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2023 What is Happening in the Housing Market?
Prices have ticked up, even with interest rates at a 15-year high. The resilience has surprised some economists.
Mortgage rates are now hovering around 7 percent — the highest they’ve been since 2007 — thanks to the Federal Reserve’s efforts to tame inflation.
The Fed’s rate increases are aimed at slowing America’s economy — in part by restraining the housing market — to try to bring inflation under control. Those moves worked quickly at first to weaken interest-sensitive parts of the economy: Housing markets across the United States pulled back notably last year. But that cool-down seems to be cracking.
Home prices fell nationally in late 2022, but they have begun to rebound in recent months. The revival is a sign of how difficult it is proving for the Fed to curb momentum in the economy at a time when the labor market remains strong and consumer balance sheets are generally healthier than before the pandemic.
“It’s another data point: Things are not cooling off as much as they thought,” said Kathy Bostjancic, chief economist for Nationwide Mutual. In fact, new housing construction “tells us something about where the economy is headed, so this suggests that things are potentially picking up.”
“Remote work means working from home for a lot of people,” Mr. Ozimek said. “That really increases the value of space.”
Available housing supply, meantime, has been tight. That’s also partly because of the Fed. Many people refinanced their mortgages when interest rates were at rock bottom in 2020 and 2021, and they are now reluctant to sell and lose those cheap mortgages.
As young people continue to bid on houses and inventory comes up short, prices and construction are staging their surprise comeback.
“Demand has hung in there better than we would have expected for that first-time buyer,” said Michael Fratantoni, chief economist at the Mortgage Bankers Association.
Source: The New York Times
2021 Market Review & 2022 Projections
Southern California home prices jumped nearly 16% in November from a year earlier, showing how the market is still ultra-competitive despite a slight slowdown that began to set in several months ago.
Some buyers sat out the bidding wars after a particularly frenzied period last spring, but plenty of shoppers stayed the course, driving prices up to successive new records in recent months.
Some economists expect home price appreciation will slow to single digits next year, in part because they expect mortgage rates will rise. That could be more likely to happen after the Federal Reserve on Wednesday announced more aggressive plans to fight inflation, but for now average mortgage interest rates remain in the low 3% range.
In addition to historically low borrowing costs, several other factors continue to fuel today’s competitive market with fast-rising prices. More millennials want to become first-time buyers, and investors are increasingly buying homes to rent or flip. In addition, many white-collar workers did well financially during the pandemic and put some of their booming stock portfolios into down payments.
Squeezing the market is the supply of homes for sale, which is at record lows. That has potential buyers one-upping one another in bidding wars that cause homes to sell for tens, even hundreds of thousands of dollars over list price.
The sharp price increases are pushing some people to leave their communities to afford a home, moving from Los Angeles to San Bernardino and from San Bernardino out of state altogether, to places such as Arizona.
In November, the biggest price rises from a year earlier were in the Southland’s less-expensive counties of Riverside and San Bernardino, which each hit new median home price records.
In Los Angeles and Orange counties, November home prices hovered below the record levels reached, respectively, in September and October, but they were significantly higher than in November 2020.
Many economists and housing policy experts say Southern California, and the nation as a whole, must build far more homes — both market rate and subsidized — if owning and renting are to be more affordable. But developers say restrictive building and zoning rules, particularly in California, have long limited their ability to meet demand, and lately, supply chain issues have delayed some projects even more.
Whether relief for buyers is on the horizon remains to be seen.
In recent months, the market has cooled somewhat, with real estate agents reporting bidding wars are less intense but still common. Competition for homes typically wanes in fall and winter, so it’s difficult to know how much of the slowdown is the result of normal seasonal patterns versus a market that will be better for buyers in the long run.
Selma Hepp, an economist at CoreLogic, said she expected more of a slowdown in sales by now, noting that transactions usually fall between October and November but dropped less this year than normal.
