Higher Rates, Higher Home Prices Year over Year
The California Association of Realtors® predicts that inflation will continue to gradually decrease over the next 18 months, with the consumer price index reaching 2.6% in 2024, down from 3.9% this year. CAR also expects interest rates to fall from 6.7% to 6%. Although still double what has been enjoyed in recent years, this projected rate would still be lower than the long-run average of 8% over the past five decades.
“With the economy expected to soften in 2024, the Federal Reserve Bank will begin loosening its monetary policy next year. Mortgage rates will trend down throughout 2024, and the average 30-year fixed rate mortgage could reach the mid-5% range by the end of next year,” said CAR's senior VP and chief economist.
Mortgage rates went higher last month, close to 8%, despite the pause in rate increases. That has more to do with the way the 10 year Treasury Bond trades, which is what mortgage rates are based on. Because of this, Fed officials indicated that they may hold on any further hikes for a bit. This is a bit of a relief to many, especially those who have been vocal about the Fed going too far in their rate increases. While August inflation came in slightly lower than anticipated, the fly in the proverbial ointment was the strong jobs report for September, which at 336,000, handily beat the estimate of 170,000.
Corelogic came out with its October 2023 data and home prices increased by 3.7% in August 2023 vs August 2022. They are predicting a modest increase over the next 12 months. Geopolitical risks, especially in the Middle East, as well as our own government's ability to function smoothly will continue to weigh on the markets.
Check out the chart below..... the three month rolling period is showing increases for almost all areas. While rates are higher and inventory is slightly higher, it's still not enough to offset buyer demand.
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Single family home prices(median) for July 2023-September 2023:
| Glendale | + 10.4% |
| Burbank | + 11.6% |
| Toluca Lake* | - 45.5% |
| Pasadena | + 5.5% |
| Studio City | + 3.1% |
| Hollywood Hills* | + 0.0% |
| Valley Village | + 7.0% |
| Sherman Oaks | + 1.6% |
| Woodland Hills | + 4.6% |
are somewhat misleading
Weekly national mortgage rates for loans under $400,000, top credit scores:
| 30 yr. fixed rate | 7.57 | ||
| 15 yr. fixed rate | 6.89 | ||
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