What’s Really Going On in the Housing Market Right Now?

 

What’s Really Going On in the Housing Market Right Now?

🏡 Why Interest Rates Matter So Much

Mortgage interest rates have a huge impact on the housing market. Most homebuyers borrow money to buy a home, and the interest they pay each month affects what they can afford. When rates are high, monthly payments go up, making homes less affordable.

Right now, rates are hovering around 6.86%, which is pretty average compared to the last year—but still high enough to slow down buying activity.

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🏦 The Fed’s Role and Jerome Powell’s Decisions

The Federal Reserve (led by Jerome Powell) controls short-term interest rates to help manage inflation. After major government spending during COVID (2020–2023), the Fed raised rates to slow inflation.

Here’s the issue: Inflation has gone down, but the Fed hasn’t lowered rates, even though other indicators (like Treasury bond yields) suggest they could. Many experts say the Fed is keeping rates too high for too long, which is cooling the housing market more than necessary.

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⚖️ Who’s Winning, Who’s Losing

Winners:

• Homeowners with low-rate mortgages

• Banks (earning profits by lending at higher rates)

• Credit card companies (charging more interest)

• Large investors (earning more from private debt)

Losers:

• First-time buyers priced out due to high rates

• People with credit card or other variable-rate debt

• Sellers who want to move but are "rate-locked" into low mortgage rates

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🏘️ Housing Inventory Is Still Tight

There are more homes for sale now than in recent months (1.45 million listings), but still fewer than before COVID—despite population growth. That shortage helps keep home prices from dropping significantly, and it also pressures builders to build more homes.

In markets like Los Angeles, we’re still in a seller’s market—even if it's more balanced than the past few years.

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📉 Buyer Activity Is Low

Mortgage application data (the “Purchase Index”) shows that buyer demand is about half of what it was before COVID. But the media often focuses on week-to-week ups and downs, instead of addressing the bigger picture: buyers are hesitant, and the market hasn’t fully recovered.

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⚠️ Industry Disruption and Lawsuits

There’s been drama around tech platforms like Zillow, Compass, and Homes.com trying to take more control of the real estate process—often at the expense of local agents.

On top of that, lawsuits against the National Association of Realtors (NAR) over commissions didn’t lower costs for consumers. In fact, commissions have gone up, and attorneys were the biggest winners.

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✅ So What Should Buyers and Sellers Do?

• Buyers: If you’re planning to stay in your home long-term and can afford it, real estate is still a smart investment.

• Sellers: You can still get solid value, but you may need to adjust expectations depending on price point and market.

• Investors: If you find a rental that cash flows well, this could be a strong time to buy and benefit from tax advantages.

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💬 Final Thought

Despite the confusion and complexity, real estate remains one of the best long-term ways to build wealth—as long as you buy smart and stay informed.

If you need help figuring out how this market affects your specific situation, reach out to a local expert you trust.