Palos Verdes Real Estate Shows Continued Strength | June 2012 Update

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Palos Verdes Real Estate Shows Continued Strength

Palos Verdes real estate continues it’s march higher.  June 2012 data show more of the same good numbers we have experienced the last several months.  Although we are seeing typical seasonal strength heading into the school year, there appears to be significant pent up demand.  Our research indicates that we could continue to show strong demand through 2012.  Shortening average days on market demonstrates this pent up demand as we are seeing multiple offer situations on a regular basis.

There was a total of 71 Palos Verdes homes sold in June .  This is a considerable increase from the 56 homes that sold in May and is the highest number of monthly sales in recent memory.  Pending sales in June increased to 67 from the 55 Palos Verdes single family homes pending in May.  The number of active Palos Verdes homes for sale in June rose to 196 homes in June from 182 homes in May.  This inventory is a welcome surprise  as inventory of homes for sale has remained low for the past 7 months.  Average days on market continues to decrease. Average days on market in June fell to 87 days from 104 days in May for properties sold that month.

Palos_verdes_real_estate_chart

The average sales price for Palos Verdes homes sold in June is exactly the same as May – $1,447,000.  Price per square foot for Palos Verdes houses that sold/closed escrow in June decreased to $473 from $493 in May.  Months of inventory (months it would take to sell existing inventory at the current rate of sale) decreased to 2.8 months for June compared to 3.3 months in May.  A “normal” market is considered 6 months of inventory – Palos Verdes real estate months of inventory is less than half of a “normal” market indicating the strength of our local market .  

At present, 189 single family Palos Verdes homes are active.  110 Palos Verdes houses are in escrow (51 homes have pending sales and 59 homes are accepting backup offers).  In addition,  7 homes have sold/closed escrow in the first 12 days of July.  This can be attributed to the Fourth of July holiday as escrow closings slowed.

Please call us for any of your real estate needs in Palos Verdes, Torrance, Manhattan Beach, or anywhere in the South Bay. We are experts in Manhattan Beach Real Estate and have extensive knowledge of the Palos Verdes Real Estate Market

 

 

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Palos Verdes Real Estate Shows Continued Strength | June 2012 Update

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Palos Verdes Real Estate Shows Continued Strength

Palos Verdes real estate continues it’s march higher.  June 2012 data show more of the same good numbers we have experienced the last several months.  Although we are seeing typical seasonal strength heading into the school year, there appears to be significant pent up demand.  Our research indicates that we could continue to show strong demand through 2012.  Shortening average days on market demonstrates this pent up demand as we are seeing multiple offer situations on a regular basis.

There was a total of 71 Palos Verdes homes sold in June .  This is a considerable increase from the 56 homes that sold in May and is the highest number of monthly sales in recent memory.  Pending sales in June increased to 67 from the 55 Palos Verdes single family homes pending in May.  The number of active Palos Verdes homes for sale in June rose to 196 homes in June from 182 homes in May.  This inventory is a welcome surprise  as inventory of homes for sale has remained low for the past 7 months.  Average days on market continues to decrease. Average days on market in June fell to 87 days from 104 days in May for properties sold that month.

Palos_verdes_real_estate_chart

The average sales price for Palos Verdes homes sold in June is exactly the same as May – $1,447,000.  Price per square foot for Palos Verdes houses that sold/closed escrow in June decreased to $473 from $493 in May.  Months of inventory (months it would take to sell existing inventory at the current rate of sale) decreased to 2.8 months for June compared to 3.3 months in May.  A “normal” market is considered 6 months of inventory – Palos Verdes real estate months of inventory is less than half of a “normal” market indicating the strength of our local market .  

At present, 189 single family Palos Verdes homes are active.  110 Palos Verdes houses are in escrow (51 homes have pending sales and 59 homes are accepting backup offers).  In addition,  7 homes have sold/closed escrow in the first 12 days of July.  This can be attributed to the Fourth of July holiday as escrow closings slowed.

