Falling interest rates may portend active year for real estate sales
by Lance Pugmire | Special to the Courier
Has there ever been a more wonderful time to drive through Claremont than in recent weeks?
The vantage points vary, from the Americana scenes of the holiday light flanked, tree lined streets above the Village to the sweeping views atop Claraboya, but each reminds us why so many are looking to put down roots here. Whether it’s children on winter break playing in our parks, the aromas of baked goods emanating through screen doors, or neighbors out for an evening stroll, the delights of Claremont living are profound.
While hosting several open houses and guiding many intrigued buyers through our neighborhoods this year, I’ve seen it doesn’t take long for visitors to wonder, “How much does it cost to live here?”
In this first week of 2024, the median list price among the town’s 30-plus current active homes falls right at $1 million. And looking forward into the new year, we reflect on the lessons of 2023 to plot out the best strategies for sellers and buyers.
In review, spiraling mortgage rates and the wealth of homeowners locked into sub-4% interest rates shrunk housing inventory and muted interest among many of those tempted to take that bold leap toward buying a new home.
Because of inaction on both sides, a seller’s market remained — just not at the level we witnessed from the start of the pandemic through May 2022. The flood of transactions during that period warped the strategies of some sellers in 2023, causing them to overprice their homes and, in other cases, remain dug in on a higher price while insisting “it only takes one” buyer to create a deal.
In Southern California housing economist Steven Thomas’ recent “Reports on Housing,” he noted how the luxury market has been virtually frozen, as Los Angeles County homes valued at $2 million and up averaged a staggering 269 days on the market from listing to sale. There are six such homes currently listed in Claremont, with the average wait among those standing at 139 days and counting at press time.
In one non-luxury Claremont case, a listing expired because of that stubborn mindset, and the seller’s plans to move out of state were placed on hold indefinitely.
Next door, in Upland, I met with a seller of an expired listing, and we discussed the changing market and the idea that record leaps in equity during the pandemic and limited inventory still had her in the catbird seat. She agreed to lower her list price by $125,000, sparking a rush of new open house visitors and fierce competition. The home saw the final price bid up to nearly $1.5 million, clearing her for an anticipated move to the East Coast.
As for buyers, it took until December 2023 for mortgage rates to ease. One of our lenders quoted a 30-year fixed rate at 6.75% this past week. The dip has contributed to the typical Claremont home’s average days on market to shrink markedly, from 80 days in early November to 52 in early December, according to Thomas’ reporting.
Many of those who chose to remain as renters rather than risk the prospect of navigating a “house-poor” lifestyle saddled with an ominous mortgage payment are poised now to make their moves.
What has worked for buyers in this climate is to target the home that best matches their criteria and price range and then push on with the assistance of creative lending, along with solid agent communication and effective negotiation.
Thomas told a group of my colleagues last week that current indicators portend a burst of activity, perhaps as soon as the first quarter of this year.
Lance Pugmire is a licensed California realtor.