Falling into the Market

Falling into the Market

For those who were in the area this past week - it officially feels like Fall on the Monterey Peninsula. If the saying goes "Spring has Sprung", does that mean Fall has Fallen?! Well, not if we are talking about mortgage rates...

Below I'll quickly cover:

  1. National home sales insights, including sales rates, inventory, and pricing trends
  2. Monterey County's real estate market
  3. The impact of natural disasters on relocation decisions
  4. The connection between Fed rate cuts and mortgage rates

Let's dive in -

National Home Sale Insights

The national housing market continues to face challenges, with sales reaching their lowest point since 2010. Here are the key takeaways:

  • September's annualized home sales rate dropped to 3.84 million units, down 1% from August and 3.5% from last year.
  • The median home price increased by 3% year-over-year to $404,500.
  • Inventory rose slightly to 1.39 million homes, but higher interest rates and limited supply keep prices elevated.
  • Homes now take an average of 28 days to sell, up from 21 days a year ago.
  • First-time homebuyers represent only 26% of buyers, an all-time low, while all-cash transactions account for 30% of sales.
  • The ratio of renter households to available homes for sale has increased dramatically, from less than 10 in 2006 to about 30 currently.
  • Home prices have outpaced wage growth, with prices up 49% compared to a 25% increase in wages over the past five years.

Monterey County Home Sale Insights

Our local market in Monterey County reflects some of the national trends:

  • September sales tied with last year at 155 units, the lowest September figures since 2007.
  • Year-to-date sales through Q3 totaled 1,263 homes, down 2% from last year and the lowest since 2007.
  • Inventory increased to 536 units in September, up 29% from last year and a high for 2024.
  • The median sales price is trending up slightly, currently 5.5% higher than in 2023.
  • Average days to sell remains steady at 38 days, with a median of 14 days, identical to 2023 figures.

Weather Events and Relocation Trends

Natural disasters are increasingly influencing housing decisions, particularly among younger Americans:

  • Nearly one-third of Americans aged 18-34 are reconsidering their relocation plans due to natural disasters, compared to only 15% of those over 35.
  • Recent events like Hurricane Helene have significantly impacted these considerations.
  • For those seeking areas less prone to natural disasters, New England (particularly Maine) and Alaska are among the safest options.

Fed Cuts and Mortgage Rates

Despite recent Fed rate cuts, mortgage rates have continued to climb:

  • The Fed recently cut rates by 50 basis points, yet the 30-year mortgage rate has increased to just below 7%.
  • This seemingly counterintuitive trend is explained by rising inflation expectations, are recently, core CPI inflation reached 3.3%, its first increase since March 2023.
  • Higher inflation expectations lead investors to demand higher yields on bonds, driving up long-term interest rates, including mortgage rates.

Home Flipping High

According to ATTOM data, home flipping in the U.S. currently accounts for over 8% of the total sales, which is a nearly 20-year high, as illustrated in the graph below:




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