Interest and mortgage rates
Interest rates on mortgages are already down. They’re down to their lowest point in 18 months. And yes, the Fed has not reduced interest rates yet. We hope they will.
But mortgage rates dropped ahead of that in anticipation of that. Will mortgage rates drop again? They might. It sounds like the Fed is going to continue dropping them a little bit, maybe again this year and into next year. So that’s great.
That is causing buyers to jump in to take advantage of lower rates and wanting to beat the other buyers to the market. Every single house that we’ve written on or received offers on has received multiple offers or a preemptive offer. It’s feeling warm.
We launched several listings this week and have quite a few things coming on this fall – whoch I’m really excited about. I’m waiting for the offers to rain on my head 🙂 Fingers crossed for me and the sellers. I’m feeling optimistic. I like to feel the heat from the other side of the table, though. I like the balance of the buy and sell side.
The election
I’m getting a bunch of questions about whether or not the election is going affect the market this fall and whether or not like buyers or sellers are holding off. Most of the questions are coming from sellers who are wondering about timing.
Should I just wait? Is this whole election thing going to mess up the market?
My answer is no. I don’t think it’s going to mess up the market. There are other things we could talk about that impact timing, but I wouldn’t wait due to the election. I haven’t heard any buyers mention it.
Keep in mind that the majority of the actual selling season is from now until the election. Not that we don’t sell things in November and December we do, but a big portion of it will be over by then.
We have to fast forward into January. We have inaugurations, which I hope will be uneventful and not have any storming of the Capitol or anything like that. If that happens, and I really hope it doesn’t, that would cause a temporary blip.
Is there one presidential candidate that’s going to be better than another for real estate? I’m not going to weigh in on that. That’s another person, another channel. I would just say, I’m not worried about the elections in terms of real estate.
For buyers
The next few months are going to be fast and furious. It’s just really, really short. Buyers in the sub $5 million market, many of them, they continue to get caught off guard by how quickly they need to move in order to make decisions on properties that are constantly being underpriced by the market value by 10% or 30%, which makes them go fast and high in a matter of days.
For sellers
If you’ve got your properties prepped or being prepped and ready to go, I think you’re going to be in a really good position for this selling season. If you ended up not being ready or want to wait until next spring, I think next spring is probably going to be marginally better. I don’t think it’s going to be massively better, but I think you’re going to be in a good place no matter what.
The hottest and coolest neighborhoods
The hottest one is measured by over bids and speed to sell remains at the Sunset, where more than 85% of homes are selling over list price, which is a little crazy. That has a lot to do with how listing agents price strategically very low under the market value. That’s just the norm there. There are more homes selling there than any other district, which is also fascinating. I did not realize that.
The neighborhood that is the least hot is Pacific Heights, which okay, yes, we all know Pacific Heights is an amazing neighborhood that many of us would love to live in. It’s not the least hot because it’s not a great neighborhood. It is a neighborhood where houses are very expensive and often they are priced closer to value or even overvalued. Only 33% of homes in Pacific Heights are selling over list price.
My favorite chart
For details on how all all the neighborhoods stack scroll down for more data and charts. There is a chart in here that I love. We do this chart about once a year, it’s a price per square foot break down by neighborhood. I really like that chart and not because price per square foot by neighborhood changes. What that chart shows you is the average and how they compare to other neighborhoods. If you’re looking at different neighborhoods, it can be a really good guide for understanding relatively.
The August market was basically in a holding pattern, following typical seasonal trends, as the summer holidays drew to a close amid declining interest rates, indications of impending cuts in the Fed’s benchmark rate, improving housing affordability, substantial financial market volatility, and a huge helping of presidential election news. The autumn selling season, just begun, typically sees significant market activity before the big mid-winter slowdown begins in late November, and some expect a very substantial rebound in demand due to interest rate declines.
“The time has come for policy to adjust…the timing and pace of rate cuts will depend on incoming data, the evolving outlook, and the balance of risks…My confidence has grown that inflation is on a sustainable path back to 2 percent.”
– Jerome Powell, Chairman, Federal Reserve Bank, 8/23/24
“We forecast mortgage rates to gradually decline in the coming quarters and anticipate a significant surge in homebuying demand, mainly from the first-time homebuyers left at the margins. However, the tight inventory is still expected to limit home sales. We expect home sales to increase modestly the remainder of the year and home prices to rise 2.1% in 2024.”
– Freddie Mac Research (FHLMC), 8/22/24
“Consumers’ short- and long-run economic outlook improved [in August], with both figures reaching their most favorable levels since April 2024 and a particularly sizable 10% improvement for long-run expectations that was seen across age and income groups.”
– University of Michigan, Survey of Consumers, 8/30/24
“Latest macroeconomic data suggests that the economy remains solid, with the cooling trend in inflation continuing at the start of Q3 2024. Both consumers and business leaders feel upbeat in general and have a positive outlook about the near future. With the Fed expected to adjust rates downward in their next few meetings, the housing market should pick up some momentum throughout the rest of the year. There are challenges…The ongoing insurance crisis, for example…has presented difficulties for homebuying and could remain a major headache for the market [over] the next couple of years.”
– California Association of Realtors, 9/6/24
“Presidential elections have little impact on home sales…[ultimately] home purchases are usually life decisions rather than political ones.”
– John Burns Research & Consulting, 7/30/24
This report includes a deep dive into regional submarket values and characteristics along with a comprehensive review of general market indicators.
