Monterey County median price for a single-family home is $1.093 million – Monterey Herald

Monterey County reached a record high for the median price of a single-family home in October at $1,093,000. (James Herrera/Monterey Herald)

SALINAS – In October, the median price of a single-family home in Monterey County hit a record high of $1,93,000, surpassing the previous record of $944,500 in July and pushing the price up 26.36% from $865,000. dollars at the same time last year.

Although the Federal Reserve has raised interest rates several times over the past two years to curb inflation and lower prices, including in the housing sector, Monterey County’s real estate market continues to defy that strategy.

“Monterey County is largely insulated from the market cooling typically expected in response to interest rate increases,” said Adam Penteritz, Monterey County Government and Community Affairs Director. “The need for housing constantly outstrips the available stock here. This is not surprising given that local authorities have not built enough housing for three consecutive decades. This is also why many residents are shocked by the high allocation of regional housing needs to their cities. The problem has been exacerbated On itself for so long that we have a persistent housing deficit of thousands of units.

The average interest rate on a 30-year fixed mortgage is about 8%. Between April 1971 and November 2023, the average 30-year fixed mortgage was 7.74%, according to Freddie Mac, the industry’s leading source for mortgage rates. Mortgage interest rates reached their highest point in modern history in October 1981 when they peaked at 18.63%.

In October, the inventory of single-family homes in Monterey County fell from 445 units to 348 — a 22% decrease from the previous year, and the average days on market for homes for sale rose from 19 to 13, a 32% decrease from the previous year. The previous year, the number of new listings rose from 145 to 154 – a 6% increase from October 2022.

“Housing inventory that is more constrained than it has been in recent years is pushing the median price up more sharply,” Pentritz said. It’s not just that inventory is currently down 22% compared to the same time last year; Inventory this year peaked in August at 397, while in 2022 around the same time it peaked at 511, and in 2021 at 473. Combine chronic and acute low inventory with pent-up demand and rising interest rates, and you’re bound to rise. the prices.”

In reaction to what is happening in the economy, the Federal Reserve adjusts the target federal funds rate to help it achieve the conditions necessary to maintain price stability and maximize employment. The Federal Reserve raises interest rates when the economy begins to overheat, as reflected in rising inflation, and lowers interest rates when the economy is weak, as reflected in rising unemployment rates.

The latest figures in October showed US inflation at 3.24%, compared to 3.7% in September, and 7.75% a year earlier in October 2022.

The unemployment rate reached 3.9% in October, compared to 3.8% in September, and 3.7% in October 2022.

Earlier this month, the Federal Reserve voted to keep its key borrowing rate steady at a 22-year high of 5.25-5.5%. But he could still vote to raise interest rates before the end of the year.

“If interest rates go up, prices will go up too. Higher interest rates also strangle our inventory because owners who bought when interest rates were low won’t sell while facing higher rates to finance their next home,” Pinterets said. “Policy solutions beyond the Fed, Such as Congressman Jimmy Panetta’s “More Homes on the Market” law could help alleviate the problem, while many housing regulations issued by Sacramento and local city councils would likely exacerbate the problem.

If rates stop rising, Monterey County home prices could hit a plateau, Penteritz said.

“But insufficient local inventory prevents us from achieving greater affordability,” he added. “The accessibility and cost of insurance also pose significant obstacles to purchasing a home here, especially in areas considered to be at risk from fires or floods.”