For the past few months, Larry Chanes and his wife, Claudia, have been debating selling their home in Upland and moving an hour away to Murrieta. The couple, with two daughters at home, wanted more space and to be closer to work and family. But when they calculated the numbers, the Chanes decided not to put their house up for sale and moved to southern Riverside County. They would have no choice but to change their 2.75% mortgage to a 6% mortgage, and the new rate would make it difficult to pay monthly.
Even if they could comfortably afford it, that amount of money that went only to interest seemed like a waste. In Southern California and in real estate markets across the country, normal seasonal trends are twisted. At a time of year when the number of homes for sale tends to rise in anticipation of the best spring shopping months, it has been declining, driven downward by people like Chanes, who don't want to get rid of their very low mortgage rates or sell in a market where home prices have been falling. The fact that sellers have problems since rates went up last year is making it difficult for others to become homeowners. Not only has the lack of inventory prevented home prices from falling more than they would have when rates rose to 7% last year, but sellers' indecision has worsened so much that some experts think that prices could stop falling. While potential sellers are holding firm, buyers, some of whom would be first-time homeowners and would not need to sell, have been more willing to follow traditional patterns and return after the winter holidays.
Real estate agents and other experts say that searching for slightly better offers compared to the past few months is one of the main reasons. Although home prices have not plummeted, they are lower than last year, and mortgage interest rates have fallen from the recent high to the 6% range, which has once again generated an uptick in demand, compared to recent months, at a time when few new ads come to the market. It's not clear if prices stop falling. The market is still much slower than at this time last year, when rates were much lower and were just beginning their rapid rise. While homes sell faster and closer to the asking price than they did a few months ago, that's not uncommon because people don't like to move around during the holidays. In February, prices fell between 4% and 12% in Los Angeles County since last year's price peak, according to a review of several platforms that track prices in different ways.
And some experts believe that prices will fall much lower, because housing remains unaffordable for too many households. However, citing sellers' doubts, Richard Green, director of the USC Lusk Real Estate Center, said he doubts that home prices will have to fall much more, unless the current banking turbulence worsens and causes large increases in unemployment. Green believes that scenario is a clear possibility, but for now, overall employment growth continues at a time when many homeowners have a strong incentive not to sell. According to mortgage data firm Black Knight, an estimated 13.4 million homes across the country have initial mortgages with rates lower than 3%, while 20.9 million have loans with rates of 3 to 3.99%. Altogether, that represents approximately 65% of the entire U.
S. UU. Only about 4% of homes have initial mortgages with rates of 6% or more. Andy Walden, vice president of business research at Black Knight, said there hasn't been such a big difference between the rate people have on their current mortgage and the current market rate probably since the 1980s, another time of high inflation. This has turned the usual seasonal trends upside down.
In general, the number of ads hits rock bottom in January and, by the end of March, increases between 5% and 15%, according to Simonsen. As of March 24th, the number of properties for sale in the three main Southern California counties - Los Angeles, Orange and Riverside - was 15% lower than at the beginning of the year according to data from Altos Research. Your customer list is a good example. One customer is older and is reducing staff; another is moving out of state for tax reasons. The third - Arlo and Zach Tysinger - moved to North Carolina after Arlo accepted a job as a pastor there.
The couple and their two young children are renting right now but once their home in Santa Clarita is sold they plan to buy undeterred by high mortgage rates. Like L. A. Simonsen said there could be some relief in price. In recent weeks inventory levels have remained relatively stable and he believes that normal seasonal factors people like moving before their children resume school should be stronger over time and number of announcements will start increasing again but he warned things won't be easy and market could remain tight for years. Few if any experts expect mortgage rates to fall below 3% in short term or perhaps never again however Green from USC said rates don't need fall so much for market relax gap just needs narrow he estimated rates 4% range would suffice but even moment could be long way off according Mortgage Bankers Association it will not be until third quarter 2024 commercial group predicts rates will be below 5%.
Meanwhile real estate agents trying attract more sellers market late February Rodeo Realty agent Tregg Rustad sent massive email detailing nine recent publications from L. presented current moment as opportunity for sellers opportunity where they could “take advantage” demand we haven't seen since last summer.