The Federal Reserve's recent decision to pause its aggressive rate-hiking program could offer a lifeline to the struggling California housing market, an expert toldAfter raising interest rates 10 consecutive times since March 2022, the Fed announced last week that it would leave its key rate unchanged, as it waits to assess the full impact of its policies on the U.S. economy.
An American flag flies above the construction site of a multifamily housing development on June 02, 2023 in Los Angeles, California.Across the country, the home price decline was modest. But in big metros where homes were significantly overpriced, many of which are in California, prices dropped by over 5 percent in recent months., according to Zillow. In San Jose during the same period, they dropped by 9.46 percent, and in Sacramento by 6.85 percent.
"There are currently fewer homes available for sale than there were during the lockdown of April and May 2020." "This has crimped purchasing power and had a negative impact on homebuyer demand in the state. As the Fed nears the end of its tightening cycle, there should be less upward pressure on rates, meaning that the bulk of the adjustment to this new environment is probably behind us."
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