Please call us for any of your real estate needs in Palos Verdes, Torrance, Manhattan Beach, or anywhere in the South Bay. We are experts in Manhattan Beach Real Estate and have extensive knowledge of the Palos Verdes Real Estate Market

 

 

Find PV Brokers on: FacebookTwitterLinkedInEmail Bart

Search for Homes in Palos Verdes California on PV Brokers. Google PV Brokers What is your home worth today - PV Brokers

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Palos Verdes Real Estate Continues Recovery | May 2012 Update

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Palos Verdes Real Estate Continues Recovery

 

South Bay and Palos Verdes real estate continued its recovery as it enters the seasonably slow early summer months.  If June and July housing numbers show similar strength, it will ne a very good indication that we are in a sustained recovery.  May 2012 Palos Verdes real estate agents‘ statisticsreflect more of the same growth we experienced last month.  55 Palos Verdes houses sold in May which is exactly the same as April.  May pending sales are just about the same as April – 63 homes compared to 64 in April.  The number of active Palos Verdes homes for sale in May rose just 4 homes to 182 in May from 178 homes in April.  As you can see from the chart above, inventory of homes for sale has been flat for the last 6 months indicating a high demand for homes in the Palos Verdes area.

The average sales price for Palos Verdes homes sold in May increased to $1,439,000 compared to $1,369,000 in in April.  Price per square foot for Palos Verdes houses that sold/closed escrow in May also increased to $494 from $486 in April.  Average days on market in May was 106 days which was more than the 90 days in April for properties sold that month.  Months of inventory (months it would take to sell existing inventory at the current rate of sale) was to 3.3 months for May which was just about the same as April which was 3.2 months.  A “normal” market is considered 6 months of inventory – so we are experiencing better than normal in this area. 

Presently, there are 196 single family Palos Verdes homes for sale.  There are 114 Palos Verdes homes in escrow (55 homes have pending sales and 59 homes are accepting backup offers). In addition, 24 homes have sold/closed escrow in the first 11 days of May with the average sales price of $1,564,742.

Palos Verdes real estate chart May 2012 showing active, pending and sold Palos Verdes homes 90274 and 90275

 

California Real Estate Market Update

California home sales and prices rise in May Sales jump 17.6% year over year, while the state’s median home price hit $270,000, rising 8.4% from May 2011.: Home sales and prices strengthened throughout California in May, providing the latest evidence that housing might be snapping out of its long slumber. Sales popped 9.3% from April and jumped 17.6% from May 2011 to total 41,790 new and previously owned houses bought statewide, according to real estate research firm DataQuick of San Diego. The state’s median home price hit $270,000, rising 2.3% from the prior month and up 8.4% from May 2011. “It’s not exactly a stampede, but people are starting to move off the housing market sidelines in numbers we haven’t seen in quite a while,” DataQuick President John Walsh said. “And it’s not just first-time buyers and investors. There are more move-up buyers in mid- to high-end coastal counties.” Home sales in the Golden State have posted year-over-year gains for 10 consecutive months, and foreclosures have steadily been making up a smaller share of the market. Sales of distressed homes made up 46.2% of the market, the lowest figure since April 2008.  

Economic and Interest Rate Outlook

Economic data released in the U.S. last week offered little enthusiasm for U.S. growth prospects. The Import Price index fell -1.0% as expected. The Producer Price Index declined and did so at a greater clip than expectations (-1.0% vs. -0.6%). In addition, the Consumer Price Index fell more than expected (-0.3% vs. -0.2%). All fueled speculation that the Fed could ease again as inflation does not appear to be a threat. Initial Jobless Claims rose to 386k against expectations for a small decline to 375k. June Empire Manufacturing was very weak (2.29) especially when compared against expectations it would drop from 17.09 in May to 12.50. Industrial Production fell -0.1% vs. expectations for an increase of 0.1% and Capacity Utilization ticked lower to 79.0%. Finally, Consumer Confidence fell more than expected (74.1 vs. 77.5.).

