El FED, is meeting today and tomorrow. Or The FED as they are known in the local Santa Clarita real estate circles.
Rumors are like other body parts, I’ll let your minds wander with that morsel.
However, the rumors are not if the FED is meeting. The rumors surround whether or not real estate mortgage interest rates will be increased.
That is indeed the question and all rumors point to absolutely yes. We have about 1/2 a dozen transactions which are locked at this point by the lenders our clients are working with. That is good news for them, if in fact interest rates are raised.
Interest rates increasing don’t help the other buyers in the market who have been looking for a home with our constrictive real estate inventory.
Rising interest rates also don’t happen to help those home sellers wanting to sell their homes. A double point of pain for them if they happen to also be home buyers within the same transaction.
If the rates are raised, how much will it be? I do know the track record is typically by .5% – or 1/2 a point rise. That seems to be the mindset of the powers that be. If in case that happens – that will cause about a $50,000.00 reduction in approval amount for a Santa Clarita home buyer that is currently, at today’s interest rate, able to finance $500,000.00.
The problem is that our median market level in the Santa Clarita real estate community is 1/2 a million dollars, or $500,000.00
And it’s only a problem because a lot of our real estate inventory is priced at those levels too. Will any additional rise in interest rates stall our current real estate market in the Santa Clarita Valley?
I would say the answer is we will need to watch, but I will go out on a limb. I foresee this kicking the current market in a higher gear than we are already in.
During the past several weeks we have observed a considerable uptick in inventory, the standing inventory in the Santa Clarita Valley cities is around 700 active real estate units. This includes our Santa Clarita single family homes, the Santa Clarita condos and the Santa Clarita townhomes.
That number is up a couple of hundred from about 5 weeks ago. That indicates that the home sellers have give in to their current position of having to buy a home with a higher interest rate than they have currently.
Most of these home sellers have interest rates on their Santa Clarita real estate at 3.3%. Those have had the hardest time deciding whether to sell their homes or not. They have started to inflate the Santa Clarita housing market and have made first time home buyers take a second look.
One of the thing that we are also seeing as a market dynamic are the new home centers and new Santa Clarita building communities ramping up their building. More land is being bulldozed and new homes are entering the Santa Clarita new home market. Keep a watchful eye and if you want to go the “new home and new housing route” – call me first and I’ll give you the run down.