Real Estate is feeling the pain from interest rate increases
The Federal Reserve(Fed) raised interest rates by 25 basis points or .25% in March, but there is some good news in that they indicated that the end of rate hikes might be near. Meanwhile mortgage rates decreased and overall borrowing costs are down. With mortgage rates declining for four weeks, as of mid April, and home buyers saving roughly $140 a month in their payments, that is positive. Buyers are currently looking at a more favorable rate environment, but the biggest headwind is that March inventories remained low as sellers just are not motivated to sell.
Very few people interested in selling are contributing to continued low inventory levels. Nationally new listing prices are down roughly 4% from last year. While there is still buyer demand, the stats below are showing that home prices in most local areas have been coming down. Variables for the rest of the year will include unemployment, possible recession, and mortgage rate levels. Mortgage rates will hugely slow down buyers as they get closer to 6.5%-7.0%. It's a sellers market due to inventory, for now, especially in the lower price points. Higher price points are mixed. It will be interesting to see what type of inventory the next few months bring and how many buyers will remain in the market if rates go higher.
Below are some good reads:
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Single family home prices(median) for January 2023-March 2023:
| Glendale | - 5.8% |
| Burbank | - 1.2% |
| Toluca Lake* | + 41.1% |
| Pasadena | - 14.6% |
| Studio City | + 1.7% |
| Hollywood Hills* | + 14.4% |
| Valley Village | + 0.4% |
| Sherman Oaks | - 6.5% |
| Woodland Hills | - 7.4% |
are somewhat misleading
Weekly national mortgage rates for loans under $400,000, top credit scores:
| 30 yr. fixed rate | 6.57 | ||
| 15 yr. fixed rate | 5.99 | ||
| 5 yr. adjustable rate | 6.05 |
