Just how slow is the market? Well, consider that in the 12 months ending in August, just 65,140 Los Angeles County homes were sold, according to CoreLogic data. That’s 37% below the homebuying pace of two years earlier.August’s median price of $830,000 – the sixth-highest ever – is up 34% since February 2020. Meanwhile, mortgage rates went from 3.5% to 7.1%. A typical Los Angeles buyer saw house payments surge 100% to $4,462 monthly, assuming a 20% downpayment.
We contrasted the periods when rates surged the fastest vs. times when mortgages tumbled the most. Both groupings averaged 1 percentage-point moves over 35 years.Start with pricing. When mortgages were in their steepest jumps, home values in LA averaged 7.6% one-year gains.By the way, the local median price has appreciated 4.7% since 1988.And falling rates modestly boost the LA sales pace, historically speaking.
When rates surged over the past 35 years, California employment grew at a 2.7%-a-year pace. But jobs shrank at a 0.7% annual pace when rates tumbled.This isn’t just some local housing quirk. Falling rates come with pricing weakness in many places.