Peak summer markets and increasing interest rates

Posted: 7/12/2017

According to the newest market data from Realtor.com, 40% of the busiest housing markets this summer are in California. With a housing shortage and limited numbers of homes for sale, prices have continued to increase. With home prices rising, middle and lower income buyers are struggling to find affordable homes as new listings are primarily targeted to higher-end neighborhoods.

The California Association of Realtors believes home values as a whole will have a total increase of around eight to nine percent over the next two years, but with that will come increased mortgage payments due to rising interest rates.

With two interest rate hikes predicted to occur within a year, those who need to refinance or received loan modifications will see an increase in their mortgage payments. “You’re most likely seeing an increase of 10 percent or 12 percent in your mortgage payment” says Oscar Weir, Senior economist for the California Association of Realtors.

Are we in a bubble right now? Not likely. For the next two years, economists believe that most areas in California will continue to see an increase in property values. Further out and making comparisons based on history, economists from Investment firm Pimco believe another recession will have a 70 percent chance of occurring in five years.