Today the Consumer Price Index was released at 7.7%. What does this mean for mortgages and real estate?

It means the fight for inflation is showing signs of working. The work the fed is doing is slowing the rate of inflation. However, inflation is still not going away. This is still far from the Federal Reserves target inflation rate of 2%. This is a good sign that inflation could be beginning to cool. This positively impacted mortgage rates, for today. Unless they can continue to cool inflation we could see rates continue to rise.

Will this affect home prices here in LA? Yes, but only to a degree. Even though Los Angeles has seen record levels of prices for homes the main underlying issue still remains. Lack of inventory. There is still plenty of demand for homes. This demand mainly coming from new household creations. Meaning, those that are now old enough to move out on their own and ready to either purchase or rent a home. Los Angeles has struggled to keep up with demand even before the 2020 pandemic. You mix that low level of inventory with artificially low interest rates and you get a boom in home prices. Now with the opposite happening, meaning artificially high interest rates, we could see a small price correction in homes prices. However, I am predicting a real estate rally once interest rates return to lower levels. Interest rates will return to lower levels in order to get the US out of what could be the coming recession, if we are not already in one.

Would love to hear any perspectives or possibly bold predictions to where real estate could head in the near future!

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