Something strange just happened out West. For the first time in REALTOR.com’s data history, not a single market area in the Western United States is listed as one of the top 20 ‘hot markets.’
Go West Young … Person!
Not really, according to this article from the sites data analysts:
So, if it isn’t drought, or wildfires, or earthquakes – what is it? How is it that for the first time since the data started being recorded that not a single Western market made the list? Not a single city in California? Oregon? Washington State? Arizona, Nevada? Colorado, Idaho? We may have forgot one, but you get the picture.
According to the analysis – the answer is quite simple…affordability. A rise in interest rates does not affect all borrowers equally – this is well established. The impact of rates varies for a number of reasons – but one of them is just simple math. Home affordability, and especially loan ease/availability varies by asset price. Many properties in the West – especially in the formerly red hot California markets, are now above what is considered ‘jumbo loan’ status. Which means that, due to the amount of the loan, different lending standards will apply.
At a much simpler, and more human level however, families in the West who were already hard pressed to afford a mortgage, are priced out when the cost in interest of each dollar borrowed just increased over 50% in the past year.
Instead, the markets showing the greatest appreciation in value in June are all in the East. Intra-state buyers, according to the article, cashing out on profits and moving laterally in state are a part of the trend.
What will come next for the West, with interest rates just increased another .75 basis points?