As mortgage rates continue to rise, eventually the housing market will evolve from its current crazy pace to one that is much more tolerable. The sharp rise in mortgage rates from 2.65% during the first week of January to 3.09% today is just the beginning of rising rates.
Housing started this year with the lowest level of homes since tracking, 2,633 homes. Mortgage rates reached a record low during the first week of January at 2.65%. Since then, the inventory has shed an additional 11%, dropping to 2,349. The Expected Market Time dropped from 42 days to start the year, a Hot Seller’s Market, to 23 days today. At 23 days, Orange County housing is nothing short of nuts.
Mortgage rates are poised to continue to rise as inflation fears emerge with a rapidly improving economy forecasted for the remainder of the year. Mortgage rates are projected now to increase anywhere between 3.5% to 4%, depending on the size of the economic boom. That is precisely where they were bouncing around prior to the pandemic, a much more normal range. These higher rates will be the catalyst to the market shift and the market will decelerate.
However, this is NOT a shift to a Buyer’s Market. This a shift from a housing market that is currently unprecedented, appreciating at about 1% per month, to a regular Hot Seller’s Market with normal, 4% to 5% appreciation per year. Don’t let this hot demand fool you, sellers who overprice will sit and languish on the market so it’s still important to price your home competitively and use a strategy that matches your goals.
The real estate market is always changing so I find it important to take breaks whenever possible. I spent a weekend at the beautiful LaQuinta Resort & Club in La Quinta with my husband and my brother’s family. If you haven’t had a chance to stay there, I highly recommend it! There’s everything you need in one spot - shops, 4 restaurants, 41 pools, adult pool and main pool. An ultimate relaxation destination right in our own “backyard.” I feel recharged and ready to jump back into this fast-paced housing market.
Did you know there is a new Proposition 19 which went into effect April 19 that affects tax liabilities when transferring title of a property? This adds new provisions for the value transfer of a primary residence for persons at least age 55 or severely disabled, victims of wildfires, or natural disasters. In addition, provisions for the parent-child and grandparent-grandchild exclusion. To learn more contact me today.