As we all know, in mid-June, the Fed raised rates three-quarters of a percentage point – an increase not seen in decades – in an effort to curb inflation, and, as suspected, the increase in rates has put downward pressure on buyer demand. Money is more expensive to borrow, and buyers are adjusting to the new real estate landscape, but there is STILL a lack of inventory, especially in Los Angeles, and good properties are STILL selling quickly. The difference now is that overpriced properties are not, and the market appears to be returning to NORMAL pre-pandemic times.
Compared to the rates from the past few years, this rate increase is significant, but it is important to remember that historically speaking, interest rates are still very low, and purchasing real estate continues to be a smart investment AND an excellent hedge against inflation. If you are renting, you’re not only building someone else’s equity, you’re also subjecting yourself to inflated yearly rent increases.
We are also finding that well-qualified buyers are still getting rates in the 4’s. You just need to know where to look, which is why WHO YOU WORK WITH MATTERS. We have connections to a number of lenders who are still providing incredible rates and products, BUT it won’t last forever, so we strongly recommend completing your pre-approval sooner than later.
If rates continue to move up and the lack of inventory subsides, then we believe there will be more equilibrium in the market. Buyers will continue to buy, and sellers will continue to sell, but the insane seller’s market we experienced these past few years will be subdued.
We are also proud to report that we closed out the first half of the year with $81.5 million sold & under contract, and we are kicking off the second half of the year with lots of new listings. In a fast-moving and complex market, we aim to be real estate advisors above all else, so give us a call or send us an email with any questions you might have.
Click HERE to read more in our July Newsletter.