Are you debating whether you should buy a house in California now in 2018, versus waiting until 2019? On the fence about when you should enter the market? Recent trends within the mortgage industry and the broader real estate market make a strong case for buying a home in California sooner rather than later.
Average mortgage rates just rose again, according to Freddie Mac, and they could climb higher by the end of this year. Meanwhile, home prices are still rising in most California cities. So buyers who postpone their purchasing plans until 2019 could encounter higher housing costs. Here are the latest trends on this front.
Mortgage Rates Rise Through First Part of 2018
During the week of February 22, 2018, Freddie Mac announced the results of its latest nationwide survey of mortgage rates. And it showed a continued rising trend. As of February 22, the average rate for a 30-year fixed mortgage loan had risen to 4.4%. While that’s still fairly low by historical standards, it’s the highest average we’ve seen since April 2014.
The company’s economists cited policy changes at the Federal Reserve and rising inflation as contributing factors in the steady upward climb of lending rates. According to a statement released with this week’s survey results:
“Fixed mortgage rates increased for the seventh consecutive week, with the 30-year fixed mortgage rate reaching 4.40 percent in this week’s survey; the highest since April of 2014. Mortgage rates have followed U.S. Treasurys higher in anticipation of higher rates of inflation and further monetary tightening by the Federal Reserve. Following the close of our survey, the release of the [Federal Reserve’s] FOMC minutes for February 21, 2018 sent the 10-year Treasury above 2.9 percent. If those increases stick, we will likely see mortgage rates continue to trend higher.”
The last sentence of that statement is meaningful for California home buyers planning to make a purchase in 2018 — particularly those who rely on financing. Economists from both the Mortgage Bankers Association and Freddie Mac have previously predicted that home loan rates in California and nationwide would gradually rise during 2018. These and other trends seem to make a good argument for buying a home in California earlier in 2018, rather than later.
Buying a Home in California Now vs. Later
Mortgage rates are an important considerations for those debating whether they should buy a home in California in 2018 versus 2019. Home prices are another trend to watch, and they’ve been rising lately as well.
According to the latest data from Zillow, the statewide median home value for California rose by 8.8% over the last year or so (reported in February 2018). The company’s economists recently predicted that house prices in the state would continue trending north over the coming months.
The bottom line to all of this is that housing costs will likely be higher in 2019 than they are now. In fact, they’re expected to rise between now and the latter part of 2018. Forecasts for both mortgage rates and home prices suggest that California home buyers could pay more if they wait until later this year (or next) to buy a house.
You have to be emotionally and financially prepared to buy a home. It’s not something that should be rushed or taken lightly. With that being said, it might make sense to buy sooner rather than later to avoid possible rate hikes and home-price increases.