ICYMI: In an ongoing quest to fight inflation, the Federal Reserve recently raised its benchmark rate by 0.25 points to 4.75%-5%. So what does that mean for the housing market? The primary impact is reduced demand as buyers think twice about taking out long-term loans. Ironically, less demand could lead to lower home prices.
The Skimm explores this conundrum.
Governor Newsom announced that he’s ending the call for a statewide voluntary 15% reduction in water use in place since July 2021.
Meanwhile, local water agencies that were expecting just 35% of requested supplies from the state are now on tap to get 75%.
The 3.1 million acre-feet of water that will provide equates to more than double the original projection of 1.4 million acre-feet.
*In case you’re wondering, an acre-foot is about 326,000 gallons!
Here’s more on the story from the LA Times.
The rapid collapse of Silicon Valley Bank has sent a chill through Silicon Valley, including the real estate industry. Buyers are more hesitant to take on the risk of a new loan, which means properties could be sitting on the market longer than expected. Want to know what happened and how we can avoid another big bank failure? CNN explains.
The housing market moves in a series of chain reactions. With inflation on the rise in 2022, the Fed began hiking interest rates. This cooled off many potential buyers, which in turn forced sellers to lower their asking prices, leading to a rare drop in median values and eventually a decline in inventory. Despite a brief holiday dip, interest rates remain at long-time highs, and the curve is bending upward.
Following a slow second half of 2022, buyer demand appears to be rebounding so far in 2023, with open houses, offers, overbidding, and absorption rates all on the rise. Median prices have yet to recover from recent declines, but those drops are based on numbers from the peak of a 10-year market cycle. And it’s only a matter of time before increased demand and a continued inventory shortage drive up prices again.
The proverbial pink elephant in the room is unpredictable interest rates, which have put a chill on the housing market. Spring is typically the most active period of the year for sales, so we should learn more in the next few months about where we’re headed.
