Mortgage and Interest Rate Hikes Only a Moderate Concern for Brokers

In almost any other year, fall is marked as a time when listings and sales increase for residential real estate agents. But the season has already flown into turbulence.

The mortgage rate has hit 6 percent, and applications for mortgages declined 1.2 percent in early September, according to the Mortgage Bankers Association on Sept. 14.

The impact is being felt around the nation. Redfin’s chief economist Daryl Fairweather said in a Sept 16 statement that the market has gotten smaller, and it is relatively balanced between buyers and sellers.

But the headlines are not bad enough to throw a wet blanket on the fall season. For Tracy Do of Coldwell Banker Realty, proof of the unflappability of the season is in her open houses, where she said she’s seen a small pickup in activity.

For the first half of September, an average of about 80 to 90 people have passed through her open houses. She compared recent traffic to mid-year, after the Federal Reserve announced the first rate hike and her open houses dropped to typically 50 people passing through. Recent open house traffic remains in stark contrast to the go go days of 2021 and the first quarter of 2022, when an average open house was marked by 200 visitors, she said.

Do forecast that this pace will continue until the end of the year and business should be fine in Los Angeles. “Demand remains high because of lack of inventory,” she said.

A possible interest rate hike this fall won’t have an outsize effect on the market, said Zane Widdes of Santa Monica-headquartered Zane Widdes Group at Keller Williams Advisors.

“Higher interest rates and higher home prices won’t pull the plug on home sales, rather it’s going to cause houses to spend longer times on the market,” Widdes said. “Home buyers can be more picky. They’ll have more inventory to choose from.”

Widdes is mostly confident the economy is more stable than the last time the housing market faced uncertainties. “For me this is not 2008. We’re not going to have any fire sales,“ he said “This is just a slowing. It’s still a relatively good economy. People are working. People are earning. But many are using their savings for spending. That affects home purchasing power.”

Sharon Tay is a former local news anchor for Los Angeles station CBS/KCAL, and has worked as a sales associate for Berkshire Hathaway HomeServices California Properties for more than a year.

“There’s a mixed bag of opinions out there,” she said. “Recent data shows many homeowners are holding off listing their homes. We’re seeing that many who have properties sitting on the market for an extended period of time are opting to stay put and keep their homes or turn them into leases.”

But she also suggested there’s still fertility in the market. “There are always going to be cash buyers out there,” Tay said. “If you have a property in good condition, in a good location, and priced right, buyers will step up.”

Nanette Basin, a Coldwell Banker real estate agent who has sold homes around Sherman Oaks said buyers have more choices this fall.

“You still see homes priced under $1 million selling quickly,” she said. “Homes on the higher end are sitting the longest, we see more price reductions, unless they are well priced. Pricing correctly is crucial.”