The Three Factors Affecting Home Affordability Today in L.A. and Beverly Hills, CA
The Three Factors Affecting Home Affordability Today in L.A. and Beverly Hills, CA | Christophe Choo at Coldwell Banker Global Luxury is Your Local Real Estate Expert
The recent surge in mortgage rates has raised concerns among homebuyers about affordability, especially in highly-priced areas like Los Angeles and Beverly Hills. However, while higher mortgage rates have impacted affordability to some extent, it's essential to understand that other factors also influence it.
In Los Angeles and Beverly Hills, where home prices are relatively high, it's crucial to consider all three factors: mortgage rates, home prices, and wages, to determine the affordability of buying a home.
- Mortgage Rates While mortgage rates have increased since the record-low rates observed during the pandemic, they have remained relatively stable for the last eight months, fluctuating between 6% and 7%. However, any increase, no matter how small, can affect your purchasing power, so it's essential to stay informed and seek expert advice from real estate professionals to make informed decisions.
It's hard to predict where mortgage rates will go in the future, but it's expected they will remain around 6%-7% in the immediate future, according to many experts.
- Home Prices In recent years, home prices in Los Angeles and Beverly Hills have skyrocketed due to the low mortgage rates, high buyer demand, and low supply of homes for sale. However, the higher mortgage rates have slowed down the rate of appreciation.
That said, it's worth noting that home price appreciation varies across markets. While some areas may see slight declines, others may experience price increases. For instance, in Beverly Hills, homes remain highly-priced due to the high-end luxury real estate market.
To determine what's happening with home prices in your local market, it's advisable to consult a trusted real estate agent.
- Wages Despite the rising mortgage rates and home prices, the good news is that wages are increasing, which improves affordability. According to the Bureau of Labor Statistics (BLS), wages have grown over time, as shown in the graph below:
Higher wages mean that homebuyers don't have to put as much of their income towards monthly housing costs, thus improving affordability.
In conclusion, home affordability in Los Angeles and Beverly Hills comes down to a combination of mortgage rates, home prices, and wages. If you're planning to buy a home, it's essential to seek expert advice from real estate professionals who can help you understand how these factors work together and keep you up to date with the latest market trends.
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