Visalia housing market holding up well despite high rates
The latest housing market as well as economic data is holding up well and a strong job market is helping Visalia and Valley households shoulder the worsening burden of rising prices, according to the California Association of Realtors (CAR).
With consumers having to pay almost 25% more for their monthly housing cost this year than last year, and having their incomes stifled by inflation, purchasing a home is getting tougher financially for many buyers.
Despite this apprehension, home sales have remained strong up to this point. Housing supply also seemed to have improved, with construction spending climbing, while inventory of existing homes continued to head in the right direction. Concerns for the risk of a recession, however, continue to mount, as the recent yield curve inversion signals a drag on the economic growth, possibly due to the Fed’s aggressive rate hikes. CAR believes it can be said we are on precarious footing now more than we have been for the last year.
RACE TO LOCK IN:
The average 30-year fixed -rate mortgage interest continued to surge and reached 7.09% this past week, the highest level since April 2002.
INFLATION’S TOLL EVIDENT IN REAL SPENDING DECLINE:
August marked the second straight year in which inflation outpaced income, raising doubts about the resilience in consumer spending. Inflation continues to be the top threat to consumer’s purchasing power, especially the increase in gasoline prices at the Valley pumps. Despite stronger growth in the past year, higher inflation continues to push real disposable income below its pre-pandemic level with inflation likely to remain elevated in the coming months.
CONSTRUCTION INDUSTRY CONTINUES TO CUT THROUGH MATERIAL AND LABOR HEADWINDS:
Total construction spending rose 0.5% during July over the previous month. The $1.7 trillion seasonally adjusted and annualized pace of spending reached during the month represents an 12% yearly gain. Total spending is now up 13.5% compared to the level observed just before the COVID-19 pandemic. Most of the spending increase was in residential development which continues to be driven by a historic shortfall of existing homes for sale and robust buyer demand. Though, sharply higher mortgage rates in recent weeks may have taken some wind out of residential sales.
Members of the Tulare County Association of Realtors believe consumer confidence in Visalia, Tulare, Porterville, Hanford, and Fresno is holding up despite the recent increase in rates by the Federal Reserve Board. One thing is sure, act now to list your home and buy a new place before the Fed raises rates again. Your family does not want to be priced out of the marketplace. Call a member of the Tulare County Association of Realtors today. They know the Valley and are professionally trained to help you and your family.
Mike Allen is President of the Tulare County Association of Realtors, President/Broker Owner of Century 21 Jordan-Link & Company, a full-service real estate firm celebrating their 47th year in business, with offices in Visalia, Tulare, Porterville, Hanford, Delano, Bakersfield, and Fresno. Mike can be reached at 733-9696 or Mike@JordanLink.com.
This article originally appeared on Visalia Times-Delta: Visalia housing market holding up well despite high rates