The summer of 2012 does not seem to be turning out much better than last year. We are still watching a slow-moving train wreck in Europe which now is having a growth impact in the U.S. A positive (pro-austerity) Greek vote could calm things for a while but the big sovereign debt issues remain whether or not Greece stays in the Euro or not. This week, all eyes will remain focused on Europe in addition to: Housing Starts, Building Permits, Existing Home Sales, Initial Jobless Claims, Philadelphia Fed Index, and an FOMC meeting with their statement released on Wednesday.


 

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PV Brokers provides residential real estate services in the Los Angeles County South Bay communities of Palos Verdes Estates, Palos Verdes Peninsula, Rancho Palos Verdes, Rolling Hills Estates, Rolling Hills, Redondo Beach, Hermosa Beach, Manhattan Beach, Torrance and San Pedro. As a boutique Realty, our Palos Verdes Real Estate agents and palos verdes brokers are committed to giving our clients specialized service and attention. For more information on Palos Verdes real estate, palos verdes homes for sale, palos verdes foreclosures, homes for sale in Palos Verdes, palos verdes market information in addition to quality information on homes for sale, visit www.pvbrokers.net.

Bart Cleveland
Broker
PV Brokers Residential
(310) 872-0778
“Where Integrity Meets Experience”
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DRE # 01858787

Palos Verdes Real Estate Continues Recovery | May 2012 Update

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Palos Verdes Real Estate Continues Recovery

 

South Bay and Palos Verdes real estate continued its recovery as it enters the seasonably slow early summer months.  If June and July housing numbers show similar strength, it will ne a very good indication that we are in a sustained recovery.  May 2012 Palos Verdes real estate agents‘ statisticsreflect more of the same growth we experienced last month.  55 Palos Verdes houses sold in May which is exactly the same as April.  May pending sales are just about the same as April – 63 homes compared to 64 in April.  The number of active Palos Verdes homes for sale in May rose just 4 homes to 182 in May from 178 homes in April.  As you can see from the chart above, inventory of homes for sale has been flat for the last 6 months indicating a high demand for homes in the Palos Verdes area.

The average sales price for Palos Verdes homes sold in May increased to $1,439,000 compared to $1,369,000 in in April.  Price per square foot for Palos Verdes houses that sold/closed escrow in May also increased to $494 from $486 in April.  Average days on market in May was 106 days which was more than the 90 days in April for properties sold that month.  Months of inventory (months it would take to sell existing inventory at the current rate of sale) was to 3.3 months for May which was just about the same as April which was 3.2 months.  A “normal” market is considered 6 months of inventory – so we are experiencing better than normal in this area. 

Presently, there are 196 single family Palos Verdes homes for sale.  There are 114 Palos Verdes homes in escrow (55 homes have pending sales and 59 homes are accepting backup offers). In addition, 24 homes have sold/closed escrow in the first 11 days of May with the average sales price of $1,564,742.

Palos Verdes real estate chart May 2012 showing active, pending and sold Palos Verdes homes 90274 and 90275

 

California Real Estate Market Update

California home sales and prices rise in May Sales jump 17.6% year over year, while the state’s median home price hit $270,000, rising 8.4% from May 2011.: Home sales and prices strengthened throughout California in May, providing the latest evidence that housing might be snapping out of its long slumber. Sales popped 9.3% from April and jumped 17.6% from May 2011 to total 41,790 new and previously owned houses bought statewide, according to real estate research firm DataQuick of San Diego. The state’s median home price hit $270,000, rising 2.3% from the prior month and up 8.4% from May 2011. “It’s not exactly a stampede, but people are starting to move off the housing market sidelines in numbers we haven’t seen in quite a while,” DataQuick President John Walsh said. “And it’s not just first-time buyers and investors. There are more move-up buyers in mid- to high-end coastal counties.” Home sales in the Golden State have posted year-over-year gains for 10 consecutive months, and foreclosures have steadily been making up a smaller share of the market. Sales of distressed homes made up 46.2% of the market, the lowest figure since April 2008.  

