buy-and-hold investors. Zamani says the current environment favors investors willing to act while other buyers wait. With fewer competing buyers, investors can negotiate better purchase prices, put some money into repairs and updates, and place a long-term tenant from a strong applicant pool.
“If you invest in a property right now and you can get a deal on a purchase and then you put a little money into your property, the rental market here is insane,” she says. She also sees room for flips, since properties that need work can be bought at a discount.
Zamani frames these as long-term holds rather than quick returns. The appeal is in steady occupancy by qualified tenants, combined with equity growth over time. She points to coastal areas with major redevelopment underway, such as Dana Point, where a $600 million harbor remodel is in progress.
For the renters themselves, the strategy carries a catch. When rates fall, they won’t be the only ones ready to buy.
“If you wait, so does everybody else, and you’ll compete with all of them again when the rates fall,” Zamani says. A market full of renters waiting for the same signal could return to buying at once, and the competition that follows could erase much of the benefit of a lower rate.
Meanwhile, buyers acting now have leverage they haven’t had in years. Zamani notes that seller credits, repair concessions, and rate buy-downs are negotiable in ways they weren’t two years ago. Statewide, inventory reached about 3.7 months in August, the highest level in six months, and sales were roughly flat year over year. Zamani expects a slower fall and more price reductions by November. “Buyers who are going to act this fall while other buyers wait for rates – those buyers are going to have a lot more negotiating power than they’ve had in a long time,” she says.
That leaves renters with a trade-off to weigh. Waiting may bring a lower rate, but acting now brings less competition and more room to negotiate. Neither is guaranteed to come out ahead, but only one of them is available today.
About the Expert: Carly Zamani is Founder and Broker of zRE Group in Laguna Niguel, California.
This article is based on information provided by the expert source cited above. It is intended for general informational purposes only and does not constitute legal, financial, or real estate advice. Readers should conduct their own research and consult qualified professionals before making any real estate or financial decisions.
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