DEMAND SLUMPING. Over the past month, demand dropped by 6% when it normally rises by 4%.
In 2002, the Los Angeles Angels won the World Series for the first time in franchise history. The next year they missed the playoffs completely with a losing record. After hoisting the Commissioner’s Trophy the year before as champions of the world, they missed post season play due to a slump in wins to close out the year from July through September. The Orange County housing market is amid a similar slump in the middle of the Spring Market following the best year for local real estate since 2005.
According to Mortgage News Daily, 30-year mortgage rates have risen from 3.27% on December 31st to 5.55% today, a climb of more than 2.25%. Rapidly rising rates eat into affordability significantly. For example, the monthly mortgage payment for a $1.1 million purchase with 10% down has risen from $4,319 on December 31st, when rates were at 3.27%, to $5,652 per month today at 5.55%. That is a $1,333 per month rise, or nearly $16,000 per year. The significant change occurred in just four short months.