Economic and Interest Rate Outlook

Economic data released in the U.S. last week offered little enthusiasm for U.S. growth prospects. The Import Price index fell -1.0% as expected. The Producer Price Index declined and did so at a greater clip than expectations (-1.0% vs. -0.6%). In addition, the Consumer Price Index fell more than expected (-0.3% vs. -0.2%). All fueled speculation that the Fed could ease again as inflation does not appear to be a threat. Initial Jobless Claims rose to 386k against expectations for a small decline to 375k. June Empire Manufacturing was very weak (2.29) especially when compared against expectations it would drop from 17.09 in May to 12.50. Industrial Production fell -0.1% vs. expectations for an increase of 0.1% and Capacity Utilization ticked lower to 79.0%. Finally, Consumer Confidence fell more than expected (74.1 vs. 77.5.).

The summer of 2012 does not seem to be turning out much better than last year. We are still watching a slow-moving train wreck in Europe which now is having a growth impact in the U.S. A positive (pro-austerity) Greek vote could calm things for a while but the big sovereign debt issues remain whether or not Greece stays in the Euro or not. This week, all eyes will remain focused on Europe in addition to: Housing Starts, Building Permits, Existing Home Sales, Initial Jobless Claims, Philadelphia Fed Index, and an FOMC meeting with their statement released on Wednesday.


 

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_____________________________________________________________

 

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PV Brokers provides residential real estate services in the Los Angeles County South Bay communities of Palos Verdes Estates, Palos Verdes Peninsula, Rancho Palos Verdes, Rolling Hills Estates, Rolling Hills, Redondo Beach, Hermosa Beach, Manhattan Beach, Torrance and San Pedro. As a boutique Realty, our Palos Verdes Real Estate agents and palos verdes brokers are committed to giving our clients specialized service and attention. For more information on Palos Verdes real estate, palos verdes homes for sale, palos verdes foreclosures, homes for sale in Palos Verdes, palos verdes market information in addition to quality information on homes for sale, visit www.pvbrokers.net.

Bart Cleveland
Broker
PV Brokers Residential
(310) 872-0778
“Where Integrity Meets Experience”
FacebookTwitterLinkedInWebWebEmail
DRE # 01858787

Palos Verdes Real Estate | Home Sales Demand Up, Inventory Tightening

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Last Friday, the California Association of Realtors released its March sales figures.  The CAR reported that overall volume was down, however,  prices have shown their first year-over-year increase in 16 months. Similarly,  the number of properties sold at foreclosure auction are also down for the second straight month.

These sales, in the past month, reflect resale figures for detached homes of about 505,000 annually, down 4.5 percent from last month and 2.3 percent as compared to a year ago. Statewide median prices, however, jumped 9.5 percent from February’s $266,660 to March’s $291,080, which is up from $286,550 a year ago, reversing a general downward trend.

Locally, for Palos Verdes Real Estate, there are 172 single family Palos Verdes homes for sale.  126 Palos Verdes houses are in escrow (67 homes have pending sales and 59 homes are accepting backup offers).  Additionally, 16 homes have sold/closed escrow in the first 11 days of March with the average sales price of $1,313,016.

March_home_chart

Palos Verdes Realtors and agencies throughout the country are using the relatively upbeat forecast to strike preemptively against a Federal Housing Finance Agency’s plan to sell foreclosed homes in bulk to investors.  This is to, ostensibly, guard against a glut of bank-owned housing hitting the market and further depressing prices. Last month we addressed the potential threat from a “shadow inventory” of homes either delinquent yet not foreclosed or with mortgage balances far higher than their market values being brought to market.

“Housing inventory remains extremely tight throughout the state and at levels severely under normal market conditions,” said C.A.R. Vice President and Chief Economist Leslie Appleton-Young in a release from the group.

