Market Conditions & Interest Rates
How do you see interest rates evolving through the rest of 2025, and what impact are they having on affordability and demand in Los Angeles right now?
Interest rates are expected to trend gradually lower into late 2025, creating opportunities for buyers to lock in at improved levels. Even with today’s rates, motivated buyers are active, and properties in desirable neighborhoods are still drawing multiple offers. A buyer who secures a $1M home today may benefit from refinancing later, while also enjoying equity growth sooner.
With rates at their current levels, what creative financing strategies (buy-downs, ARMs, jumbo options) are you recommending to help buyers stay competitive?
A popular option in today’s market is the 2/1 buy-down, where the interest rate is reduced by 2% in the first year and 1% in the second year before adjusting to the full rate. This creates a smoother payment transition for buyers and makes homes more attainable without requiring sellers to reduce their price. For example, a seller’s credit towards a 2/1 buydown can lower a buyer’s payment by several hundred dollars per month in the early years, making the property significantly more attractive.
Are you noticing lenders loosening or tightening qualification standards compared to 2023–2024?
Compared to 2023–24, lenders are offering more creative programs, particularly for self-employed clients and buyers with strong assets. Documentation remains important, but lenders now offer more tailored programs that make it easier for qualified buyers to complete their purchase.
Buyer Positioning
For first-time buyers in LA, what’s the smartest way to prepare financially in today’s market?
The best way to prepare financially is to start early with a clear savings plan for the down payment, closing costs, and reserves for future expenses. Building strong credit and minimizing other debts will also improve loan terms and increase purchasing power. Getting fully pre-underwritten before beginning the search is key. It shows the sellers that you’re a serious buyer and helps you know exactly what you can afford. Combined with programs like FHA, 3% down conventional, and first-time buyer assistance, this preparation puts buyers in the best position to confidently step into homeownership.
How important is speed vs. strength (i.e., pre-approval, cash reserves, appraisal gap coverage) when writing an offer this year?
In today’s market, sellers place the greatest value on strength and certainty. A clean offer free of unnecessary contingencies and supported by full pre-underwriting, proof of funds, and well-organized documentation, gives sellers confidence that the transaction will close smoothly. Buyers who provide this level of preparation consistently stand out, even in competitive situations, because their offers feel solid, reliable, and ready to move forward without surprises.
What are the biggest mistakes you see buyers making when it comes to financing in a competitive LA market?
One of the biggest mistakes buyers make is beginning their home search without being fully prepared financially and on paper. The most successful buyers take the time to secure pre-underwriting, organize funds for down payment and closing costs, and have their documentation ready to present. This preparation not only builds confidence but also allows them to act quickly and stand out when the right property becomes available.
Seller Positioning
From a lending perspective, how can sellers make their properties more attractive to today’s buyers who are rate-sensitive?
Sellers can stand out by offering buyer-friendly terms such as credit towards the buyers’ closing cost, or towards rate buy-down options. A $15K seller credit toward a rate buydown, for example, can make a listing far more appealing than a similar home priced slightly lower.
Are you seeing more buyers request concessions or rate buy-downs as part of their offer structure, and how should sellers think about negotiating those?
Concessions have become a smart tool for creating win–win transactions. Rather than being viewed as a weakness, offering items like rate buydown credits or assistance with closing costs can make a property stand out to motivated buyers and help deals move forward quickly. Sellers who use concessions strategically often achieve stronger overall results, such as securing a full-price offer or reducing time on market, while giving buyers added confidence and peace of mind in their purchase.
Neighborhood & Product Trends
Are you noticing differences in financing patterns between luxury properties, condos, and entry-level homes in LA?
Financing trends vary widely by price point. First-time and entry-level buyers are often using FHA or low-down payment conventional programs, which make ownership possible with smaller upfront costs. Condos remain attractive for affordability, though buyers and lenders carefully review HOA health to ensure smooth financing. In the luxury segment, jumbo loans and cash remain dominant, allowing high-end markets to stay vibrant and competitive.
How are jumbo loan products shaping the high-end market in areas like Beverly Hills, Hollywood Hills, and Santa Monica?
Jumbo financing continues to fuel the high-end market, giving buyers in the $3M–$5M range strong purchasing power. In many cases, jumbo rates are just as competitive or even more favorable than conforming loans, which gives luxury buyers confidence to move forward. This has kept the high-end markets highly active, with well-qualified buyers able to secure premium properties without hesitation.
Looking Ahead
What’s your outlook for buyer demand in LA through 2025 given potential Fed moves and inventory levels?
Following the Fed’s recent decision to lower the federal funds rate by ¼ percentage point, buyer optimism is rising. As a result, buyer demand is expected to strengthen in the coming months, especially for homes that are well-located and move-in ready. Inventory remains tight, which will keep competition alive in desirable neighborhoods. Therefore, buyers who have their financing lined up, documents ready, and are ready to act will be best positioned to take advantage of this improving environment.
If you had to give one piece of advice to someone planning to buy or sell in the next 12 months, what would it be?
Buyers should focus on preparing early with strong financing, complete documentation, and a clear plan! This position helps them to move confidently and win when the right home appears. Sellers, on the other hand, can achieve the best results by pricing in line with today’s market and highlighting flexibility, such as offering credits for buydowns or closing costs. With this approach, both buyers and sellers create win–win scenarios that lead to smoother, faster, and more successful closings.
Thanks so much to Senior Mortgage Advisor Eric Hartoony of Premier Plus Lending for this helpful information. If you’re a buyer in LA and need Eric’s contact information, don’t hesitate to drop me a note in the “Work With Tara” tab at the top of my website and I’ll be happy to make an introduction.
Warmly,
Tara
