How much difference does a half-point drop in mortgage rates really make in the South Bay housing market?
Everyone talks about mortgage rates, but fewer people look at how rate shifts actually play out in real-time market activity. So we did just that. By reviewing the last three 0.5% drops in interest rates over the past few years, we uncovered what it means for buyer behavior, competition, and home values across the Beach Cities.
Why 0.5% Matters More Than You Think
A half-point drop in rates may not seem dramatic, but in high-priced areas like Manhattan Beach or Redondo Beach, it can shift a buyer’s monthly payment by hundreds of dollars—and their purchasing power by tens of thousands.
Let’s say rates go from 7.25% to 6.75%:
• On a $1.5M loan, that’s roughly $450/month in savings
• Over 30 years, it adds up to $162,000 saved
• Buyers can often afford $75K–$100K more in price for the same monthly cost
The Last Three Drops: What Happened in the South Bay
📉 Drop #1: Fall 2022 – From 7.0% to 6.5%
Market Response: A surge in showing activity, especially among buyers who had been waiting on the sidelines.
Local Insight: Redondo Beach townhomes saw a small bump in sales volume as affordability briefly improved.
📉 Drop #2: Spring 2023 – From 6.75% to 6.25%
Market Response: Increased multiple-offer situations in Hermosa and Manhattan Beach for homes under $2M.
Local Insight: Buyers who had paused their search in Q4 2022 jumped back in quickly, pushing homes into escrow within days.
📉 Drop #3: Winter 2024 – From 7.125% to 6.625%
Market Response: Noticeable pick-up in open house traffic, especially for newer listings.
Local Insight: Inventory remained tight, but listings that were priced right moved faster.
What It Means for You
When rates dip, even slightly, buyers re-enter the market quickly. That creates:
• More competition for well-priced homes
• Shorter days on market
• Pressure to act fast if you’re a buyer
• A window of leverage if you’re a seller listing at the right moment
Final Takeaway
A 0.5% rate drop can change the entire tempo of the South Bay market. Whether you’re looking to buy or thinking of selling, timing your move around these windows can be the difference between waiting and winning.
Want to know how today’s rate shifts could affect your next move? Follow our latest market updates with our monthly newsletter or give me a call.
