The Future of the California Real Estate
The 500 pound elephant in the room that very few are having the courage to address in the California real estate market is interest rates are going up. In fact, 30-Year Fixed Rate Mortgages in the United States are averaging 5% now, which is the highest they have been in 11 years after years at being historically low.
It is important to remember that past performance is no promise of future performance. In other words, just because the market reacted in a certain way when interest rates went up before does not mean things will be the same exact way as it did last time. That is because the real estate market, and the world are in very different places today than they were even just a decade ago. And as an industry, we have learned a lot and there are more measures in place to safeguard buyers and sellers, as well as the real estate market in general.
In my last newsletter, I shared an article about the California Housing Marketing [being] in a league of its own, which talked about how much the housing market conditions had improved in just one year’s time. For instance, the median sale price from 2021 to 2022 in Los Angeles rose by 11% from $850,000 to $945,000. Sometimes it can be easy to stay in the zone and keep going forward without taking a moment to stop and reflect on how much we have actually accomplished, but when we do it is amazing to see all that has been done in a relatively short amount of time.
So yes, interest rates are rising and housing prices have gone up, and there are early indications that they will continue to go up even higher at some point. All this means, is that we will need to make some adjustments to overcome those challenges, which is why choosing the right real estate team can make such a huge difference in buying or selling a home.
Ready to buy or sell real estate in California? Contact Stephen White today.
Real Estate Today
- The average 30-Year Mortgage Rate is up to 5%, which is the highest it has been since February 2011
- Google to triple California real estate spending in 2022 to $3.5 billion
- Technology pushes the boundaries for what is possible in real estate, with advancements in AR/VR, big data, and smart contracts changing the landscape for future real estate buyers and sellers
- A California Housing Speculation Act that if passed, could impose a whopping 25% capital gains tax as a deterrent for real estate investors making short-term gains