It’s been 10 months — October 17, 2024 — since Freddie Mac’s 30-year mortgage rate dropped below 6.5%.

It’s been 37 months since rates dipped below the 6% mark. This past week, the Freddie rate landed at 6.72%.

It’s the same, and getting old, this Southern California housing story. High mortgage rates and high home prices are crushing affordability. Is this going to continue or change?

After all, it’s been a solid three-year slowdown.

I’ve asked economic and housing experts to weigh in.

Jordan Levine, the chief economist for the California Association of Realtors, looks at a litany of factors prolonging the stagnation of home sales. He cited economic uncertainty with U.S. trade wars and fear.

“Another thing hurting home sales is the brother-in-law effect,” he said. This is when someone you talk with or see at a social event offers negative news or advises you to wait because of X or Y.

Levine said the last time there were any real estate bargains out there was the Great Recession when 10%-15% of workers were out of work.

He sees mortgage rates in the 6.5% range as a best-case scenario. If there is a shock to the economy, rates could drop to 6%.

“Home sales are up a little bit,” Levine said. “For the year end, home prices will largely be flat, up in the low single digits.”

Mark Zandi, chief economist at Moody’s Analytics, thinks we have hit the bottom in terms of existing home sales volume.

“Sales should slowly improve even if rates don’t improve,” Zandi told me. “Rates may stay where they are for two, three, four years.”

What about the economy in general?

“Recession risks are significant because of the tariff and immigration policies,” Zandi said. “Tariff effects are coming dead ahead. It weakens growth and raises inflation.”

Most surprising to me was Zandi’s observation about the importance of Federal Reserve independence.

“A lack of independence could spook bond investors,” he said. This means mortgage rates could go higher if a new Fed chair drives short-term rates down in the face of inflation.

Pat Veling, CEO and founder at Real Data Strategies, opined that even with increased inventory and sellers reducing their list prices, home prices are not going down.

“There is a lot of bad information out there as sellers finally get real,” said Veling of sellers who are overpricing their listed homes. “Home prices will continue to climb even as fewer homes sell.”

As for mortgages, Veling thinks rates will come down, providing opportunities to refinance at lower rates than what buyers can get today.

Steven Thomas, chief economist at Reports on Housing, provided some interesting statistics about today’s housing activity compared with one year ago:

Increased number of listings:

Southern California: 42,053 versus 30,176 last year

Orange County: 5,123 versus 3,369 last year

Los Angeles County: 15,431 versus 11,356 last year

Riverside County: 8,282 versus 5,906 last year

San Bernardino County: 6,785 versus 5,035 last year

San Diego County: 6,432 versus 4,510 last year

Expected market time (listed until going under contract into escrow):

Southern California: 118 days versus 83 last year

Orange County: 96 days versus 65 days last year

Los Angeles County: 128 days versus 90 days last year

Riverside County: 119 days versus 83 days last year

San Bernardino County: 133 days versus 95 days last year

San Diego County: 102 days versus 73 days last year

Thomas believes we’ll see a slower economy with home prices and interest rates dipping a little bit for the rest of the year. We’ll see a slight price increase next year.

“There is a real stickiness to home pricing. There are very few desperate sellers,” Thomas said.

Raymond Sfeir, an economist at Chapman University, made an interesting observation about Orange County housing permits. In the first six months of this year, single-family permits are down 25% while permits for apartments and condos are up 18%.

“Developers are going for cheaper, more affordable units,” Sfeir said.

“Rates will come down in 2026,” he said. “A 6% rate in 2026 will move the needle to stimulate sales.”

As for Orange County in 2026, Sfeir believes we’ll see a 3% price increase compared with flat home prices for the country.

Mark Vitner, chief economist at Piedmont Crescent Capital, said the country is in a tough spot with home affordability being a real challenge.

“The whole country is dealing with the lock-in effect,” he said of homeowners hesitant to sell because of their low mortgage rates, and in California, low property taxes.

“People don’t want to give up their existing mortgages. This worry is causing home prices to soar,” Vitner said. “And hiring has really slowed, causing others to hunker down and stay in their homes.”

Vitner said that nationwide there are way too many new homes available for sale. “The median price for new homes is now lower than the resale median,” he explained.

As for wage growth, Vitner sees wages growing faster than home prices going forward, with a 2% home price increase nationally. “This won’t restore affordability. We need a second leg to the economic expansion,” he said.

I believe the economy will continue to slow with sluggish employment leading the way. The second struggle to watch is the increasing late payments on consumer debt and auto loans.

We’ll also see a consumer spending slowdown because of the tariffs. As a result, we’ll see mortgage rates under 6% by year’s end.

Home sales and median home prices will increase because lower mortgage rates will increase affordability. Freddie Mac rate news: The 30-year fixed rate averaged 6.72%, 2 basis points lower than the previous week. The 15-year fixed rate averaged 5.85%, 2 basis points lower than the previous week.

The Mortgage Bankers Association reported a 3.8% mortgage application decrease compared with one week ago. Bottom line: Assuming a borrower gets the average 30-year fixed rate on a conforming $806,500 loan, last year’s payment was $5 more than last week’s payment of $5,215. What I see: Locally, well-qualified borrowers can get the following fixed-rate mortgages with one point: A 30-year FHA at 5.75%, a 15-year conventional at 5.375%, a 30-year conventional at 6.25%, a 15-year conventional high-balance at 5.75% ($806,501 to $1,209,750 in Los Angeles and Orange County and $806,501 to $1,077,550 in San Diego), a 30-year high-balance conventional at 6.5% and a jumbo 30-year-fixed at 6.375%. Eye-catcher loan program of the week: a 30-year mortgage, fixed for the first five years at 5.625%, with a 30% down payment and 1 point cost.

Jeff Lazerson, president of Mortgage Grader, can be reached at 949-322-8640 or jlazerson@ mortgagegrader.com.