On the foreclosure front, 86,487 sales were scheduled for last month in California, though 80 percent were postponed and 10.6 percent were cancelled, leaving only 8,392 properties that actually went to auction. Of those, a record 38.6 percent were snapped up by third parties, typically cash investors.

While foreclosure sales ,were down, new foreclosures were up over 18 percent to total 22,512 statewide last month. This has been an expected consequence of last year’s “robo-signing” scandal, which tied up foreclosure departments at many lenders for months.

Presently, average time it takes to reach foreclosure from the day a bank files to begin proceedings was 260 days in Los Angeles County last month, down from 301 days a year ago.

March 2012 Palos Verdes real estate statistics show significant increases both in Palos Verdes homes sold and pending sales compared to February.  51 Palos Verdes houses sold in March compared to 38 homes in February.  There was a large increase in March pending sales – 76 homes compared to 54 in February.  The number of active Palos Verdes homes for sale in March was just about the same as in February, 180 compared to 179 homes.  Curiously, we still have not seen an increase in the number of homes for sale as we go into the Spring selling season.  Presently, we are at historic lows for inventory of active Palos Verdes homes for sale.  This works to create a more balanced market between buyers and sellers.  As you can see from the chart above, we have 36% less inventory in March 2012 compared to March 2011 and and 49% more pending sales March 2012 compared to March 2011 – definitely a tighter market for buyers. This demonstrates the high demand for the Palos Verdes area.

In terms of Palos Verdes homes for sale  in March, average sales were $1,208,000 compared to $1,043,000 in February (25 out of the 38 homes sold in February were under $1,000,000 – that is 65.8%).  Price per square foot for Palos Verdes houses that sold/closed escrow in March was $439 which decreased slightly from $447 in February.  Average days on market in March was 111 days which was less than the 155 days in February for properties sold that month.  Months of inventory (months it would take to sell existing inventory at the current rate of sale) fell to 3.5 months for March compared to 4.7 months in February.  A “normal” market is typically six months of inventory – so we are experiencing better than average conditions in terms of this metric.

 


 

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Visit www.pvbrokers.net “Where Integrity Meets Experience”

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For more information on homes for sale in Palos Verdes, Palos Verdes real estate, palos verdes homes for sale, palos verdes realtors, palos verdes real estate market information as well as quality information on homes for sale in Rancho Palos VerdesManhattan Beach real estate, Hermosa Beach real estate, Redondo Beach real estate, Torrance real estate, Palos Verdes real estate trends,and real estate trends in the Beach Cities, Palos Verdes Estates and the South Bay, please contact us by phone, email or social media.

Bart Cleveland
Broker
PV Brokers Residential
(310) 872-0778
“Where Integrity Meets Experience”
FacebookTwitterLinkedInWebWebEmail
DRE # 01858787

_____________________________________________________________

 

Become a fan!

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PV Brokers provides residential real estate services in the Los Angeles County South Bay communities of Palos Verdes Estates, Palos Verdes Peninsula, Rancho Palos Verdes, Rolling Hills Estates, Rolling Hills, Redondo Beach, Hermosa Beach, Manhattan Beach, Torrance and San Pedro. As a boutique Realty, our Palos Verdes Real Estate agents and palos verdes brokers are committed to giving our clients specialized service and attention. For more information on Palos Verdes real estate, palos verdes homes for sale, palos verdes foreclosures, homes for sale in Palos Verdes, palos verdes market information in addition to quality information on homes for sale, visit www.pvbrokers.net .

 

Palos Verdes Real Estate | Home Sales Demand Up, Inventory Tightening

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Last Friday, the California Association of Realtors released its March sales figures.  The CAR reported that overall volume was down, however,  prices have shown their first year-over-year increase in 16 months. Similarly,  the number of properties sold at foreclosure auction are also down for the second straight month.

These sales, in the past month, reflect resale figures for detached homes of about 505,000 annually, down 4.5 percent from last month and 2.3 percent as compared to a year ago. Statewide median prices, however, jumped 9.5 percent from February’s $266,660 to March’s $291,080, which is up from $286,550 a year ago, reversing a general downward trend.

