These blog posts are meant to share my findings, adventures, needs etc while seeking out real estate in Orange County, California. They are in no way meant as a source of advice, financial or otherwise or a solicitation of funds. If you are in the market to buy or sell real estate or trying to make a financial decision, please consult a professional who is familiar with your needs and your financial situation. Everything on this blog is merely an expression of my opinion.
Are rising interests rates a signal of changing tide in the real estate market? Over the last few weeks, 30 year mortgages have spiked significantly leading to a 3% fall in new loan application. The full story on rising interests rates can be seen here and here. For an explanation on why rates are rising, readers might want to check out the article here.
This spike in rates have lead me to wonder if the latter half of 2013 may bring about a slow down in the real estate market. Given the current shortage of inventory, while I’m anticipating a slight slow down in the housing market, I don’t believe the slowdown to be significant due to the severe shortage of inventory in our current market here in Orange County, which is sitting at approximately 35% of historical norms as of spring 2013. Furthermore, over the last 2 years, cash buyers have made up a significant portion of the buying market.
However, for sellers that do need to sell their house in a hurry, 21 days or less, I do believe they may experience more days on the market as compared to selling now. On the upside, a slight slowdown for the market might not be all that bad. Over the last few months in my quest for single family homes, the low inventory has lead to seemingly unrealistically high prices. In many closed sales, prices seemed far above the affordability level for families who would commonly be the target market in that particular area. I’ve been starting to wonder how this phase of the market was going to end? Was the inventory being snapped up by first time investors bidding far over asking?
The big question that remains over the next 6 months is will rates remain steady or keep rising? Has the current interests rates factored in the easing of QE3? These are the questions I am pondering.
[Edit] For more thoughts on the interests rates hikes, check out the link here.
