Throughout the sustained run-up in home prices, there’s been sporadic speculation that a reversal must be imminent—possibly driven by a natural urge to assume that too much good news is bound to invite a corresponding nosedive.
Throughout the run-up, the commonly accepted reason for U.S. home price increases has been the sustained supply and demand imbalance. For a number of well-documented reasons, the supply of homes for sale dropped below record levels at the same time that demand continued to mount. As competition for the available housing increased, so did the willingness of buyers to pay top dollar. Super-low mortgage rates helped make many high-priced Costa Mesa real estate buying decisions entirely reasonable.
Now, as the summer wears on, many parts of the nation are registering conditions that you might expect to cause a sharp decline in real estate prices. Nationally, demand has slackened somewhat (no surprise, given the rise in the cost of home loans). And supply has increased. Yet prices aren’t buckling. As realtor.com wondered last week, “Deals are falling through. Bidding wars are dwindling…so how is it possible that median list prices are 16% higher than a year ago?” Some possible reasons—
- Per Bankrate’s chief analyst Greg McBride, “while the market is cooling, prices are not necessarily dropping.” One factor is a renewed falloff in new home construction which will further constrain inventories.
- Per New York City Realtor Ralph DiBugnara, “The summer market will stay mostly high because of an increased urgency to buy.” He cites buyer fears of accelerating mortgage rates.
- Per NAR senior economist Nadia Evangelou, “I believe the housing market will continue to outperform compared to pre-pandemic.” But price growth will slacken due to affordability concerns.
- Per CoreLogic’s economist Selma Hepp, conditions “will lead to slower home price growth but unlikely declines in home prices.”
As all acknowledge, no one (experts included) can claim certainty about the future—and the current mix of volatile conditions can cut both ways. If a falloff in the market tempts some sellers to drop asking prices, others, per Hepp, “won’t be under a lot of pressure to budge”—particularly sellers who will need monetary inducements to kiss their historically low mortgage rates goodbye.
If you are curious about how this summer’s Costa Mesa real estate market compares with the rest of the nation, don’t hesitate to call. We’ll be happy to share the latest activity!
We are built on a philosophy of Heritage & Hustle. The L3 is a full service real estate agency with a regional office located in the heart of #CostaMesa, offering a wide-array of custom services to meet their clients’ needs with roots in the community since 1976. It’s L3 mission is to provide trusted, convenient, responsive service to ensure clients enjoy their real estate experience. The L3 was originally formed to offer personal, concierge-level service as an alternative to the large, nationally based real estate companies. From its small beginnings of only two employees, The L3 has grown to a full staff of 25 serving over 300 clients a year. The L3 is not limited to serving just its clients; it is also committed to serving the community. Not only has The L3 donated hundreds of hours to many area charities, they have also received the prestige of being named one of the #toprealestatecompaniesinCostaMesa If you’re interested in #buyingorsellinginOrangeCounty, turn to the experts. Turn to The L3 and let them help you make your real estate buying or selling dreams come true. For more information or to get started on finding or selling your home contact The L3 today at 714-444-4663 or email us at email@example.com
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