Locally, for Palos Verdes Real Estate, there are 172 single family Palos Verdes homes for sale.  126 Palos Verdes houses are in escrow (67 homes have pending sales and 59 homes are accepting backup offers).  Additionally, 16 homes have sold/closed escrow in the first 11 days of March with the average sales price of $1,313,016.

March_home_chart

Palos Verdes Realtors and agencies throughout the country are using the relatively upbeat forecast to strike preemptively against a Federal Housing Finance Agency’s plan to sell foreclosed homes in bulk to investors.  This is to, ostensibly, guard against a glut of bank-owned housing hitting the market and further depressing prices. Last month we addressed the potential threat from a “shadow inventory” of homes either delinquent yet not foreclosed or with mortgage balances far higher than their market values being brought to market.

“Housing inventory remains extremely tight throughout the state and at levels severely under normal market conditions,” said C.A.R. Vice President and Chief Economist Leslie Appleton-Young in a release from the group.

On the foreclosure front, 86,487 sales were scheduled for last month in California, though 80 percent were postponed and 10.6 percent were cancelled, leaving only 8,392 properties that actually went to auction. Of those, a record 38.6 percent were snapped up by third parties, typically cash investors.

While foreclosure sales ,were down, new foreclosures were up over 18 percent to total 22,512 statewide last month. This has been an expected consequence of last year’s “robo-signing” scandal, which tied up foreclosure departments at many lenders for months.

Presently, average time it takes to reach foreclosure from the day a bank files to begin proceedings was 260 days in Los Angeles County last month, down from 301 days a year ago.

March 2012 Palos Verdes real estate statistics show significant increases both in Palos Verdes homes sold and pending sales compared to February.  51 Palos Verdes houses sold in March compared to 38 homes in February.  There was a large increase in March pending sales – 76 homes compared to 54 in February.  The number of active Palos Verdes homes for sale in March was just about the same as in February, 180 compared to 179 homes.  Curiously, we still have not seen an increase in the number of homes for sale as we go into the Spring selling season.  Presently, we are at historic lows for inventory of active Palos Verdes homes for sale.  This works to create a more balanced market between buyers and sellers.  As you can see from the chart above, we have 36% less inventory in March 2012 compared to March 2011 and and 49% more pending sales March 2012 compared to March 2011 – definitely a tighter market for buyers. This demonstrates the high demand for the Palos Verdes area.

In terms of Palos Verdes homes for sale  in March, average sales were $1,208,000 compared to $1,043,000 in February (25 out of the 38 homes sold in February were under $1,000,000 – that is 65.8%).  Price per square foot for Palos Verdes houses that sold/closed escrow in March was $439 which decreased slightly from $447 in February.  Average days on market in March was 111 days which was less than the 155 days in February for properties sold that month.  Months of inventory (months it would take to sell existing inventory at the current rate of sale) fell to 3.5 months for March compared to 4.7 months in February.  A “normal” market is typically six months of inventory – so we are experiencing better than average conditions in terms of this metric.

 


 

Real Estate Tools and Research

 

Visit www.pvbrokers.net “Where Integrity Meets Experience”

What’s My Home Worth What's my house worth Search Homes For Sale realestatehomesearch
Real Estate Articles and Trends blog search Time to Buy Palos Verdes Real Estate? buy palos verdes real estate

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PV Palos Verdes Real Estate facebook pic JOIN US ON FACEBOOK and follow us on Twitter! Palos Verdes Real Estate twitter Bookmark and Share

For more information on homes for sale in Palos Verdes, Palos Verdes real estate, palos verdes homes for sale, palos verdes realtors, palos verdes real estate market information as well as quality information on homes for sale in Rancho Palos VerdesManhattan Beach real estate, Hermosa Beach real estate, Redondo Beach real estate, Torrance real estate, Palos Verdes real estate trends,and real estate trends in the Beach Cities, Palos Verdes Estates and the South Bay, please contact us by phone, email or social media.

