Will lower mortgage rates save California’s housing market?

Will lower mortgage rates convince California house hunters to stop balking at unaffordable homes on the field What s next for interest rates is a heated national debate Related Articles Marin median house price climbs to million California s former insurance commissioner wants oil and gas companies to pay for the home insurance problem Contra Costa County reports drop in homelessness California home prices dip in May st drop in nearly years Judges clear way for Berkeley to close two of its largest homeless camps The Federal Reserve is taking a cautious approach to further cuts in the rates it controls fearing ongoing commerce wars could reignite problematic inflation Fed critics majority of notably President Donald Trump think rates are too high and the Fed should be aggressively cutting Political theater aside what might lower rates mean for California s housing sector And remember Fed cuts don t constantly lower what mortgage borrowers pay Let me remind you and not for the first time that a historical perspective suggests that cheaper money is not a perfect cure You see bargain financing has a bad habit of arriving when the financial sector is in disarray To see what s up or down with the realm my trusty spreadsheet looked at statewide homebuying evidence from the California Association of Realtors the average -year mortgage rate from Freddie Mac and leadership job statistics These economic indicators were divided into three groups dating back to to gives us a view into how homebuying performed in -month periods when rates fell the bulk vs when financing costs increased significantly During these years rates averaged a drop to from in their gaudiest declines Within the largest essential rate increases mortgages averaged a jump to from Rate changes When rates drop house hunters get busy The number of single-family homes sold averaged a one-year gain during the biggest rate cuts since However sales decreased by an average of when rates rose sharply But there s a catch Sales declined in of these -month periods when rates tumbled And look out for cooler appreciation The statewide median home price rose an average of in the years when rates tumbled since but it increased at a annual pace when rates jumped Plus prices dipped of the time when rates fell sharply Cheaper money can also alter the number of options house hunters have to choose from Inventory as measured by days on industry fell by an average of when rates tumbled in years but rose with rate jumps Elevated buying may have gobbled up supply And buyers timing can change Days on field sped up by four days on average with declining rates since but selling times increased by four days when rates jumped Affordability matters Estimated house payments fell on average with declining rates but increased by when rates rose Tricky juggle Do not forget real estate s three keys Jobs Jobs Jobs When mortgage rates took their deepest dives during the past years the number of California workers fell by on average as California unemployment rose to from Buying a California home requires a solid paycheck Consider how employers statewide hired when rates soared since Jobs grew at a rate of annually as unemployment dropped to from Those extra paychecks create prospective house buyers So it s a tricky juggle between real estate s thirst for cheaper money and its need for a healthy job region Jonathan Lansner is the business columnist for the Southern California News Group He can be reached at jlansner scng com