Home Sales vs Home Prices:
As mentioned in an earlier newsletter, the elevated mortgage rates and limited housing supply are suppressing home sales in California (and across the nation). Let’s not confuse the number of home sales with the price/value of a home. The number of homes that have sold is down year over year but the value (since the end of January) of the homes that have sold has risen.
Low unemployment and the strong economy are two of the main reasons we will continue to see the Federal Reserve (Feds) hike interest rates. Yes, the Fed just raised the federal funds rate another 25 basis points bringing the current federal funds rate to approximately 5.50 %. To give perspective on this, last year at this time, the federal funds rate was 1.75%.
We get it, inflation was out of control and the best tool the Federal Reserve has to combat inflation is to raise interest rates. *Some economists think we’re at the end of the tightening phase and that lower rates are just around the corner and some economists think there are more interest rate hikes coming. Fed Chair Jerome Powell is adamant about getting inflation to 2%. He has demonstrated that he will continue to raise rates until we get there. I think that the federal funds rate will remain at this level longer than everyone (economists) think. *(I am not an economist but I do pay close attention to economics).
Our current economy is strong. Housing inventory is low. There is high demand for homes. Here’s is a good example of the demand. Last week we listed a home for sale in west Lancaster, a nice home… basically move-in ready. We received 4 offers, all above asking. Now, our marketing had a lot to do with this and just goes to show that there are buyers out there… even at these higher interest rates. (Ask me about our marketing program that generates LOTS OF BUYERS to ensure you get TOP DOLLAR). Homes that are priced right and in move-in condition will always get top dollar.
Have a GREAT DAY and if you have any questions feel free to call me, I’m always here for you.