Are we losing money on our home?
Question of the week: Are we losing money on our home?
Answer: Maybe, but probably not.
With this very open question there are plenty of answers, but the main answer to the question is the question when did you buy your home?
Ignoring specific locations and looking at regional locations, let’s looks at home prices over the last several years.
Starting with data from the California Association of Realtors for residential sales in September 2023, when the conforming rate was 7.375% for a 30-year fixed mortgage.
As you can see median home prices are down statewide from last month, but not in Southern California as LA County prices rose and Orange County prices were flat from August. Statewide, and locally, prices are up from September of 2022. With the number of sales down, and prices being up, we see the impact of lack of supply with plenty of demand.
To our question of the week, if you purchased a home in Los Angeles or Orange County in September of 2022 you likely did not lose any value in your home.
Very few people purchased homes in 2022, but several people did in September 2021, when the conforming rate was 2.75%, before interest rates began to climb in 2022. For historical context, below is also price data for September 2019, when the conforming rate was 3.625%, before pandemic exploded housing markets with lack of supply and historically low rate.
As you can see from the chart, median prices are up from September 2021, moderately statewide (4%) and in LA County (3%), and significantly in Orange County (19%).
For those who purchased their home prior to the pandemic, your home value is up considerably. Using the September 2019 median prices, statewide prices have increased 39%, in Los Angeles County the median price is positive by 38%, and the Orange County median price has increased a whopping (technical term) 58%.
Rephrasing the question of the week, do you think you have lost money in your home?
To schedule an initial meeting by phone or Zoom, click here for my calendar, please feel free to forward to a friend or family member!
Have a question? Ask me!
Fundamental to prices are supply and demand. As has been discussed in the WR&MU, while higher rates have certainly dampened demand, buyers are still in the market—but they have very little inventory to look at and eventually purchase. Overall lack of inventory is primarily due families staying in their homes, not moving up as their families grow, or moving to smaller homes as their families have contracted.
Stats back up the lack of move up buyers. Reading Cathy Francis’, a veteran agent in the Central Coast, newsletter this week, she put forth a statistic that perfectly shows the supply issue in the housing markets. For many years, decades?, the average amount of time for homeownership before moving was 6.5 years. Currently the average time has almost doubled, with families staying in their home 12.3 years. That results in a lot of homes not being on the market.
Rates for Friday November 10, 2023: Not a lot of news moving rates this week, so no surprise that the conforming rate has not moved from last Friday.
FIXED RATE MORTGAGES AT COST OF 1.25 POINTS LOCKED FOR 45 DAYS FOR PURCHASE TRANSACTIONS:
30-year conforming 7.375% Flat
30-year high-balance conforming 7.625% Flat
Please note that these are base rates and adjustments may be added for condominiums, refinances, credit scores, loan to value, no impound account and period rate is locked. Rates are based on 20% down with 740 FICO score for purchase mortgages.
Part of me is five days old, and appears to be getting along with the other parts that are over 60. Monday, I became semi-bionic with a new knee, putting me in day five of the rehab process. My objective is to be incrementally better each day until I am fully rehabbed. And then can go through the process again with the right knee!
I am very much looking forward to the day sometime in early to mid-2024 that I can walk a golf course with the only pain being in my head for the lousy shot I just hit.
Have a great week,
Dennis
Past Weekly Rate & Market Updates can be found on my blog page at my website www.DennisCSmith.com/my-blog
