Two things in the housing market are low right now: mortgage rates and inventory.

These two lows create opportunity for both home buyers and home sellers. Low mortgage rates mean that the purchasing power of buyers has increased because they can buy more house for a lower monthly payment. In fact, mortgage rates are at their lowest level in the past 3 months hovering at 3.6 percent*. If you have been on the fence about purchasing a home, this is a prime opportunity. If you have only been looking for a house in the past 5 years it can be easy to lose perspective about how low mortgage rates are. These under-five percent mortgage rates are a far cry from the double digit interest rates of the past. 

 

Now let’s take a look at inventory. 

One of the statistics that is used to measure inventory levels is “Months of Inventory”. What is months of inventory measuring? Essentially, months of inventory measures the supply of homes on the market and how long it would take for all the listings to sell if they were being purchased at the same rate as they had been. Think of it in terms of t-shirts at a store, how long does it take for the shelf to be empty. 

In Los Angeles County for the month of January 2020, we had 4 months of inventory**. Narrow that down to one specific city, for example, San Dimas which only had 2 months of inventory! 

Taking a look inside San Bernardino county, for the month of January 2020, the city of Rancho Cucamonga also had only 2 months of inventory. Throughout Southern California we see a similar story of low inventory, especially in the non-luxury entry level price points. Even though entry level in certain cities might be around $500K, there is still a shortage of homes in that price range. 

Two months of inventory is very, very low which indicates that we need more homes on the market for sales to keep pace with the demand of home buyers! 

Who has heard someone say, “We really want to buy right now, but there is nothing on the market.”

If you are a homeowner considering selling now or within the next 5 months, set up your private, confidential home seller consultation today. Your home could sell at a premium right now because of low inventory! One of our real estate agents will meet with you to find out what your home is worth. You don’t have to feel like you’ll be signing something the second you reach out. Let’s just start a conversation. 

In answer to the question, “How low can they go?” with many economic issues the answer is: it depends. Inventory and mortgage rates are complex numbers that are affected by a multitude of economic, policy, monetary, and outside factors.

 

 

 

 

Source: 

*https://freddiemac.gcs-web.com/news-releases/news-release-details/mortgage-rates-drop-lowest-level-three-months

**Source: CRMLS, Residential Single Family Residences Only, 02-03-2020


 

This content is not the product of the National Association of REALTORS®, and may not reflect NAR's viewpoint or position on these topics and NAR does not verify the accuracy of the content.