Southern California Housing Market Cools as Interest Rates Rise

Southern California’s housing market has experienced a cooling trend following a significant jump in interest rates. With the average rate for a 30-year fixed mortgage reaching 5.55%, many potential homebuyers are feeling the impact of this increase. However, amidst this challenging market, first-time homebuyer Diale Ebewele managed to secure a Tarzana condo with a 4.99% interest rate and only a 5% down payment.

Ebewele, a health care industry administrator, expressed his excitement at finding a place in a safe area close to his work. This success story is a rare occurrence in the current housing market, where low-down payment buyers often struggle to compete with all-cash offers or buyers with larger down payments.

The rise in mortgage rates has led to a 21% decrease in mortgage purchase applications compared to the previous year, according to the Mortgage Bankers Association. This trend, coupled with recession fears and collapsing consumer confidence, has caused many potential buyers to hesitate.

Despite these challenges, experts like Patrick Veling, CEO and President of Real Data Strategies, advise that now may be a good time for motivated first-time homebuyers to enter the market. Veling emphasizes the importance of considering personal time horizons and the historical context of mortgage rates.

While pending home sales in Southern California have seen a significant decline, there is a silver lining for home shoppers. With an increase in inventory levels and more than 31,000 homes for sale in the region, buyers have more options to choose from. However, low inventory levels may persist due to homeowners’ reluctance to sell in the current market conditions.

Overall, the housing market in Southern California is facing challenges due to rising interest rates and economic uncertainties. Despite these obstacles, there are opportunities for savvy buyers to find their dream homes at a time when competition may be less intense. As the market continues to evolve, it will be crucial for buyers to stay informed and work with experts to navigate the changing landscape.