On behalf of the snow, from the LA Times:
Surging mortgage interest rates threatened to squash Michael and Christine Hawkins’ dream of home ownership. But this fall when the couple saw a Canoga Park condo languish on the market, they devised a plan.
They’d submit a “low ball” offer they could stomach if they cut back on vacations, shopping and eating out. In a year — when interest rates hopefully had dropped — they could refinance and free up their budget.
Last month, amid a decline in overall home values, the Hawkinses, both in their 30s, closed on the two-bedroom condo for 7% less than asking. But they may be stuck with a high payment for the foreseeable future, because if home prices keep falling, they might not have enough equity to refinance.
“There is not a lot of wiggle room right now [in our budget],” said Michael Hawkins, 37. “I’m happy we did it, but I’m super nervous what is going to happen.”
For the first time in a decade, Southern California homeowners, and those across the country, are seeing their equity fall en-masse, the result of higher mortgage interest rates that have sapped purchasing power and sent home values down.
Real estate analysts said the loss in equity — which is expected to deepen — could curtail economic growth as people have less to spend on home renovations, pay for emergencies or invest in a business.
The shift in the market is unnerving some recent buyers who told The Times they worry falling prices will trap them in their mortgages and have personal consequences such as tight budgets and delayed retirement.