The annual median price increase for all of Southern California, 15.6%, is lower than the 20% rise that was common in months earlier this year, but it’s also a few percentage points higher than a recent low of 12.6% in September.
This slight acceleration of year-over-year price increases the last two months could indicate a pickup in price appreciation is underway, but Hepp said she doesn’t believe that’s the case. The pickup is probably due to more luxury homes selling, therefore pushing the median value slightly higher, rather than a true price acceleration, she said.
CoreLogic predicts year-over-year home price gains will slow in 2022, reaching 1.9% in L.A. County by November of next year. John Burns Real Estate Consulting also expects a price slowdown next year, to the high single digits.
For now, here’s a county-by-county breakdown of home prices and sales in November compared with a year earlier, as tracked by DQNews.
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In Los Angeles County, the median sales price rose 12.6% to $788,000, and sales rose 7.7%.
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In Orange County, the median sales price rose 14.9% to $919,000, and sales fell 3.5%.
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In Riverside County, the median sales price rose 20.2% to $546,750, and sales rose 2.5%.
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In San Bernardino County, the median sales price rose 18.8% to $475,000, and sales rose 5.6%.
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In San Diego County, the median sales price rose 15.4% to $750,000, and sales fell 7%.
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In Ventura County, the median sales price rose 14.6% to $755,000, and sales fell 0.6%.
Source: Los Angeles Times
2021 Market Predictions
The housing market has been on fire this year with record-low mortgage rates and a sudden wave of relocations made possible by remote work. Meanwhile, home prices have pushed new boundaries as buyer demand continues to surge. As we near the end of 2020, here’s a look at the expectations of real estate experts for 2021.
Danielle Hale, realtor.com chief economist: We expect sales to grow 7 percent and prices to rise another 5.7 percent on top of 2020’s already high levels. While we expect mortgage rates to tick up gradually, sales and price growth will be propelled by still strong demand, a recovering economy, and still low mortgage rates. High buyer demand and still-lagging supply will keep prices growing, but at a slower pace than 2020 as buyers contend with mortgage rate and price increases that create affordability challenges. On the whole, the market will remain seller-friendly, but buyers will still have relatively low mortgage rates and an eventually improving selection of homes for sale.
Elana Knoller, Better.com chief product officer: While the Fed has indicated it doesn’t plan to hike rates soon, uncertainty over what the new administration might do in addition to broad availability of a Covid-19 vaccine, on top of what we hope is an improving economy, could bring an end to the ultra-low rates that we’ve seen this year. We will continue to see the growth of Millennial home buying regardless of the rate backdrop.
Todd Teta, chief product officer at ATTOM Data Solutions: There is incredibly low inventory, with less than 500,000 homes for sale, mortgage rates are at 50-year lows, and there’s no sign yet of distressed sellers from the recession coming out. These supply and demand factors will push prices even higher in the first half of the year. Inventory and pricing should ease a bit in the second half of the year, and larger economic headwinds could start showing up.
Selma Hepp, CoreLogic deputy chief economist: 2021 could still have more surprises in store for us. Expectations for the housing market remain generally positive. First, interest rates, which have motivated many buyers in 2020, are expected to remain low and will help ameliorate some of the affordability concerns resulting from rapid home price appreciation seen in 2020. In other words, low mortgage rates continue to provide greater purchasing power, especially for first-time home buyers. Second, first-time home buyers will remain a strong force in the market as the largest cohorts of Millennials are turning 30 – critical household formation years. But also, the oldest Millennials are increasingly contributing to the trade-up market. As a result, 2021 home sales activity is expected to remain strong and outpace 2020 levels. Third, inventory levels are likely to see some improvement, partially from sellers who have been on the sidelines, partially from distressed homeowners, and partially from more new construction. But the housing market will continue to struggle with an imbalance between supply and demand, which will lead to sustained competition among buyers and further home price appreciation, albeit at a slower pace than seen in 2020.
