Will rates go down?

2023 was an interest rate story. After 11 rate hikes between 2022 and 2023, the last of them occurring in July 2023, we were all looking towards the Fed for some relief in 2024.  Inflation’s persistence and a resilient labor market have most economists predicting that June could be the initiation of  the rate cuts. Although since inflation rose from January to February, they could hold off even longer.

If rates go down, how will this impact inventory?

Truth be told, inventory is at pretty scarce levels. While a decrease in interest rates will positively impact affordability,  most folks (59.4%)  are locked into interest rates under 4% and 90% have rates under 6%. 

Economists predict that we will end the year with interest rates hovering around 6%. Today the 30 year fixed is at 6.88%.

So Bottom line, it will help a little…. - but inventory will still be tight. There is a national housing shortage spurred by lack of development caused by the global financial crisis of 2007. There is a deficit of 3.5-5.5 million homes. 

What will happen to home prices?

Home prices will continue to rise.  Experts believe they will rise an additional 2.9% this year.

What’s happening here locally, in Orange County?

We are in a strong sellers market.  Current inventory is 62.9% lower than Feb 2019 (pre-pandemic) and 51% lower than just a year ago.

The median sales price is 66.6% higher than Feb 2019 (pre-pandemic) and 8.75% higher than a year ago.

Currently there is 2.5 months supply of housing where Feb last year there were 3.1 months supply of and Feb 2019 there was 5.1 months supply.

Bottom Line

Despite the highest interest rates we’ve seen in over 20 years, in 2023 2,848 single family homes were sold in Orange County alone - along with 419 condos, 197 multi-family homes and 152 parcels of land.

If you are waiting for things to ease up a lot prior to making a move, you may be waiting for a long time.

So maybe think about it this way…Instead of asking if you should move, ask how can you make that move possible. In fact, please ask me!! (845-237-2368) You may be surprised at the options available to you.