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June 17, 2017

2

Interest Rates Increase

by Bob Schwartz

Interest Rates Increase

3Br La Jolla Colony home rental Interest Rates Increase

For the second time this year the Federal Reserve Board has raised interest rates! it was March 15, 2017 that the Federal Reserve first raised interest rates this year. If you’d like to see that story on the first Federal Reserve rate increase, click this link: Fed raises interest rates

Although this was the second interest rate increase this year, it was also the third interest rate increase in the last six months!

Interest Rates Increase

In the San Diego real estate market, actually for the entire real estate market, none of the participants like to see mortgage rates increase. Almost always, when the Federal Reserve Board raises short-term interest rates, all mortgage rates also increase. So, buyers have a little tougher time qualifying, may not be able to afford as much a house is a good prior to the rate increase, and so  residential real estate activity.

Now, with this said, here in California, especially Southern California and San Diego, I don’t think this week’s quarter percent rise in short-term interest rates will have much of an impact on our residential sales activity. this region is being impacted by a severe shortage in homes that are being put up for sale. This acute lack of inventory has been the principal driving force behind San Diego’s escalating home values.

With this fact in mind, I really don’t think the Fed’s action this week will have any significant impact on our local San Diego real estate market. Our supply demand equilibrium is out of balance right now and so although the Federal Reserve’s interest rate hike will have an impact in many other regions, I believe homeowners here in San Diego can look forward to continued modest residential real estate appreciation.

Here is a direct link to the Federal Reserve Board’s press release on their most recent quarter point interest-rate hike: Federal Reserve Board rate hike

 

Interest Rates Increase

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2 Comments Post a comment
  1. Jun 17 2017

    The “double whammy” of rising mortgage rates and higher home prices are thwarting potential home buyers.

  2. Jun 17 2017

    With fixed-rate loan rates up by 0.5 [percentage point] since last summer, and house prices in national indexes up at least 5%, the monthly principal and interest payment is more than 10% higher than it was last summer, adding to affordability challenges for first-time buyers.

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