Jesse Vaughan, co-founder of Landed: Essential professionals and individuals who can work from home are buying homes. They are also changing housing preferences, for example, seeking more space. Combined with record-low mortgage rates and forbearance programs, odds are the housing market will remain strong, but it is not a foregone conclusion. There is still significant risk to the downside if economic normalization coming out of the pandemic is botched or significantly delayed. The trend of Millennials moving to the suburbs and mid-size cities will continue after the pandemic subsides as it was in motion before Covid-19. The pandemic has accelerated what is a generational trend: getting married, having children and desiring more space. I expect price increases in the highest-cost metropolitan areas, such as San Francisco and New York, will trail rising mid-size cities, such as Austin, Texas and Salt Lake City.
Daryl Fairweather, chief economist of Redfin: Although the U.S. may be able to vaccinate most of its citizens by the end of 2021, many countries will struggle to distribute vaccines. Thus, the global economic recovery could take much longer, which would make U.S. mortgage-backed securities attractive to international investors, keeping mortgage rates low. Even as the pandemic hopefully nears its end, Americans will continue to buy homes that fit their new lifestyle. As a result, 2021 will see more home sales than any year since 2006. Annual sales growth will increase from 5% in 2020 to over 10% in 2021.
Antoine Thompson, executive director of the National Association of Real Estate Brokers: As the nation continues to grapple with Covid-19, the 2021 housing market will continue to have low interest rates. Congress will likely approve funding and legislation by the Biden-Harris administration for the creation of a new closing cost and down-payment assistance program and/or tax credit to help increase the rate of Black and minority homeownership. There will be a push by housing and civil rights advocates to have the Biden-Harris administration fix the fair housing and community reinvestment policies rolled back by the Trump-Pence administration.
Lawrence Yun, National Association of Realtors chief economist: Home sales surprised with a surge in the second half of 2020 and the momentum will carry into 2021. The record low mortgage rates have been the key factor for home buying even in a difficult job market condition. As we enter 2021, jobs will steadily recover especially knowing that the vaccine distribution is just around the corner. The interest rates will continue to be favorable since the Federal Reserve has indicated such. And supply will rise based on the higher number of housing starts of single-family homes. This will give consumers more choices, and more importantly, will tame home price growth. Demand could be stronger in the outlying suburbs and in more affordable metro markets, while the downtown locations could witness softer demand.
Jarred Kessler, CEO and co-founder of EasyKnock: As companies announce plans to allow employees to permanently work remotely, high-tax cities will continue to see a talent drain as people relocate in search of cities with a lower cost of living. Second-tier cities like Austin, Charlotte and Tampa will experience a residential building boom.
As Covid-19 rages on and with new restrictions likely to be put into place, the financial options for homeowners is growing scarce. 2021 will see an increase of alternative financing options for homeowners to provide additional flexibility during times of financial crisis.
The federal government will create an incentive stimulus program for landlords and homeowners to allow renters or owners to remain in their homes and will extend the eviction moratorium to line up with the vaccine rollout.
Joe Tyrrell, president, ICE Mortgage Technology: In addition to record-breaking volume for refinance and purchases, there has been an increase in relocations, as people are shifting away from metropolitan areas to more rural ones. We expect this migration trend to continue as people redefine what home means for them. We will likely see borrowers invest more in their houses and choose home locations in places that fit their lifestyles, versus the need to be close to offices or particular schools. We expect lenders to adopt true automation that increases their scale, especially in the shift to eClosings as the standard, while also reducing their dependency on staff for tasks that can and should be automated. More than ever, the goal for lenders will continue to be to serve borrowers better, faster and more efficiently by leveraging technology that fundamentally supports digitally closing loans.
Jeff Tucker, Zillow senior economist: We expect to see the housing market continue its bull run from this summer and autumn well into 2021. Home value appreciation will approach 9% or even 10% by July, before cooling somewhat down toward 7% appreciation. This rapid price growth will be driven by the same factors that took the steering wheel in 2020: strong demographics, low mortgage rates, and inadequate supply.
