Election and Rates

With the election and the latest Fed's rate cut announcement behind us, housing market activity will hopefully pick up in the next few weeks before the year ends.  Mortgage rates have already begun trending down after peaking last week, which is a good start for the holiday season.  Housing sentiment reaching its highest level since early 2022 is also a positive sign that signals an increase in home buying interest, which could result in more home sales in coming months.  The National Association of Realtors also believes that the housing market will likely get better in the near term, as it released its latest housing market outlook that projects a solid growth in home sales in both 2025 and 2026. 

The Federal Reserve cut the fed funds rate by 25 basis points in its November FOMC meeting and reiterated that the central bank will continue to reduce its balance sheet.  This move was expected and markets are already pricing in another 25 basis points cut in December.  From the point of view of mortgage markets, Republican policies are anticipated by investors to be unfavorable for several reasons. First, economic growth is expected to be higher, which raises the outlook for future inflation.  In addition, proposed tariffs likely would add to inflationary pressures.  Finally, investors anticipate that increased deficit spending will require the issuance. of larger quantities of bonds, and higher yields potentially will be needed to attract additional purchases. 

Housing affordability improved in the 3d quarter of 2024 but still remains an issue as only 16% of California households could afford to purchase the $880,250 median-priced home.  The contingent buyer is helping fuel home sales as those buyers are selling their departing residences and moving most if not all their equity into their new home purchase. 

Pricing a home correctly with agent guidance continues to remain the best approach for Sellers to receive top dollar for their home.  Our homes continue to be many families biggest asset and it is important to receive clear guidance whether buying a new home or selling your home.  Call me at 858-220-6412 so we can discuss your real estate goals for 2025.