It is all relative! The overall Housing Inventory is still considered low compared to pre-pandemic years in California. The lower supply of homes available on the market today has ripple effects on the housing prices. Homes have not depreciated much even facing current inflation due to the high demand far outnumber the inventory available. Even with the much higher mortgage rates, ready and qualified buyers are making offers and closing escrows, especially in highly desirable locations. Many builders or developers are pressing a stop on building new homes due to the higher mortgage rates today. "Demand is also directly correlated with mortgage rates". This is one of the reasons why home prices are able to remain stable and hold its' value, especially in desirable locations and high demand neighborhoods.  

 

Housing experts believe that home prices are starting to adjust and stabilize itself due to the Fed's multiple rates increases to fight inflation. "Market is balancing, and will continue to normalize." 2020 and 2021 were summarized as the "Unicorn Years", the frenzy sellers' market where homes were receiving double digit multiple offers, while today as mortgage rates have hiked above 6.5%, home prices are finally stabilizing and correcting towards a more balanced market. Less buyers are purchasing and homes are staying on the market more than 30 days. Many sellers are willing to provide concessions to buyers, and negotiate with qualified buyers to closing deals. 

 

Although today's competition is less frenzy compared to 2021 when interest rates was historically lowest 2.5-3.5%, today qualified buyers are leveraging their negotiation power
to purchase homes with less bidding war and competition. On a positive note, many reputable lenders are offering reliable and creative financing/ loan programs for different types of buyer scenarios to reduce the mortgage rates in the first few years with the option to refinance with better rates in the near future.  

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Home prices in California is predicted to continue to increase at a slower pace and hold its value per housing and economic forecasts ( source: Fannie Mae, Freddie Mac, NAR, Corelogic, Zelman, HPES). New and long-timed homeowners are seeing and benefiting from the huge increase in equity they have gained in just a short few years. 

People have been nervous and wondering how this economy
with the current inflation will affect the housing market! Based on financial and economists' collective data: 

• More than 60% of CA homeowners have enough equity to sell today than foreclosing.

• The number or foreclosures over the last two years have
been all time low

• Most homeowners have exited their forbearance plan during pandemic and caught up on payments

• Today's lending practices have much higher standards than back in 2008. Lenders are cross-qualifying before approving loans to borrowers. 

• The current market still needs a lot of inventory for the demand of ready buyers  ( supply is still low and demand is high)

 

Sellers: (Especially empty nesters) 
Why not leverage the low inventory aspect and list your property now? Your home would be receiving more interests while less competition on the market. 

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Buyers: You have less competition among serious and qualified buyers this year, higher chance to get your offer accepted. With over 9% inflation rate, increasing mortgage rates, volatile ( tanking) stock market, and recession is forecasted coming, building equity in real estate is much more tangible than watching your hard-earned savings shrink in value. 

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Disclaimer: These following statistics are based on the collective data
from economists and financial experts. Charts provided by
KCM ( Keeping Current Matters).