Buyer Demand is Strong
Home prices increased by 6.9%, from December 2021 to December 2022, according toCorelogic and they are still forecasting a 3% increase from December 2022 to December 2023. Rate "buy downs" are the story, according to Blacknight's Mortgage Monitor, as many buyers are paying money upfront to get a lower rate on their mortgage. This explains why buyer demand is still so strong despite the higher rates. A slow down is definitely underway but keep in mind that home prices surged by 42% in the last three years, according to the National Association of Realtors, so a pause is actually a good thing, overall, for the housing market.
On the economy front, the Federal Reserve(Fed) raised interest rates by .25%. Inflation slowed to 6.4% , but price pressures are still evident and inflation is slowing at a much slower rate than originally hoped for. "The Fed has aggressively raised its benchmark interest rate in the past year to its highest level in 15 years in its drive to get rampaging inflation under control. The Fed’s goal is to slow borrowing and spending, cool the pace of hiring and relieve the pressure many businesses feel to raise wages to find or keep workers. Businesses typically pass their higher labor costs on to their customers in the form of higher prices, thereby helping fuel inflation." Everyone is hoping for the proverbial "soft landing", fingers crossed!
What's interesting is that the under $2M part of the market is now showing multiple offers again and more buyers are out hunting for homes. For the last three months, it's a mixed bag as some markets are showing strength and others are slightly down. The chart below shows home prices are all over the place, but, definitely reflecting a slow down.
Below are some good reads:
How to Handle Buyer Love Letters
8 Reasons Why Your Listing Isn't Selling
January 2023 Housing Market Trends Report
New Tax Brackets for 2023
Single family home prices(median) for November 2022-January 2023:
| Glendale | - 1.1% |
| Burbank | - .6% |
| Toluca Lake* | + 10.7% |
| Pasadena | - 7.0% |
| Studio City | - 1.8% |
| Hollywood Hills | + 5.5% |
| Valley Village | - 2.2% |
| Sherman Oaks | + 4.0% |
| Woodland Hills | - 3.7% |
*Please note that this area had few sales so percentages
are somewhat misleading
Weekly national mortgage rates for loans under $400,000, top credit scores:
| 30 yr. fixed rate | 6.18 | ||
| 15 yr. fixed rate | 5.64 | ||
| 5 yr. adjustable rate | 5.45 |
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