By Eric Engelbert
In this week's market report, a significant development impacting the real estate sector is the recent rise in mortgage rates, surpassing the 7% mark. Comparatively, during October of the previous year, rates remained above 7% for the majority of the month. This increase had a noticeable impact on home buyers, who responded by refraining from writing offers to purchase properties. Consequently, December 2022 witnessed a record low in the number of closings, with only 1,137 recorded, accompanied by the lowest median sales price of the year at $1,085,000 for single-family homes. Take a look at our real estate market reports by each city in Orange County. They include past sales, properties that have accepted an offer, and properties currently for sale.
According to the latest data, mortgage applications have experienced a steady decline for three consecutive weeks. This trend is expected to continue, and I anticipate an even greater decrease in applications this week, primarily due to the recent surge in mortgage rates, which have surpassed the 7% threshold.
The increase in rates will likely discourage potential home buyers from entering the market, as it raises the cost of borrowing and makes homeownership less affordable. Consequently, we can anticipate a notable impact on the number of mortgage applications in the coming week.
The recent increase in mortgage rates will undoubtedly have an impact on the real estate market nationwide, including smaller markets. However, when it comes to Orange County, I predict that the market will largely continue business as usual. The demand for real estate in Orange County remains strong, as indicated by the median days on market for all properties being just 29, which is relatively low. Additionally, inventory levels remain low, suggesting a limited supply of available properties.
While the rise to 7% mortgage rates may deter some buyers, it is unlikely to significantly hamper the overall market in Orange County. The market's continued strength and limited inventory suggest that there will still be active buyers in the region, potentially mitigating the impact of higher rates. Consequently, it is reasonable to anticipate that the Orange County real estate market will remain resilient despite the increase in mortgage rates. Take a look at all the homes for sale in Orange County with a view of a golf course.
Amidst these circumstances, the Case-Shiller Index recently published housing data up until March 2023, revealing a continued recovery in housing prices. Moving forward, it will be intriguing to observe how persistently high mortgage rates influence the behavior of home buyers in the market.
Take a look at our video which includes all the weekly statistics.