Mortgage rates are rising. Will that slow our out-of-control housing market?
For a decade, rock bottom mortgage rates helped home buyers steadily bid up the cost of housing. That includes the last few years, during the pandemic, when rates fell to unheard-of levels and home prices exploded across Southern California and the nation.
Now, things are changing.
Mortgage interest rates are rising fast, hitting 5% last week for the first time since 2011, according to a widely watched gauge from Freddie Mac. Just six weeks ago, average rates for a 30-year fixed mortgage were under 4%. In November, they were below 3%.
The swift rise, on top of soaring prices, has made homeownership suddenly more expensive. So, if people can afford less, are home prices about to fall?
Several top real estate experts said they don’t foresee price declines — at least meaningful ones — absent a recession. Prices are most likely going to continue to climb, but in smaller increments than Southern California’s current 17% annual rate.