How the Iran War Could Affect Mortgage Rates and the Los Angeles Housing Market

Global events can have a surprising impact on the local housing market. While a conflict in the Middle East may seem far removed from buying or selling a home in Southern California, changes in oil prices, inflation, and government borrowing can influence mortgage rates and housing affordability.

In this market update, Scott Himmelstein of the Scott Himmelstein Group explains how the Iran war could affect mortgage rates, buyer demand, home prices, and real estate activity across Los Angeles and the San Fernando Valley, including Porter Ranch, Granada Hills, and Woodland Hills.

How the Iran War Can Influence Mortgage Rates

Mortgage rates are influenced by several economic factors, including inflation expectations and movements in the bond market. One important indicator is the 10-year U.S. Treasury yield, which often moves in the same direction as mortgage rates, although the relationship is not exact.

According to the video, a weaker-than-expected U.S. jobs report initially pushed Treasury yields lower, creating an opportunity for mortgage rates to decline. However, rising oil prices associated with the conflict introduced new concerns about inflation and borrowing costs.

This illustrates how quickly the economic outlook can change. Even when one development points toward lower mortgage rates, another can shift the market in the opposite direction.

For homebuyers in Los Angeles, these changes matter because mortgage rates directly affect monthly payments and how much home a household can comfortably afford.

Why Rising Oil Prices Matter to the Housing Market

Oil prices affect more than the cost of filling up a car. Higher energy prices can increase expenses across multiple industries, including transportation, manufacturing, shipping, and construction.

When businesses face higher operating and transportation costs, some of those expenses may eventually be passed on to consumers. This can contribute to broader inflation, which is closely watched by the Federal Reserve and financial markets.

The Strait of Hormuz is an important global shipping route for oil. When conflict threatens energy supplies or shipping through the region, oil markets may react to the possibility of disruptions.

For the housing market, the potential effects include:

• Higher transportation and delivery costs for building materials.
• Increased expenses for construction and home improvement projects.
• Renewed inflation concerns that could put upward pressure on borrowing costs.
• Greater uncertainty for buyers planning their monthly housing budgets.

These effects do not happen automatically or at the same pace. However, energy prices are one of several factors that can influence the broader economic environment in which the housing market operates.

How Inflation Can Push Mortgage Rates Higher

Mortgage rates do not simply follow the Federal Reserve’s decisions. They are also influenced by bond market expectations, inflation forecasts, and the broader outlook for the economy.

When investors become concerned that inflation will remain elevated, they may demand higher yields on Treasury bonds. Mortgage rates can rise alongside those yields, although lenders also consider other factors.

The video describes two competing forces. Weaker economic data can put downward pressure on rates, while rising oil prices and inflation concerns can push them higher.

This creates uncertainty for anyone hoping mortgage rates will fall soon.

Rather than assuming rates will move in one direction, buyers and sellers should understand that economic developments can change the outlook quickly.

What a Difference in Mortgage Rates Can Mean for Buyers

Even a modest change in a mortgage rate can affect a household’s monthly payment, especially when purchasing a higher-priced property.

The video uses a $400,000 property and a home priced around $1.4 million to illustrate how a difference between approximately 5.8% and 6.25% could affect monthly payments. The exact impact depends on the loan amount, down payment, loan term, and other financing details.

In a high-cost market like Los Angeles, buyers may already be stretching their budgets to find a home in their preferred neighborhood. A higher mortgage rate can reduce purchasing power or require buyers to reconsider their price range.

Before making an offer, buyers should:

• Calculate a monthly payment they can comfortably manage.
• Consider property taxes, insurance, HOA fees, and maintenance expenses.
• Review different financing scenarios with a qualified mortgage professional.
• Compare available homes based on their overall value, not just the asking price.
• Avoid making a purchase based solely on predictions about future mortgage rates.

The goal is to make a decision that works for your finances, even if market conditions change.

Will the Los Angeles Housing Market Crash?

Higher mortgage rates can make buying a home more difficult, but they do not automatically mean a housing market crash is coming.

Scott shares that his team continued to see buyer activity at open houses across Los Angeles, with more than 20 groups visiting each of several homes during the weekend described in the video. He also notes that well-priced properties in desirable locations continued to attract multiple offers.

These are observations from the team’s experience, not a complete measure of the entire Los Angeles housing market. Still, they illustrate an important point: buyer demand can persist even when financing becomes more expensive.

Housing decisions are driven by more than interest rates. People move because of new jobs, growing families, marriage, divorce, downsizing, and changing space requirements.

As a result, some buyers continue searching for homes even when the economic outlook is uncertain.

Why Limited Housing Inventory Can Support Home Prices

Another factor discussed in the video is the mortgage rate lock-in effect.

Many homeowners who secured low mortgage rates in previous years may be reluctant to sell if moving means taking on a substantially higher rate for their next home. Others may have paid off their mortgages and have different financial considerations.

