Interest rates and low inventory levels are top-of-mind for most Buyers and even big banks in today’s real estate market. Given the downward trend in interest rates and historically low inventory, Goldman Sachs recently adjusted their economic prediction for real estate prices this year from -6.1% on January 10, 2023, to -2.6% just two weeks later on January 24, 2023. I am waiting to see if they will continue to adjust their prediction, given the positive movement we are seeing.  

I asked my long-time lending partner, Hunter Markwardt of CrossCountry Mortgage, to provide an example of what a 1% lower mortgage rate equates to in terms of a monthly payment. According to Freddie Mac, 30-year fixed mortgage rates peaked at approximately 7.08% on November 10, 2022. On February 2, 2023, rates were at 6.09%.  

*Today, rates are bouncing around a bit, making us wonder where they will eventually land, but for the purposes of this email, we are going to use 6% rates. 

Here’s the scenario: 

If a Buyer has a $1.5M mortgage at 6% vs. 7% (on a 30-year fixed mortgage), their monthly payment has gone down $985. That is a significant difference for most Buyers.  

Keeping Current Matters (KCM) just did an analysis for the Mortgage Daily News in terms of the direct effect mortgage rates have on Buyer demand.  

In terms of inventory, we are still constrained with some Sellers on the sidelines still hoping the wild sales prices of last April and May will return. These valuation numbers are long gone. However, strong Buyer demand, and a shortage of quality inventory, will most likely cause competition for sought-after homes in great condition that are fairly priced.  

If you are a Buyer, we are still in a rare market where mortgage interest rates and average housing prices have declined since their peak last year. But you need to buy now before there is more competition. We are here to educate you on the market so that you don’t miss a good house simply because you don’t have anything to compare it to. If you are a Seller with a great house, you too should move quickly to bring it to market with the good Buyer demand we are beginning to see as rates improve.  

We love this balanced market and are doing all we can to educate our clients and bring a strong inventory to market. We do have a few off-market opportunities that we can share, so make sure you ask us what we are working on. And we’d like to be working on more, so if you know someone who wants to buy or sell, please share this market update, and send them our way! Our volume and experience give us an unprecedented view into Lamorinda’s real estate crystal ball. Just ask the 1100+ clients we have successfully helped!

 Dana & Team