2024-263 The FED reduced the rate to 4.75-5.00 percent!
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2024-263 The FED reduced the rate to 4.75-5.00 percent!
Connor “with Honor” MacIvor - September 19, 2024** 0 Comments | Add Comment
What exactly does that mean?
Federal Funds Rate (Fed Rate):
The Federal Funds Rate is the interest rate that banks charge each other to borrow money for very short periods, usually overnight. The Federal Reserve sets this rate to help control the economy—either to make borrowing cheaper (to boost the economy) or more expensive (to slow things down).
Think of it like this: the Fed Rate affects how expensive it is for banks to borrow money. When it’s cheaper for banks to borrow, they’re more likely to offer lower interest rates on loans to people, including mortgages. But the Fed Rate doesn’t directly control your mortgage rate—it’s just one piece of the puzzle.
Mortgage Rate:
The Mortgage Rate is the interest rate you get when you borrow money to buy a home. This rate is set by the lenders (banks or other financial institutions) based on a lot of factors, like inflation, demand for homes, and the general economy. Mortgage rates are also influenced by what’s happening with long-term government bonds.
In simple terms, mortgage rates are what you’ll pay for your home loan, and they can be higher or lower depending on the economy. When banks think inflation will rise, they tend to increase mortgage rates.
How Are They Connected?
Bottom Line for Buyers and Sellers:
In short, the Federal Funds Rate and Mortgage Rate are related, but they’re not the same thing. The Fed controls one (Fed Rate), and lenders control the other (Mortgage Rate). They affect each other, but mortgage rates are influenced by many factors beyond just the Fed’s decision.
Santa Clarita Real Estate Market Update – Day 263-2024: The Fed Reduced the Rate to 4.75%-5.00%
Welcome to today’s Santa Clarita Real Estate Market Update with Connor with Honor at SantaClaritaOpenHouses.com. It’s day 263 of 2024, and there’s exciting news for both buyers and sellers in the Santa Clarita Valley: the Federal Reserve has cut interest rates! But what does this really mean for the local market?
The Federal Reserve’s Rate Cut – How Does It Impact Santa Clarita?
The Fed’s recent decision to reduce rates by half a basis point, bringing the federal funds rate to 4.75-5.00%, is designed to make borrowing cheaper for everyone. This includes potential homebuyers looking to secure mortgages. In response to this, the 30-year fixed mortgage rate has dropped to 6.15%, the lowest level we’ve seen since September 2022.
This drop in rates is a welcome development for first-time homebuyers, as well as those who were previously priced out of the market due to higher mortgage rates. However, before we get too excited, it’s important to remember that while rates are dropping, a full recovery in the housing market will take time. Here’s what you need to know.
National and Local Trends in Housing
On a national level, we’ve seen a 14.6% increase in new home sales this past August. That’s the fastest pace since early 2022. There’s also a 36% increase in inventory, which means more homes are being listed for sale than we’ve seen in the past year. However, this doesn’t necessarily mean an immediate boom—Santa Clarita is still dealing with a tight market.
Locally, we’re facing some of the same challenges as the national market. While more homes are becoming available, buyers are still cautious. High home prices and slow wage growth continue to limit the number of qualified buyers. Even with the recent 14% surge in mortgage applications, the local market is still taking time to adjust.
Santa Clarita’s Market Breakdown
Here in Santa Clarita, the median home price is still hovering above $800,000, and while lower rates might help buyers qualify for loans, competition remains stiff. Sellers will need to ensure that their homes are properly priced to attract offers. This is especially true now that we’re seeing more buyers enter the market as rates drop.
Here’s a detailed breakdown of Santa Clarita’s current real estate data:
The Local Impact of the Fed’s Rate Cut
While the Federal Reserve’s rate cut might seem like an immediate win for buyers, it’s important to understand the nuances. Lower mortgage rates do provide some relief, but they won’t magically solve affordability issues. Buyers are still grappling with high home prices, and demand continues to outpace supply, meaning we’re still in a competitive market.
Sellers, this is your chance to take advantage of the market’s current conditions. If you’ve been on the fence about listing your home, the decline in rates could bring more buyers to the table. However, with more inventory becoming available, you’ll want to ensure your home stands out with the right pricing and an aggressive marketing strategy.
One of the best ways to ensure your home gets noticed is by listing it on SantaClaritaOpenHouses.com, where buyers can see up-to-date MLS data directly from the source.
What’s Next for Interest Rates?
The Fed’s decision to lower rates is part of a larger economic recalibration, but keep in mind that shelter costs (rent and home prices) continue to rise. In fact, shelter costs increased by 5.2% over the last year, even as inflation has slowed in other parts of the economy. So, while we may see more rate cuts in the future, housing affordability remains a challenge.
That said, if you’re a homeowner who bought when rates were higher, now might be a good time to consider refinancing to secure a better rate down the road.
What Does This Mean for You?
If you’re a buyer, this is the time to stay sharp and keep a close eye on the market. While rates are coming down, it’s not a buyer’s market just yet, so you’ll need to act fast when you find the right property. Partnering with an experienced real estate agent—like myself, Connor with Honor—can help you navigate the complexities of the current market and find the best opportunities.
For sellers, this is your window of opportunity. Buyers are emerging from the sidelines, but with inventory on the rise, competition is heating up. Make sure your home is priced correctly and marketed aggressively to attract the best offers.
That wraps up today’s Santa Clarita Real Estate Market Update. To stay informed on the latest real estate trends and see current listings, visit SantaClaritaOpenHouses.com. For more information, check out this related post: Google Post. I’m Connor with Honor, and I’m here to help you make the best decisions for your real estate needs. Stay tuned for more updates, and I’ll see you in the next episode!
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