Home buyers in Laguna Niguel and Dana Point rushed to get that much-desired home and lock in the all-time low rates this spring. This combined with very low inventory created multiple offers on any properties that were desirable and affordable (relative terms, I know). Half way through June the rates began to rise from the mid 3s to the mid 4s and higher. During this rise some buyers were lucky enough to get in contract and lock rates. One of my buyers caught it on the rise and locked at 4.2%. She is very happy she did.
Home buyers seem to be cautious right now, wondering if the rates will bounce back a little or keep on climbing. I certainly can’t tell you. During the term of my real estate career we were always thrilled to see rates below 5.5% and below 5 was almost unheard of. Yes, I have the story of getting 9.75% on my first house and bragging about it but we all know the prices were much lower back then.
The other thing I have noticed over my sixteen years in real estate is that when rates and markets change it takes a while for the buyers to process the information and get used to the idea. I think that is what we are seeing right now. Since rates have risen the buyers are now paying 25% more for their borrowed money so the purchasing power is less. Back to the lender they go to figure out just how much home they can qualify for in this new environment. Added to that is the August Slump which comes every year. That is my term to describe the slowdown due to families getting vacations out of the way and preparing for school, or taking that freshman off to college. Never fear, home sellers, the buyers are still out there and will come back in mid September if not before.
It is the investors and flippers who will probably not be back for awhile. That is good news of course for minimal-down home buyers. Cash is still king and there are plenty of those buyers out there in all price ranges if your Laguna Niguel or Dana Point home is priced correctly.