Merced’s real estate market shifts: What buyers need to know
AI-generated summary reviewed by our newsroom.
- Federal Reserve rate cut boosts buyer interest, but affordability remains low
- Sellers offer incentives like appliances, solar panels, or closing cost coverage
- Experts urge buyers to plan ahead as construction, labor and demand trends shift
The recent interest rate cut by the Federal Reserve could help would-be homebuyers in Merced but affordability still remains difficult according to local real estate experts.
This past Wednesday, the Fed lowered rates by a quarter-point, reducing the federal funds rate, the interest rate banks lend to other banks, to 4%, which leads to lower overall borrowing costs
“It comes as no surprise,” said Audrey Searcy, manager of Century 21 Select Real Estate. “We’re very pleased to see the interest rate start to lower,” she said, adding that the rate cut could be “a good push for folks who have been waiting, sitting on the fence.”
Searcy advised potential buyers that now is a good time to “marry the house and date the rate,” a term realtors use to mean purchasing a home sooner before prices rise with the intent of refinancing if a better rate becomes available in the future. Historically, she added, “when the rates go down, the home prices go up.”
Even with the expected rate cut, “affordability in Merced is fairly poor,” said Dr. Rowena Gray, assistant professor of economics at the University of California, Merced, because home values have increased dramatically since the pandemic while incomes have not.
Gray said the value of homes in Merced continue to rise, even while values drop in other parts of California. Ahead of the Federal Reserve’s announcement on Sept.17, she said she would probably wait for the rate cut if she were a homebuyer, because current prices and rates are so high.
Data from the California Regional Multiple Listing Service for August home sales in Merced County shows that home values were hit hard by the 2008 recession but have been steadily rising since 2009.
Between August 2011 and 2013 the median sale price for homes in the county increased by 32.4%. Over the next three years the median sale price jumped another 25.9% landing at $220,397 in August 2016.
Merced home values have continued to increase over the past three years but at a slower pace, increasing by 8.3% between 2023 and 2025.
Merced realtors said that even though the median price of a home has gone up, homesellers need to be prepared to do more to present their homes.
“I think buyers are being a little bit more particular about what they’re looking at,” Carmona said, noting that waiting for a rate cut could be a smart financial decision, when the difference between 5 and 6% could mean a few hundred dollars in your monthly mortgage payment.
Gurman Singh Mattu, a realtor with Realty Executives of Northern California said that recently he has seen sellers agree to install appliances or solar panels prior to sale to sweeten the deal for buyers.
Searcy said she is seeing the same trend with some sellers willing to cover closing costs when selling their property.
Carmona said that the majority of homes that are selling right now are single family homes but that because of high prices most of the buyers are already homeowners looking to buy a second or third property.
This highlights a concern that Gray raised that while there are plenty of homes being built in Merced, she worries they aren’t the type of homes people are looking for. Her own graduate students, she said, typically want to live alone rather than with roommates. On the other hand the population of older adults is growing rapidly and “there’s more singles basically on both ends of the … life cycle.”
In addition, Gray said that she also expects building prices to go up due to tariffs on materials and that restrictions on immigration will increase the price of labor.
Carmona advised that the best thing for potential homebuyers to do is to prepare ahead of time.
“Educate yourself, talk to an agent, maybe even interview a few realtors,” she said, “You want to be comfortable with it, it’s not like buying a T-shirt.”
This story was originally published September 20, 2025 at 5:00 AM.
