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By Leila Lajevardi • April 30, 2018

The Economy's Upward Momentum

Mortgage rates and Real Estate prices continue to increase as inventory continues to shrink. “After flatlining for much of the past two months, mortgage rates have again moved definitively upward, touching their highest levels since January 2014,” said Aaron Terrazas, senior economist at Zillow.

“This upward momentum suggests a growing acceptance of the underlying strength of the American economy that markets seemed to discount over the past couple of months.” While some expected to see an immediate result in spending due to the presiden’ts recent tax plan, what is becoming clear is that we are going to see the effects at a more gradual rate.

Spending in the housing market will continue to create competitive prices, leaving homes unaffordable for median household incomes. Inman News reports that it is projected to be the most competitive season this summer for prospective buyers after this year alone recorded a 9 percent constriction on real estate inventory. As inventory continues to narrow, prices continue to increase. There is no sign that these prices will slow down. Inman also cites that current prices are similar to the home prices 15 years before the financial crisis with San Diego and Los Angeles at an all time high.

Household incomes are unable to match these home prices. First time buyers in California can afford 19-23 percent of the active real estate inventory.  Buyers are struggling even with the increasing wage growth. It is no match for the increasing prices and limited inventory.


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