What’s the Latest?

Week of December 4th-10th

Real Estate News

What's now vs. what's next

It feels like we've just kicked off 2023, yet here we are, in the final weeks of the year. At the beginning of this year, 30-year fixed mortgage rates were slightly above 6%, and recently, they reached a peak of 8%. This swift rise has significantly restricted housing supply and lead many potential buyers to sit on the sidelines, waiting for rates to drop or prices to decrease.

Earlier in the year, prices in Monterey County eased, only to surge to new highs more recently—coinciding with the record-high rates. As winter approaches, we typically see fewer homes hitting the market, hinting at reduced inventory in the coming months.

In the U.S., mortgage rates have been declining for six consecutive weeks. Just this week, someone was quoted a sub-6% rate for a 30-year fixed mortgage, dipping below the median rate from 1971 to 2010. A prolonged period of lower mortgage rates will spur higher demand and consequently could push prices up.

Lower inflation readings in the near future might give the Federal Reserve the leeway to decrease the fed funds rate while maintaining the spread between inflation and the fed funds rate, thus maintaining the current policy's restrictive nature. This would make debt cheaper for consumers. However, this is just a possibility, not a current occurrence.

The chart above illustrates when home prices have fallen over the past 50 years. Falling real prices means adjusted for inflation and falling nominal prices means not inflation-adjusted.

Curious where home prices will land in 2024? In real estate, like in most things in life, uncertainty is the only certainty. What I can tell you is right now, rates are considerably lower than even a few weeks ago; for every million dollars borrowed, switching from an 8% to a 6% rate would save $500,000 in interest over a 30-year mortgage term and lower monthly payments by $1,400.

Worked with me in the past? Share your experience.

Leave a review

Jonathan Balog

DRE# 01980970
Broker
M: 831.747.0310
[email protected]

Compass is a real estate broker licensed by the State of California operating under multiple entities. License Numbers 01991628, 1527235, 1527365, 1356742, 1443761, 1997075, 1935359, 1961027, 1842987, 1869607, 1866771, 1527205, 1079009, 1272467. All material is intended for informational purposes only and is compiled from sources deemed reliable but is subject to errors, omissions, changes in price, condition, sale, or withdrawal without notice. No statement is made as to the accuracy of any description or measurements (including square footage). This is not intended to solicit property already listed. No financial or legal advice provided. Equal Housing Opportunity. Photos may be virtually staged or digitally enhanced and may not reflect actual property conditions.

OUR WEEKLY UPDATE

What’s the Latest?

Property Tips and Tricks

Powder rooms: a license to thrill

Real Estate News

What's now vs. what's next

Worked with me in the past? Share your experience.

Jonathan Balog

Stay Smart