Real estate in Los Angeles received a boost from the Federal Reserve recently. The Fed announced that they won’t raise their benchmark interest rate until unemployment dips below 6.5%. Right now, unemployment is hovering around 7.4%. According to Fed estimates, unemployment won’t go below 6.5% before 2015.
This news means the Federal Reserve won’t start raising interest rates for another couple of years, said Pimco Chief Executive Mohammed El-Erian at a recent Washington panel. That gives the Los Angeles real estate plenty of time to recover. In early August when rates shot up almost 1% and 30 year mortgages went from 3.5% to the mid 4% range I witnessed a sudden slow down in the Los Angeles real estate market. Multiple offers where not as fast and furious as before. Homes for sale in Los Angeles that would have flown off the market in neighbors like the Sunset Strip took a few weeks to open escrow and some even sold lower than the asking price. That was partly also due to the fact that sellers thought the early year gains would continue into the 3rd quarter and adjusted their asking prices up accordingly from 2nd quarter sales comps.
Now with rates remaining steady, potential homebuyers have time to get mortgages and shop for their ideal home in many of the Los Angeles communities, such as the popular areas of Bird Street, Sunset Hills, Hancock Park, Los Feliz, West Hollywood, Hollywood Hills, Beverly Hills and Bel Air to name a few.
When rates finally do start to rise off of the current historic lows, the homes in Los Angeles won’t see a major hit due to the low supply and international demand. Los Angeles real estate is getting stronger, and will be in a good position in the next couple of years. Locally, we expect Los Angeles homes for sale to be in high demand by 2016 due to the 30 something boom that will start getting married and having babies, when rates are expected to rise again.
When you are ready to explore the communities of Los Angeles to make your home, please give me a call. Knowing your area, home values and options is my specialty.
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Susan Andrews
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