RANCHO CUCAMONGA, Calif. — This pandemic has sparked something called a "super sellers'" market. U.S. mortgage rates jumped slightly at the end of last week on higher treasury yields. This was the most significant hike in more than a year.
The average "30-year" sat at 2.99% on February 19, after a 50-year low of 2.65%.
Market analysts have been seeing homebuyers jump at cheap mortgages and also refinancing while they can, which is fueling a supply and demand imbalance, on top of inflation.
Last month, the National Association of Realtors reported existing home sales rose 24% from the same time last year. The median U.S. home price also increased about 14%.
Experts say there are many reasons for the uptick in rates, but overall, investors are concerned as we come out of this pandemic. All of this growth and inflation could further increase interest rates and decrease refinancing, amounting to big losses for those mortgage-bond investors.
For Duane Houston and his family, the home buying process was extremely stressful in Rancho Cucamonga.
In his home away from home, Houston takes pride in every bit of what’s made Clips on 66 his barbershop. But when it was time to buy his first house, that same entrepreneurial nature would become one of several road blocks.
“As an entrepreneur, versus being a W-2 employee of a big corporation, technically I’m more of a liability, because I don’t have as consistent of an income," Houston said. "My income is contingent on the type of year I’m having. And with COVID, barbershops being shut down most of the year, that was also an asterisk when it came to qualifying for a loan.”
When he finally was approved, Houston said it was nearly impossible for him and his pregnant wife to find a house in Rancho Cucamonga.
He spends most of his day at his shop, but the couple used all of their free time searching for the home they’d raise their family in.
"The home buying process was a roller coaster," he explained. "It was at times very discouraging. The market was so competitive. And a lot of times it just seemed like we weren’t gonna land anything.”
Homes, Duane said, with 18 offers in an hour that would end up selling for $30,000 to $40,000 over asking price.
It’s a frustration Southern California real estate agent Troy Palmquist said a ton of buyers are feeling right now in the strongest seller’s market he’s ever seen.
“You’ve got a lot of investors that are looking to buy houses to fix and flip right now that are competing at the prices that a normal homeowner would because the supply and demand is so skewed because of the foreclosures and eviction moratoriums on properties," Palmquist explained.
Troy said the pandemic has had many other impacts on the market as well.
With interest rates under 3%, realtors predict people will only continue to capitalize on the historic lows, continuing the upward trend of home prices.
In December, it only took an average of 11 days for a single family home in California to sell. That’s 28 days faster than December of 2019.
In Los Angeles, the median price of a single family home increased nearly 14% compared to one year before. And in the Inland Empire there was an increase of nearly 17%.
Still, Troy’s advice for those looking to buy: don’t get discouraged.
“It might take you three, four, five times but that just means the house wasn’t the right house for you," he said.
A lesson the Houston’s learned first-hand. After a hostile couple of months, they decided to bypass the chaotic bidding process, finding and moving into a new construction townhome instead.
“Anything in life that is worth having is going to be some kind of struggle, so look forward to the struggle, look forward to the challenge cause it’s gonna be the moments of growth," Houston said.
Worth it for the new owners who can finally say they’re home sweet home.