Mortgage rates and Pacifica, CA, Housing Market May 2023

The California Housing Market Recovers. So Does Pacifica, CA

Following mortgage rates fall in April 2023, the California housing market rebounded in May, with existing home sales up by over 10% month on month. Pacifica’s existing home sales went up by 6% in May 2023, showing more activity on the market than surrounding Half Moon Bay, Daly City, South San Francisco and San Bruno. Despite the month-to-month increase, home sales fell compared to the same period previous year.

Pacifica has got the largest percentage of homes sold over list price – 92%, with median number of days on the market being 9 days. Median Sales Price for a single family home has reached $1,550,000 in May 2023.

Federal Reserve Pauses Rate Hikes, Yet Long Term Mortgage Rates Moved Higher

After 10 consecutive rate hikes, last Wednesday, June 14, 2023, the Federal Reserve opted to stop rate hikes, keeping the fed funds rate stable, which was widely expected. However, Fed Chairman Powell stated that there will be two more rate hikes this year in order to combat inflation. Fed members speculated that there might be one more rate hike in July. The news about this additional hike triggered a spike in short-term and near-term rates both domestically and internationally.

Rate Increases Across the Globe

Other central banks raised interest rates last week, including the Bank of Canada, which surprised the market. And, on the heels of our Fed rate hike, the European Central Bank (ECB) boosted interest rates to their highest level in two decades this past Thursday. As interest rates rise around the world, our rates rise as well. The opposite is true.

Builders Feel Optimistic

Building permits, a leading indicator of future building, increased 5.2% year on year to 1.491 million, compared to 1.425 million predicted. Builders are enthusiastic about the future of housing, as they should be. The housing supply is grossly inadequate, the labor market is constrained, and the rate-hiking cycle is coming to an end.

Bottom line

Long-term interest rates may not improve much in the short future as markets process the fact that the Fed may hike rates twice more this year, with no rate cuts. It is now more vital than ever to closely monitor the data and collaborate with me, an experienced real estate professional who closely monitors this.