If you’ve been keeping an eye on the housing market lately — or thinking about making a move — you’ve probably noticed that mortgage rates aren’t cooperating the way many of us had hoped. After more than a year of gradual decline, rates have started climbing again. So what does that mean for buyers and sellers here in San Pedro, Rancho Palos Verdes, and the South Bay? Here’s the full picture.
Rates Went Down — Then Came Back Up
Back in January, C.A.R. was forecasting the average 30-year fixed rate would settle in the 6.0% range for 2026, and for a brief stretch in late February and early March, that’s exactly where we landed. Then came the reversal. As of late May, rates are back near 6.6%, according to Mortgage News Daily. The culprits are familiar: lingering global instability, Middle East tensions, and inflation that has proven difficult to fully extinguish. As Colin Robertson of The Truth About Mortgage put it, high oil prices feed inflation expectations, which translate directly into higher bond yields and mortgage rates.
Should You Just Wait It Out?
We hear this question constantly right now. Here’s our honest take: waiting indefinitely for dramatically lower rates is probably not a winning strategy. Most experts agree rates are unlikely to fall significantly until both inflation cools and geopolitical pressures ease — and even then, expectations point to the low-to-mid 6% range, not a return to the 3% era.
In the meantime, our local market has held its value. The South Bay median sales price climbed to $1,285,000 last year, up 7% year over year. In San Pedro specifically, the median reached $1,000,000, a gain of 5.2% from 2024. Waiting hasn’t meant prices are dropping; for many buyers who paused, prices simply kept moving up around them.
The Part the Headlines Are Missing
Here’s something encouraging that doesn’t get enough attention: wages have been growing faster than home prices. Data from the Federal Reserve Bank of Atlanta and Redfin shows wages increasing at roughly 4% annually, while home price growth has slowed to approximately 2%. When income rises faster than prices, affordability quietly improves over time — even when rates aren’t helping. Add to that an improving inventory picture that’s giving buyers more choices and more negotiating room than we’ve seen in years, and the full picture is more encouraging than the headlines typically suggest.
Yes, affordability is a real challenge right now and we won’t pretend otherwise. But buyers who are well-prepared and working with a local expert are still finding opportunities in this market. If you’d like to run the real numbers for your situation, we’d love to have that conversation. Reach out at info@hhcoastal.com or visit www.hhcoastal.com.
Mike Harper and Peter Hazdovac are both licensed Realtors® and co-owners of HH Coastal Real Estate, an independent local brokerage. For more info, visit www.hhcoastal.com.