Source: Forbes
Housing Forecast in 2020
Low mortgage interest rates will support California's housing market in 2020 but economic uncertainty and affordability issues will mute sales growth, according to a housing and economic forecast by the California Association of Realtors (CAR).
C.A.R. sees a small uptick in existing single-family home sales of 0.8 percent next year to reach 393,500 units.
The California median home price is forecast to increase 2.5 percent to $607,900 in 2020.
"With interest rates expected to remain near three-year lows, buyers have more purchasing power than in years past, but they may be reluctant to get off the sidelines because of economic and market uncertainties," said C.A.R. President Jared Martin.
The average for 30-year, fixed mortgage interest rates will dip to 3.7 percent in 2020, down from 3.9 percent in 2019.
"California's housing market will be challenged by changing migration patterns as buyers search for more affordable housing markets, particularly by first-time buyers, who are the hardest hit, moving out of state," said C.A.R’s Leslie Appleton-Young.
According C.A.R.'s 2019 State of the Housing Market Study, nearly 30% of those sellers who planned on repurchasing said that they will buy their next home in another state outside of California — the highest level since 2005. Older generations were more likely to buy outside of California. 37% of baby boomers and silent generation planned on repurchasing in another state. 30% of Millennial sellers planned to do the same.
Source: California Association of Realtors
Housing Market in 2019
A new report predicts how much home prices will grow next year
Home prices in Los Angeles reached record heights in 2018.
Price increases fell slightly after summer 2018, and a new analysis from Zillow suggests a cooling trend in the market will continue into the new year.
A survey of 100 real estate experts on their expectations for 2019 showed they expect home values in Los Angeles will continue to rise next year, but at a significantly slower rate than the nationwide average.
The panelists predict that prices will climb 7.7 percent in 2019 across the country; but in the Los Angeles metropolitan area (which includes Orange County), they are expected to tick up 5 percent.
Now that median home prices have climbed to unprecedented levels in Los Angeles, many buyers may be priced out of the market. Others may simply bide their time.
Jordan Levine, senior economist for the California Association of Realtors, suggests some buyers are hoping prices will suddenly bottom out.
Jordan Levine, senior economist for CAR, says it’s a mistake to think home values will tank the way they did in 2008, since mortgage providers are still shying away from the kind of risky home loans that fueled the housing market’s last collapse.
More likely, says Levine, is that home values will continue to grow—but at a more modest rate.
Buyers might also have a hard time getting excited. As Levine points out, nearly three in four residents of Los Angeles County can’t afford to buy a median-priced home in the area.
“There is a limit to how much folks can afford to pay,” he says. Trends show people moving into more affordable areas, outside of Los Angeles.
Source: LA Curbed
2018 California Housing Market Forecast
Home sales and median price to increase in 2018 but at a slower pace.
With the economy expected to continue growing, housing demand should remain strong and incrementally boost California’s housing market in 2018, though a shortage of available homes for sale and affordability constraints will be a challenge.
The C.A.R. forecast sees a modest gain in existing single-family home sales of 1.0 percent next year.
“Solid job growth and favorable interest rates will drive a strong demand for housing next year,” said C.A.R. President Geoff McIntosh. “However, a persistent shortage of homes for sale and increasing home prices will dictate the market as housing affordability diminishes for buyers struggling to get into the market.”
The average for 30-year, fixed mortgage interest rates will increase slightly to 4.3 percent in 2018, up from 4.0 percent in 2017, but will still remain low by historical standards.
The California median home price is forecast to increase 4.2 percent to $561,000 in 2018, following a projected 7.2 percent increase in 2017 to $538,500.
“With tight inventory being the new ‘norm’ for the past few years and at least the upcoming year, we’ll continue to see fierce competition driving up prices, leading to lower affordability and weaker sales growth.”
