SoCal Home Buying Jumps
The biggest drop in mortgage rates in history has Southern California house hunters making an autumnal rush to buy, with freshly opened escrows up 14% in a year.
A year ago, home buying suffered as the 30-year fixed-rate loan averaged 4.9% — an eight-year high, by Freddie Mac’s count. Last Thursday, rates fell to 3.57%, a 27% one-year slide that is unparalleled in the 48-year history the agency has been tracking home-loan rates.
Yes, that’s a faster rate drop than declines of the 1980s when the Federal Reserve reversed its rate-hike efforts. Or tumbles during the mid-1990s global bond crises. Or after the housing bubble burst a decade ago.
Or look at the decline this way: The typical buyer’s monthly mortgage payment is down 15% in a year — or $77 for every $100,000 borrowed.
And it appears house hunters have jumped at the added “affordability.”
According to ReportsOnHousing’s latest tracking of broker listing networks, demand for homes in Los Angeles, Orange, Riverside and San Bernardino counties — as measured by new escrows opened in the past 30 days — was 12,328 on Oct. 3. That’s up 14% in 12 months. While the buying spree is swift, it’s still no stampede: Escrows are actually down 1% vs. the past eight years’ average for this time of year.
These house hunters are being greeted by a shrinking inventory with 34,456 existing residences listed for sale in the four counties covered by the Southern California News Group — down 7.4% in a year but still 2% higher than the eight-year average.
This translates to homes selling quicker. Estimated market time of 84 days — listing to escrow, by ReportsOnHousing’s formula — vs. 103 days a year earlier. ReportsOnHousing considers a “market time” under 90 days as conditions favoring sellers. So this is “normal” as market time since 2012 has averaged 84 days at this time of year.
Posted on nationalmortgagenews.com 10/18/19.