The benchmark 30-year fixed-rate mortgage rose this week to 4.52 percent, according to Bankrate’s weekly survey of large lenders. Rates have increased almost half a percentage point since the beginning of the year and have risen for seven consecutive weeks. 30-year fixed rates are at the highest point since April 2014, when the average rate was 4.54 percent. The rise in mortgage rates are primarily being driven by a rise in inflation as lenders are anticipating the Federal Reserve will need to increase rates to offset the impact of a tightening labor market, massive tax cuts and increased government spending. Just this week the new Federal Reserve Chair Jerome Powell addressed Congress by signaling the Fed will keep raising rates to contain inflation.
So, what does this mean for Lamorinda home values? In short, not much. While the rise in mortgage rates might have a more profound impact on markets around the country the strong Bay Area economy, limited inventory, the numerous all cash buyers and early spring market results all point to another strong year for the Lamorinda real estate market. Not only is the Bay Area economy strong but Lamorinda will continue to be a beneficiary of the trend of New Tech firms basing employees in San Francisco, making Lamorinda a viable commute option. Until more high-density housing options are available, the lack of inventory will continue to push prices further north and mitigate any impact of reduced homeownership tax incentives and the higher cost of ownership with rising mortgage rates. In addition, today’s buyers that need a loan must continue to compete with numerous all cash buyers that are not directly impacted by rising rates.
Also, the early Spring market results show no signs of slowing. The recent volatility in the stock market did not even register with buyers as other market forces continue to support the upward price trend. While not the best news for buyers this is a great time for anyone looking to sell their home.
Call us with your real estate questions. Erin - 925.951.3817; Darrick - 925.900.8218