If you have any real questions about real estate, please contact Lilian Phan, your Real Estate Consultant for Life, at Lilian.Phan@compass.com or (310) 402-3567
2017 Real Estate Forecast
The year 2016 proved to be a hot one for real estate. Low mortgage rates, high demand fueled 2016 housing market.
Will housing prices keep climbing into 2017?
Home prices continue to post steady year-over-year gains and are nearly back to pre-recession highs.
Nela Richardson, chief economist for Redfin, says that bullish real estate sales prices are decelerating. “After several years of steady and steep price growth, we are seeing indications that price growth is slowing and the market is normalizing,” says Richardson.
Prediction: Housing Market To Normalize
Based on these indicators, Richardson expects 2017 will bring a more normalized housing market — one that still boasts a healthy number of sales but a moderate rate of price growth.
Rick Sharga, executive vice president of Ten-X, says that home price appreciation is likely to slow down next year, “although we’re still likely to see at least a 3 to 4% year-over-year increase,” he says.
“In 2017, we’re also projecting another modest increase in total home sales,” Sharga continues. “However, three headwinds continue to challenge the housing market’s recovery — tight credit, limited inventory, and rising prices, which are beginning to create some affordability problems in certain markets.”
Home Appreciation Might Slow, But Not Stop
Blomquist anticipates home appreciation to slow nationally to approximately 5% in six months and to 3.5% in 12 months. “That slowdown could be accelerated by rising mortgage rates,” he says, “but even without rising interest rates I think enough markets are now hitting affordability and inventory constraints that demand will slow down. And as demand slows, inventory will gradually increase in 2017.”
“But real estate, for most people, should still be thought of as a long-term hold with a great tax write-off, forced savings plan, and long-term appreciation,” Guth says. “My home has doubled in value since I purchased it in 2002, even though it was hit very hard in 2009.”
Rising Rent Could Be Your Deciding Factor in 2017
Considering these housing market forecasts, many professionals say it’s wise for prospective home buyers to think about purchasing relatively soon.
Mortgage interest rates remain low and housing price are rising.
“I think it’s still a great idea for first-time buyers to purchase now, because most are paying high rents and need the tax write-offs that come with owning a home,” says Guth.
Richardson agrees that rental affordability is one of the biggest factors driving first-timers into the market.
“With rates at historic lows, buyers may be able to find a home with a monthly mortgage payment that is less than or equal to rent,” she says.
Should Buyers Put Off Their Purchase?
Blomquist says purchasing sooner versus later can be smart — so long as you view the home as a long-term investment. He also offers a mortgage rate forecast: “The rock-bottom interest rates make it a good time to be a borrower.”
“For first-time buyers seeking a place to live and possibly raise a family, it’s smart to have a long-term view on a home purchase,” says Sharga.
Additionally, waiting for the next real estate crash and prices to go lower really isn’t a good strategy — “it’s much more likely that home prices will continue to go up over time and that interest rates will ultimately rise,” Sharga adds.
10 Things Homebuyers Can Expect in 2016
A recent survey by Zillow estimates that about 4.9 million Americans are interested in buying a home in the coming 12 months. Solid job growth and favorable interest rates will drive a strong demand for housing next year.
For 2016, Homebuyers should be on the lookout for slightly higher home prices and mortgage rates.
The average for 30-year, fixed mortgage interest rates will rise only slightly to 4.5 percent but will still remain at historically low levels.
California’s housing market will continue to improve into 2016, but a shortage of homes on the market and a crimp in housing affordability also will persist.
In regions where inventory is tight, sales growth could be limited by stiff market competition and diminishing housing affordability. On the other hand, demand in less expensive areas will remain strong thanks to solid job growth in warehousing, transportation, logistics, and manufacturing in these areas.
The California median home price is forecast to increase 3.2% in 2016. This is the slowest rate of price appreciation in five years. In Los Angeles, home values have gone up 7.7% in 2015 and Zillow predicts they will rise 2.0% in 2016.
If you have any real questions about real estate, please contact Lilian Phan, your Real Estate Consultant for Life, at Lilian.Phan@compass.com or (310) 402-3567.