Bart Cleveland
Broker
PV Brokers Residential
(310) 872-0778
“Where Integrity Meets Experience”
FacebookTwitterLinkedInWebWebEmail
DRE # 01858787

_____________________________________________________________

 

Become a fan!

Bookmark and Share

PV Brokers provides residential real estate services in the Los Angeles County South Bay communities of Palos Verdes Estates, Palos Verdes Peninsula, Rancho Palos Verdes, Rolling Hills Estates, Rolling Hills, Redondo Beach, Hermosa Beach, Manhattan Beach, Torrance and San Pedro. As a boutique Realty, our Palos Verdes Real Estate agents and palos verdes brokers are committed to giving our clients specialized service and attention. For more information on Palos Verdes real estate, palos verdes homes for sale, palos verdes foreclosures, homes for sale in Palos Verdes, palos verdes market information in addition to quality information on homes for sale, visit www.pvbrokers.net .

 

Interest Rates vs Mortgage Rates | PV Brokers Residential Real Estate

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Interest Rates vs Mortgage Rates | PV Brokers Residential Real Estate

Over the past 2 years, the Federal Reserve has lowered short-term interest rates to nearly zero by a total of 3.50 percentage points. (This lowered the federal funds rate, NOT the prime lending rate, though that falls in lockstep with the former.) The Fed stated that it plans to have rates remain low and for a “considerable period of time”.  Perhaps through 2013!!  Many people are excited because they believe this will lead to lower rates on fixed-term mortgages, meaning the average person may be able to save big bucks by refinancing.

The Fed has been on hold for quite a while now. Many would like to know if this means it may be a good time to consider refinancing their primary residence. Most homeowners are currently locked at considerable higher rates .

Our research suggests something surprising. Contrary to popular belief, the federal funds rate does not directly affect mortgage rates. (Not even adjustable rates, from what I can tell.) According to Bankrate:

Mortgage rates have declined dramatically over the past 2 years. But the Federal Reserve’s present stance on unchanged interest rates does not guarantee that rates will stay low. In fact, mortgage rates often climb following a cut in the federal funds rate, and actually rose about 50 basis points after the Federal Reserve announced its emergency 75-basis-point cut Jan. 22.  Similarly, it is possible for Mortgage rates to rise while the Fed funds rate stays the same.  So, we suggest that buyers and homeowners consider that just because the fed may be on hold through 2013, it does not mean that mortgage rates cannot climb.

Bankratemortgages

That chart may be a little difficult to read. This one from Bankrate is not:

Hshmortgages

The blue line represents the U.S. national average on 30-year fixed mortgages.  The green line represents the federal funds rate. . Both lines trend downward, but otherwise seem unrelated. If anything, the mortgage rate appears to be a precursor to the federal funds rate. Again, it seems clear that the federal funds rate does not directly affect mortgage rates.

So, then, what does affect mortgage rates? According to an HSH Associates article on the subject, the answer is very complex. “Fixed mortgage rates, like other bonds, track US Treasury bonds quite well,” the authors write. However, they’re quick to add, “There is no specific ‘lockstep’ relationship between Treasuries of any term and fixed mortgage rates.”

GRS reader Jericho Hill is an actual economist. When I asked for his comments, he noted, “Thirty-year rates are largely affected by the supply and demand of funds available for long-term loans, and by the anticipated inflation rate. If the Fed’s moves lead to expectations of higher inflation, guess what that would do? Raise mortgage rates!”

Now may or may not be a good time to refinance your home. But don’t count on a drop in the federal funds rate to yield a corresponding drop in mortgage interest rates.  Also, don’t wait too long as a rise in mortgage rates could still occur regardless of a Feds Fund rate increase.

 

Please contact us at (310) 872-0778 for any of your real estate needs in Manhattan Beach, Palos Verdes and the South Bay. We are experts in Palos Verdes Real Estate and have extensive knowledge of the South Bay Residential Real Estate Market.

      
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