Here in Calabasas, clients, friends, and neighbors are always asking: How’s the market? It’s not always a simple answer, because there are multiple factors and forces at play. Right now, mortgage rates, housing demand, and price reductions are having the biggest impact home values. Let’s take a closer look at each of these important influences on the Calabasas housing market.
1. Mortgage rates are at their highest peak since 2011 – that’s 7 years ago.
After years of record low rates during the low recovery from the 2008 crash, the 30-year fixed mortgage rate exceeded 4.6%, which was the highest level since Spring of 2011. The recent string of rate hikes has all the earmarks of a trend moving steadily upwards. The Federal Reserve Bank has reacted to our expanding economy by predicting inflation, so most analysts believe we’ll be seeing small increases each quarter. Even though these interest rate increases are hotly debated, the Central Bank usually protects its independence and will march to its own drummer. In response to this, applications for mortgages took a big spike in September. This can only mean that buyers want to jump into the market before rates get any higher.
2. Demand is here to stay – but not at these prices.
Since consumer confidence in the economy began to improve a few years ago, home prices have been rising steadily. People kept buying as unemployment hit records lows across virtually all demographics. However, we’re now at a threshold where people are very concerned about affording the home they need. There were so many people waiting to buy that buyers seemed to ignore the creeping prices. Now, affordability is the lowest it’s been since 2010 and it’s having a negative effect on demand. Home showings here in Calabasas are slightly down, which may be related to affordability. Demand is expected to continue rising despite this, but not at today’s price-points.
3. Price reductions are taking hold.
Almost a third of homes sold and closed in September had at least one price decrease from the original listing price. Of course, this is a result of creeping mortgage interest rates, buyers hitting a “wall” with prices, and list prices holding firm despite all that. In the last few months, sellers began realizing that the market simply couldn’t bear the record-high prices. Mostly due to full employment and real need, there is certainly no indication of a major real estate slowdown; but real estate values may be levelling off. What this means for Calabasas homeowners Because home values are higher than any time in the last ten years –and homes are selling at faster paces than ever before – sellers are well positioned in today’s market. However, with rising rates and affordability hitting the ceiling, these conditions will not last forever, it’s conceivable that we could even see a turn to a buyer’s market in the next 12 months.
In our own team’s experience, we know that there are many qualified buyers ready to enter the market. Right now, is the best time to get your home sold quickly and for a fantastic price.
If you are curious about selling in today’s market, call me for a home evaluation. I provide these as a complimentary service to our Calabasas neighbors, so you can have a very accurate price estimate before you decide to sell. You can call me at 818-970- 2946. When you are ready to sell, keep in mind that I’ve helped hundreds of Calabasas families get above-average outcomes. I’m here to help you, too.