Mortgage Rates and Southern California Real Estate Market Conditions 8/15/2022

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In our first blog post we spoke about the experts predicting higher mortgage interest rates for 2022. The Mortgage Bankers Association was predicting the average 30-year fixed rate mortgage would be around 4.5% by the end of 2022. Well, we already surpassed that by over a full percent to 5.81% according to Freddie Mac’s primary mortgage survey on 6/23/2022. Rates have not been that high since 2009. That certainly sent shockwaves to the real estate market. Mortgage rates have almost doubled since the beginning of 2022. 

Since the peak on May 12th rates have settled downward a little bit to 4.99% as of last week. But, as of today, it has bumped up above 5% to 5.22% according to Freddie Mac’s latest market survey, 8/11/2022.

According to the California Association Of Realtors June home sales and price report, year to date home sales were down 10.9 percent in June. “Excluding the three-month pandemic lockdown period in 2020, June’s sales level was the lowest since April 2008. Pending sales data also suggests we can expect additional retreating in the coming months,” said C.A.R. Vice President and Chief Economist Jordan Levine. “With inflation remaining high and interest rates expected to climb further in the coming months, the market will normalize further in the second half of the year with softer sales and more moderate price growth.”

Southern California sales had the biggest drop of all regions in California, with sales plunging 27.1 percent year over year with the median sales price up 8.4% to $830,000 in the same time period.

There is some good news for buyers in the report. The overall supply conditions in California improved again in June, with the statewide unsold inventory index (UII) rising to the highest level in two years. The improvement in the index was partly due to an increase in supply and partly due to a pullback in demand. With both closed sales and pending sales slowing by more than 20 percent, total active listings surged 64.4 percent in June, the largest year-over-year growth in more than seven years. Active listings in June also climbed to the highest level since November 2019, with a month-to-month increase of 28.8 percent from May.

Please reach out to us if you have any questions regarding this blog or need help with any of your real estate needs.

Michael Durkin, President

Blue Wave Investments Inc

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In our first blog post we spoke about the experts predicting higher mortgage interest rates for 2022. The Mortgage Bankers Association was predicting the average 30-year fixed rate mortgage would be around 4.5% by the end of 2022. Well, we already surpassed that by over a full percent to 5.81% according to Freddie Mac’s primary mortgage survey on 6/23/2022. Rates have not been that high since 2009. That certainly sent shockwaves to the real estate market. Mortgage rates have almost doubled since the beginning of 2022.  Since the peak on May 12th rates have settled downward a little bit to 4.99% as of last week. But, as of today, it has bumped up above 5% to 5.22% according to Freddie Mac’s latest market survey, 8/11/2022. According to the California Association Of Realtors June home sales and price report, year to date home sales were down 10.9 percent in June. “Excluding the three-month pandemic lockdown period in 2020, June’s sales level was the lowest since April 2008. Pending sales data also suggests we can expect additional retreating in the coming months,” said C.A.R. Vice President and Chief Economist Jordan Levine. “With inflation remaining high and interest rates expected to climb further in the coming months, the market will normalize further in the second half of the year with softer sales and more moderate price growth.” Southern California sales had the biggest drop of all regions in California, with sales plunging 27.1 percent year over year with the median sales price up 8.4% to $830,000 in the same time period. There is some good news for buyers in the report. The overall supply conditions in California improved again in June, with the statewide unsold inventory index (UII) rising to the highest level in two years. The improvement in the index was partly due to an increase in supply and partly due to a pullback in demand. With both closed sales and pending sales slowing by more than 20 percent, total active listings surged 64.4 percent in June, the largest year-over-year growth in more than seven years. Active listings in June also climbed to the highest level since November 2019, with a month-to-month increase of 28.8 percent from May. Please reach out to us if you have any questions regarding this blog or need help with any of your real estate needs.