Interest Rate Pause, First Annual Drop in US Home Equity
The structural challenges of this market, lack of inventory and higher rates, continue to be the big story but high mortgage rates are turning out to be the secondary issue. Inventory continues to be the major headwind for buyers, in what Zillow is calling an "affordability crisis", and it's tied to the continued lack of existing homes for sale. According to their estimates we have a 4.3 million shortfall in needed inventory.
Keep an eye on commercial real estate......the persistent low occupancy rates may cause some upheaval in the next year as their loans come up for renewal at much higher rates, great article below outlines the challenges.
Federal Reserve (Fed) voted to pause on interest rate hikes this month. Don't get too excited though, this week Jerome Powell, head of the Federal Reserve, said additional rate hikes may be on the way, which may put a damper on home prices in the Fall. While this might sound like good news for buyers, the additional hikes will offset any nominal price declines.
US home equity dropped for the first time since 2012, but homeowners have had a big run on housing values over the last 4-5 years. Case Shiller Index showed continued gains in April but year over year, and the ten city composite showed a 1.2% decline which is representative of the weakness I'm seeing.
Locally, low inventory levels continue to fuel multiple offer situations. I'm still seeing multiple offer situations in the $900k-$1.5M range. But several items of note, as you will see below, year over year, we are seeing price declines, additionally location and condition of homes are playing huge roles in the number of offers. Given the low inventory levels will be interesting to see how the next few months will play out.
Below are some good reads:
13 Different House Styles to Know
Monthly Housing Trends Report
Making Sense of America's Commercial Real Estate Crisis
9 Scandinavian Decor Ideas
Quiet Luxury is the Understated Design Trend of the Year
Single family home prices(median) for March 2023-May 2023:
| Glendale | + 8.6% |
| Burbank | - 4.5% |
| Toluca Lake* | - 12.6% |
| Pasadena | - 1.8% |
| Studio City | - 2.4% |
| Hollywood Hills* | - 4.3% |
| Valley Village | - 16.8% |
| Sherman Oaks | - 9.4% |
| Woodland Hills | - 4.0% |
are somewhat misleading
Weekly national mortgage rates for loans under $400,000, top credit scores:
| 30 yr. fixed rate | 6.99 | ||
| 15 yr. fixed rate | 6.43 | ||
| 5 yr. adjustable rate | 6.09 |
Ana Connell 818.795.8474
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