Source: California Association of Realtors, CBS Money Watch & Los Angeles Daily News
2015 Los Angeles Real Estate Forecast
Home prices in the Los Angeles metro area rose by 18.2% from February 2013 to February 2014, according to the Case-Shiller price index, and they continue to climb today.
While house values in L.A. are expected to rise steadily over the next year, homeowners should not expect the double-digit gains we’ve seen in recent years. Economists from the real estate information service Zillow have predicted a 7.0% increase in Los Angeles home prices over the next 12 months.
Demand for homes has risen gradually in response to economic improvements and job gains (California’s unemployment rate recently fell to 7.8%, its lowest point in six years). However, there has also been a significant increase in inventory.
According to Realtor.com, the total number of listings in the Los Angeles metro area increased by 29.3% annually, from March 2013 to March 2014. This is quite a reversal from a couple of years ago, when there was a severe inventory crunch across much of California.
Two years ago, investors were purchasing homes left and right, trying to maximize their resale profits before prices began to climb. This drove inventory down and skewed the supply-and-demand picture, paving the way for those double-digit gains mentioned earlier.
But inventory is now growing. This is why Zillow’s prediction for Los Angeles home prices through 2015 calls for a reduction in year-over-year appreciation. There are significantly more properties available today, per home buyer. In
The prediction for smaller annual home-price gains in Los Angeles — and elsewhere across California — can actually be viewed as a stabilizing force for the local housing market and broader economy.
Low mortgage rates in Los Angeles and nationwide will continue to drive demand for housing, specifically by increasing affordability. Long-range predictions expect higher interest rates at the end of 2014, and into 2015. These predictions could create a sense of urgency among home buyers, especially when viewed alongside rising home prices.
If you have any real questions about real estate, please contact Lilian Phan, your Real Estate Consultant for Life, at Lilian.Phan@compass.com or (310) 402-3567.
Source: Home Buying Institute
Real Estate & Wealth Inequality
The ability to transfer wealth from one generation to the next is instrumental in ending intergenerational poverty. Most wealth in the United States is gained from the appreciation of real estate over time. 25% of Americans’ wealth comes from the increased value of homes — and that number is nearly 50% for people of color.
According to Russell Sage Foundation, household net worth declined steadily between 2007 and 2013. Households at the lowest end of the spread were hardest hit, losing 60% of their wealth.
Since 2007, approximately 25% of all Latino and African-American borrowers have lost their homes to foreclosure or are seriously delinquent, compared to just under 12% of white borrowers. And – prospects of reversing that trend are so few.
Even if credit were more widely available to low-income people, other market realities will likely block them from homeownership for many years to come. Because the foreclosure crisis disproportionately struck low-income families and households of color, millions of low-income people will have to wait five to seven years to rehabilitate their score just to be eligible to apply for a mortgage.
Similarly, escalating student loan debt is shutting the door to homeownership for Millennials. Today’s average starting salary for college graduates is $45,000, yet 66% of Americans leave school with more than $25,000 in debt. For years to come, most recent graduates will not be able to meet new mortgage rules that require total debt not to exceed 43% of income.
Frustratingly, all of this is happening when there is a once-in-a-lifetime number of affordable homes on the market because of the foreclosure crisis. Not only can’t low-income people get the financing to buy them, but the homes are being purchased by institutional investors at a record pace.
If we want to reverse this trend and narrow the wealth gap, we need a better path to homeownership for low-income families.
If you have any real questions about real estate, please contact Lilian Phan, your Real Estate Consultant for Life, at Lilian.Phan@compass.com or (310) 402-3567.
Source: CNN Money
Listing Price Drops Will Help Drive a Fall Surge in Home Sales
Sellers are dropping listing prices to meet buyers’ more value-focused expectations. Sellers are adjusting prices more aggressively than at the end of previous summer selling seasons.
There is a slowdown in home price growth. For the first time in five months, price growth was essentially flat in July.
