Interest Rates Up - Are Prices or Activity Falling?

Prices here in SoCal were already up big this Spring and now rates are up big too.  The cost per month of the avg home here is up about 40% since January!  It seems reasonable to think the market should now correct and buyers will choose to wait for prices to go back down now.

Any signs this is already happening?  Anyone seeing any evidence of a cooling market yet? Particularly in SoCal?
  • July 10 2013 - Los Angeles
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Answers (10)

I have seen the buying frenzy calm down the last 3 weeks.. I still think there are plenty of buyers, I think you will see the prices steady themselves.
  • July 19 2013
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Profile picture for Blue Nile
Rates will be dropping in September with the Congressional discussion on Debt Ceiling again...

Here are the charts:
March:


April:


May:

June:


July:



Irrational Exuberance on housing prices does not exist throughout all price ranges and neighborhoods in Southern California; only some.

Yes, increased interest rates next year may drive some prices back down, or may cause some to level out, but the FED has been trying for 5 years to create "inflation", and devaluation of the dollar.
  • July 18 2013
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Not a tremendous difference yet, but several buyers I have spoken with are taking notice of the change in rates. Some think they need to rush and buying anything they can get their hands on right now and others are telling me they want to wait a month or two to see if the rates drop a little so they can lock in at lower levels.

Only time will tell how this all plays out.
  • July 18 2013
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Rates haven't scared to many people off yet in our market, although it is certainly a possibility in the coming months.
  • July 18 2013
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Inland Emprire - I haven't noticed a signifcant cool down yet. But, I do think that the interest rate rise is going to have an affect on the buyer's ability to qualify for a home. I am afraid some really good buyers will be priced out of the current market if prices don't stop rising.
  • July 18 2013
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I have seen the market cool down a little in the last 3 weeks. Its not as much of a buying frenzy as there was 2 months ago. 

That being said, there are still numerous buyers out there, and although the rates have gone up, they are still very much affordable. 

I do not think values will go down any time soon, however, I do expect them to stabilize.
  • July 17 2013
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Profile picture for Joel Carson

[Hotlink removed by Zillow moderator. Please see our Good Neighbor Policy.] continued to increase during the 2013 second quarter. Residential property sales were up 14.47 percent overall and the median selling price jumped 14.72 percent.

The Wasatch Front Regional Multiple Listing Service (WFR-MLS) reported 9,904 homes sold in the second quarter, that's 14.47 percent more than was sold in the same quarter in 2012. The median sold price rose to $206,500 (14.72 percent higher than 2012).

This uptrend is great news for Utah because it means the market is moving. We're seeing more home buyers get off the fence and buy while interest rates are still low and before home prices climb any higher. Inventory has been relatively tight recently, but during the second quarter 16,784 new Utah home listings were added to the WFR-MLS. That's 18.01 percent more than were added during the same period in 2012.

The median percent of new listings that sold during the second quarter dropped 3 percent from 2012 to a median 59.01 percent. The new median asking price for a Utah home for sale is $225,000 (12.56 percent higher than in 2012.

It's interesting to note homes are selling much faster than they did during this period in 2012. The median current days on the market is 25 days as opposed to 48 days in 2012.

  • July 12 2013
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In the bay area it seems like buyers are easing up a bit due to increasing rates however prices are not dropping. Buyers are still aggressively writing offers so they can lock in a good rate before they go up even higher. Sellers are still getting multiple offers over asking.
  • July 11 2013
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Prices for an avg home here ($500k) are up $100k in 5 months.  Now with interest rates up, the total lifetime expense of the loan costs another $100k - this time compared to just 2 months ago.  Total cost of that $500k house have risen effectively $200k in 5 months.  I don't think it went up this fast at the peak of the bubble! 

Anyone from the LA area able to give feedback on what they're seeing on the ground?  Is activity slowing?  Are prices softening at all?
  • July 11 2013
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I think you are kidding yourself if you think prices will come down in the near future. If you are lucky enough to have property increasing in price then you might be seeing rising prices for some time. Prices here are not going up yet, but they are all around us. It sounds clear that you missed the bottom and you might not see it again for some time.
  • July 11 2013
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