When homeowners choose to stay put, fewer existing properties may become available for sale. Limited inventory can help support prices when buyer demand remains steady, although local conditions vary.

This dynamic is relevant to communities throughout the San Fernando Valley, including Porter Ranch, Granada Hills, and Woodland Hills.

However, low inventory does not guarantee that every property will maintain its value or attract competing offers. Pricing, property condition, location, and the number of comparable homes on the market all influence a home’s performance.

For sellers, understanding the competition and setting a realistic asking price remain important.

Rising Construction Costs Could Affect Housing Supply

Higher energy and transportation costs can also make residential construction more expensive. Building materials, appliances, and other supplies may be affected by changes in fuel prices and global shipping conditions.

If construction costs increase, builders may face additional challenges when developing new homes. Depending on market conditions, higher costs can affect project feasibility, new-home prices, and the pace of construction.

In areas where housing supply is already constrained, slower or more expensive construction could add to existing affordability challenges.

Still, construction costs are only one part of the supply picture. Land availability, labor costs, zoning, financing, and local development conditions also play important roles.

What Buyers Are Searching for in 2026

The video highlights several questions that reflect the uncertainty many buyers are facing:

• Is now a good time to buy a home in Los Angeles?
• Will mortgage rates drop in 2026?
• Should I wait for mortgage rates to go down?
• What is the Los Angeles housing market forecast?
• Is moving to the San Fernando Valley a good option?

There is no single answer that works for every buyer. Waiting for lower rates could help if rates decline, but future rates are uncertain. Meanwhile, home prices, inventory, and the selection of available properties may also change.

Some buyers may benefit from continuing their search while carefully evaluating affordability. Others may need more time to save for a down payment, improve their financial position, or wait for a property that fits their needs.

The important thing is to make a decision based on your own circumstances rather than relying entirely on a market forecast.

What Could Happen to Mortgage Rates Next?

Two broad economic forces could influence mortgage rates in different directions.

1. A slowing economy

If economic growth weakens and employment conditions deteriorate, investors may anticipate lower interest rates, potentially putting downward pressure on Treasury yields and mortgage rates.

2. Persistent inflation

If higher energy prices and other cost pressures contribute to persistent inflation, bond yields could remain elevated. Inflation concerns may also affect expectations for Federal Reserve policy, making it harder for mortgage rates to decline.

The direction of rates will depend on how these and other economic factors develop. No forecast can guarantee a particular rate or timeline.

For buyers, the more practical question is whether a suitable home is available at a price and monthly payment that make sense for their financial situation.

What Makes the Los Angeles Housing Market Different?

Los Angeles has a diverse economy, a wide range of communities, and neighborhoods with different housing options and levels of demand. The video points to areas such as Porter Ranch, La Cañada Flintridge, Long Beach, Studio City, and Woodland Hills as examples of locations that attract buyers for factors including schools, outdoor space, and access to other parts of the region.

The San Fernando Valley also offers a variety of communities for people with different budgets, lifestyles, and commuting needs.

However, real estate conditions can vary significantly from one neighborhood to another. A broad market headline may not accurately reflect what is happening with a specific property type or price range.

Buyers should compare current listings, recent comparable sales, and their financing options. Sellers should review competing inventory and recent market activity before deciding how to price and prepare their homes.

Practical Advice for Homebuyers and Sellers

For buyers, higher mortgage rates make it especially important to understand the full cost of ownership. Get financing guidance, establish a comfortable budget, and evaluate each home based on your needs and long-term plans.

For sellers, preparation and pricing remain essential. Buyers may be more careful about their spending and more willing to negotiate repairs or other terms. A home that is priced realistically and presented well may be better positioned to compete.

For both groups, avoid making major decisions based on a prediction that mortgage rates will rise or fall by a specific amount. Focus instead on your financial readiness, timing, and the realities of the local market.

Final Thoughts: How Global Events Affect Local Real Estate

The Iran war, rising oil prices, inflation concerns, and Treasury yields demonstrate how global developments can influence mortgage rates and housing affordability in Los Angeles.

At the same time, local real estate markets are shaped by inventory, buyer demand, property condition, neighborhood preferences, and personal circumstances. Higher mortgage rates do not automatically mean a housing crash, just as limited inventory does not guarantee that every home will sell quickly or at a premium.

If you’re considering buying in Los Angeles, moving to the San Fernando Valley, or selling a home in Porter Ranch or Granada Hills, take time to understand the conditions affecting your specific neighborhood and budget.

Watch the Video

For Scott Himmelstein’s full discussion of the Iran war, mortgage rate trends, and the Los Angeles housing market, watch the accompanying market update from the Scott Himmelstein Group.

This article summarizes the market commentary in the video. Economic figures and market observations reflect the information presented at the time of filming and should not be treated as current forecasts or guarantees. Mortgage rates, housing conditions, and individual financing outcomes can change.