What a difference a month makes. Last year just before the spring real estate season, tariffs were implemented, that added economic instability, so we lost potential production. This year, as mortgage rates hit lows and we were thinking 2026 was looking good. The war was started, and again this real estate season has headwinds. If the politicians are making housing a priority (which both parties say they are), it would be nice if the White House would start these types of things in the Fall so not to disturb the market (only half joking).
The recent war escalation in the Middle East has pushed oil prices higher, and when oil jumps quickly, inflation concerns typically follow. Since mortgage rates tend to move with the bond market, especially the 10 year Treasury, those inflation fears can push borrowing costs higher almost immediately.
That’s why it feels like rates are changing with every presidential tweet, every breaking news alert, and every headline suggesting the Middle East conflict is either escalating or de-escalating… Frankly, right now, they are.
What makes this market so challenging is that rates are being pulled in two opposite directions at the same time.
So right now, rates are caught in A Tug-of-War: Inflation vs. Recession:
• inflation risk pushing them up
• recession fears pulling them down
Higher Oil = Higher Inflation = Higher Rates
Higher oil prices can raise:
• gas prices
• transportation costs
• shipping expenses
• building material costs
• overall consumer inflation
That puts upward pressure on Treasury yields and, in turn, mortgage rates. The recent CPI (Consumer Price Index) jumped in March .9% in the month or 3.3% year over year from 2.4% because gas was up 21% for the month.
But Prolonged Conflict Could Mean Lower Rates
If higher oil prices persist too long, they can slow economic activity and increase recession concerns. When recession fears rise, money often moves into bonds as a safe haven. That can bring Treasury yields lower and mortgage rates may improve.
So right now, rates are caught in a tug-of-war:
• inflation risk pushing them up
• recession fears pulling them down
This is exactly why we are seeing so much volatility.
First Time Buyers Are Feeling This the Most
This environment is hitting first-time buyers the hardest. They are the most payment-sensitive group in the market. Even a move from 6.00% to 6.50% can significantly change affordability. For many entry level buyers in the Valley, that can mean several hundred dollars more per month.
But it’s not just about math. It’s about psychology.
Many buyers are asking:
• What if rates drop next week?
• What if the war escalates?
• What if we head into recession?
That uncertainty is causing part of the buyer pool to sit on the fence. Not because they can’t buy. Because they’re unsure what tomorrow’s headlines may bring.
This is where I continue to remind clients that real estate is always hyper-local.
National headlines matter. Rates matter. Even when you look at the Median price of the region it’s a broad number. But neighborhood specific pricing and buyer demographics matter just as much. Even adjacent San Fernando Valley communities can tell two completely different stories.
For example:
• Sherman Oaks median price: $2,447,565
• Van Nuys median price: $870,000
Those are adjacent neighborhoods, yet they represent completely different affordability levels and buyer pools. That means rate volatility affects each area differently. A luxury buyer in Sherman Oaks may absorb a rate increase more comfortably. A first time buyer in Van Nuys, Reseda, Winnetka, or Canoga Park may feel every eighth of a point.
Well Priced Homes Are Still Selling Despite the uncertainty, the market has not stopped. Serious buyers are still active. The difference is that buyers are more analytical and value focused than they were in prior years.
Current SFV single-family snapshot:
• 1,701 active listings
• 410 pending sales
• 496 closed sales
• 37 average days on market
• median sale price: $1,090,000
That tells us the market remains active. It is simply more selective.
Homes that are priced right, show well, and are in strong locations are still generating interest. Meanwhile, I’m sure we’re all hoping for a constructive resolution of the Middle East conflict ASAP… but we know that region has been at war with itself for centuries.
If you are in the Los Angeles area, and have any questions or real estate sales or financing needs, feel free to contact me
Ron Henderson GRI, SRES, SFR, RECS, CIAS, CREN, GREEN
President/Broker
Multi Real Estate Services, Inc.
Gov’t Affairs Chair – Southland Regional Association of Realtors (2025)
Gov’t Affairs Chair – California Association of Mortgage Professionals (2017-2018)
Chairman – OutWest Marketing Meeting (Real Estate Education)
DRE #00905793 NMLS #310358
www.mres.com
ronh@mres.com
Specialist in the Art of Real Estate Sales and Finance
Real Estate market, mortgage rates, Los Angeles, San Fernando Valley, Conejo Valley, Simi Valley, Woodland Hills, West Hills, Calabasas, Chatsworth
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