There is a shift in pricing power from sellers to a more balanced market. As a result of this shift, the number of homes that sold above list price in July is down nearly 7% from a year ago, the biggest drop of the year.
We expect prices to continue to flatten. The widespread price drops is likely to give buyers even more confidence that they have regained some of the bargaining power lost last year. Price drops are most prevalent in markets that have seen a big buildup in inventory and/or a sizeable increase in home price appreciation over the past year.
However, Los Angeles remains a metro area in which a significant number of homes continue to sell for more than list price.
If you have any real questions about real estate, please contact Lilian Phan, your Real Estate Consultant for Life, at Lilian.Phan@compass.com or (310) 402-3567.
Source: Housing Market Tracker from Redfin
Equity Credit Lines are Making a Comeback as Home Prices Rise
A growing number of homeowners across the country have begun taking out home equity credit lines at a rapidly accelerating pace. New data suggest that a rebound boom in equity-tapping is underway. Owners have pulled a 27% increase in volume over the year earlier.
In California alone, nearly $6 billion in new equity credit lines were originated in the last 12 months.
Home equity credit lines — commonly referred to as HELOCs — typically are second mortgages. HELOCs are structured as open lines of credit that the borrowers can access up to a stated limit. Lines are often used to pay for home renovations, college tuition and other recurring big-ticket expenses.
HELOCs are particularly attractive because of their low interest rates and repayment flexibility. Rates for owners with good credit run from the mid-3% range to 4%. Research suggests that the equity boom is no bubble. But in many markets, price increases have cooled off considerably in recent months, meaning equity growth has slowed. If you plan to jump on the HELOC bandwagon and borrow against your equity, play it smart. Don’t hock too much of what you believe to be your equity.
If you have any real questions about real estate, please contact Lilian Phan, your Real Estate Consultant for Life, at Lilian.Phan@compass.com or (310) 402-3567.
Source: The Los Angeles Times
Buying is Better than Renting in Los Angeles
Trulia estimates that you’ll save 24% by buying a home! The median home price in Los Angeles is $420,000. The median rent price is $2,100 per month. Even though Los Angeles’ homes prices have risen some 12-20% in the past year according to different sources, it’s still cheaper to buy than rent here. It has a lot to do with low mortgage rates. According to Trulia, rates would have to climb to 7% or more for renting to be a better deal than buying a home. Currently, rates are sitting around 4.25%.
Of course, it also depends on what part of the city you live in. Residents of Bel Air, for example, easily pay a couple of million dollars for homes there, while those who live in the San Fernando Valley can pay less than $200,000.
If you have any real questions about buying a home versus renting, please contact Lilian Phan, your Real Estate Consultant for Life, at Lilian.Phan@compass.com or (310) 402-3567.
Source: CNN Money
Home Price Increases Continue at a Slower Pace
Home prices continued to rise this spring, but the pace of increase has slowed since late last year. Some experts say the current growth is better for the market, because rapid price increases can keep some buyers on the sidelines.
“Today’s Case-Shiller data is consistent with the slow glide-path down towards a more normal housing market,” said Stan Humphries. Most of the big gains were in markets in California and Florida, as well as Las Vegas. All of those markets were hit particularly hard by the housing bust that followed the home price bubble in the middle of the last decade.
A drop in mortgage foreclosures and unemployment, low mortgage rates and pent-up demand for people who had wanted to buy homes have combined to help lift home prices.
Recoveries in home sales and prices have been a major driver of the rebound of the U.S. economy so far this year, as the jump in prices has increased household wealth. The price increases and low mortgage rates also helped many homeowners refinance their mortgages and lower their home payments. But even with two years of increases, prices are still 17% below the peak reached at the height of the housing bubble in early 2006.
We still have room to recover!
If you have any real questions about real estate, please contact Lilian Phan, your Real Estate Consultant for Life, at Lilian.Phan@compass.com or (310) 402-3567.
Source: CNN Money