Recently updated guidance shows that consumers should prepare for interest rates to remain elevated for longer than initially anticipated as the economy, and labor markets in particular, continue to outperform expectations and keep inflation above the target range. Homebuying demand, though still grappling with reduced affordability as rates remain above 7%, saw a modest increase last week, but market trends over the past 2 months suggest that buyers and sellers are beginning to negotiate more with most measures of competitiveness having eased slightly, but consistently, over the past 8 weeks.
Unemployment claims show labor market still tight: In addition to a strong jobs report for August, which showed a net increase of 23,100 new nonfarm jobs, the latest weekly data showed that Californians were filing new claims for unemployment insurance at the lowest rate since October of 2022. Last week, 35,040 new claims were filed with the state’s Employment Development Department—roughly 1,500 fewer claims than were filed the week prior, which is more than 28,000 few UI claims than were filed during the second week in January. Although tightness in the labor market has been a source of upward pressure on inflation, remaining at or near full employment has helped broader macroeconomic growth perform above expectations over the short run.
New California Association of Realtors forecast shows stronger sales and prices in 2024: Last week, C.A.R. released its housing market and economic forecast for 2024, which predicts a modest increase in both home sales and in home prices next year. Although the state is not expected to return to the elevated levels reached during 2021, existing single-family transactions are expected to rise to nearly 330,000 units. This would represent a 22.9% increase from a projected 266,100 units this year. Home prices, which continue to be driven higher by a dearth of available inventory, will continue to rise in 2024, with the median price expected to reach $866,300 on an annual basis—a 6.2% increase from 2023 and slightly higher than the original projection for last year. The recovery is likely to remain subdued, but both inventory and sales should pick up in the second half of the year as rates begin to dip slightly.
Mortgage applications rise slightly after 8 consecutive declines: Demand for homes continues to come in well below the 15-year highs reached over the past two years, but new mortgage purchase applications perked up slightly last week despite rates trending higher. The overall index rose 12% last week, bucking the 8-week slide that began in July. Despite this modest bump, September as a whole is coming in 12% below August and more than 25% lower than September 2023. There remains growing interest from investors, second/vacation home sales, and from international buyers, but first-time buyers remained challenged by decreasing affordability while repeat sales are locked into their current homes by low rates on their existing mortgages and an increasing number of long-time homeowners facing potential capital gains if they were to sell their existing residence.
Fed signals higher for longer strategy at latest FOMC meeting: The Federal Reserve’s Federal Open Market Committee (FOMC) met last week and voted to keep their target interest rate the same at 5.5%. Although this was the expected outcome by oddsmakers, policymakers did signal that they may have to keep rates higher for longer in order to ensure that inflation is tamed. The ‘dot plot,’ which is an estimation of where policymakers think rates need to be in order to achieve their dual mandate of full employment and price stability, showed that rates will need to remain elevated longer than was anticipated when they made their last set of projections at the end of June. Three months ago, consensus expectations amongst voting members called for a 4.5% Fed Funds Rate in 2024, which equated to a 100 basis-point reduction. The new average for 2024 of 5% means the Fed Funds Rate is currently scheduled to come down roughly half as much next year as originally signaled.
California market softens slightly ahead of winter amidst rising rates: The latest on California’s housing market shows that sales have not dipped back to the lows reached during the winter of 2022, which rates initially rose above 7%. However, transactions did dip below 260,000 units for the first time since January. Additionally, pending sales suggest a sluggish next few months as new escrows dipped by more than 23% from 2022’s relatively lackluster pace in August. In addition, competition has eased slightly as we approach the winter months as the number of homes being reduced has been rising in recent weeks while the percentage of homes selling above their listing price on the MLS has been falling. The rebalancing has been slight, with homes sold above asking price down from 52% in June to 46% last week, but it has been consistent for the past 3 months. The market remained characterized by too little inventory, but as the typical homebuying season has ebbed, homes are taking slightly longer to go pending and buyers and sellers are beginning to negotiate more.
If you would like to discuss if now is a good time for you to buy, sell, or invest in a home or investment property, please feel free to contact me.
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251 Elm Ave.
Long Beach 90802
2 Bed+Den | 4 Bath | 1,750 SF | $900,000
OPEN HOUSE
Sunday 12:00-3:00 pm
This exceptional modern townhome at The Huxton built in 2018 boasts 2 bedrooms, a den/great room, and 4 baths spanning 1,750 square feet. The large rooftop deck off the top-floor den/great room provides an exceptional indoor/outdoor living experience with seamless tri-fold sliding doors.
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4200 Via Norte
Cypress 90630
4 Bed | 3 Bath | 2,915 SF | $1,550,000
This luxurious 4-bed/3-bath Cypress home was expertly upgraded from the inside - out! No stone was left unturned in the vigorous pursuit of redesigning and upgrading this nearly 3,000 sqft Greenbrook home.
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436 N Bellflower Blvd #104
Long Beach 90814
1 Bed | 1 Bath | 693 SF | $475,000
Resort living in the heart of Long Beach. Stoneybrook is a highly desirable Gated Community. Walking distance to shopping, restaurants, Cal State Long Beach, the VA Medical Center and the Colorado Lagoon.
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2059 W 160th St.
Torrance 90504
2 Bed | 1 Bath | 837 SF | $779,900
Discover Your Dream Home in North Torrance! This charming 2-bedroom home is nestled on a serene residential street, offering you a remarkable opportunity to own in this sought-after neighborhood with great schools.
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807 Delaware St
Huntington Beach 92648
4 Bed | 5 Bath | 3,237 SF | $2,750,000
Tesoro Builders has created another extraordinary opportunity to own a brand new, custom designed single-family home in the heart of highly coveted downtown Huntington Beach. The epitome luxury living offers an exceptional beach lifestyle. Starting at $2,750,000, based on options and interest.
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1669 E 65th St.
Long Beach 90805
2 Bed | 2 Bath | 1,023 SF | $635,000
Charming Spanish style home with large living room with ample windows allowing plenty of natural Light, original hardwood floors, updated kitchen, central heat and AC, and a permitted rumpus Room with ADU potential.
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781 W 30th St
San Pedro 90731
3 Bed | 2 Bath | 2,067 SF | $1,225,000
Stunning 3-bed, 2-bath home with breathtaking ocean views in Coastal San Pedro. Experience the beauty of the ocean from the front yard, primary bedroom, and the expansive backyard. Situated on a generous 9,576 SF lot, there's plenty of space to potentially add an ADU.
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773 W 30th St
San Pedro 90731
3 Bed | 2 Bath | 1,040 SF | $955,000
Enjoy beautiful ocean and harbor views from the front yard, living room, and the expansive backyard. This 3-bed, 2-bath home offers even more possibilities with an additional enclosed patio area currently staged as a family room and game room. The spacious 8,904 SF lot provides ample room for expansion, including the possible potential to add an ADU.
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1007 Catalina Ave #108
Redondo Beach 90277
2 Bed | 2 Bath | 1,181 SF | $1,175,000
Welcome to Your Dream Beach Home! A Stunning 2 story, 2 bedroom, 2 bath condo located half a block to the beach. Beautifully updated throughout with dramatic high ceilings, gorgeous kitchen, and an abundance of natural light and open space.
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985 S. Idaho Ave. #60
La Habra 90631
2 Bed+Den | 2 Bath | 1,073 SF | $505,000
This 2 bedroom plus a den (currently being used as a 3rd bedroom) is tucked away in a peaceful serene location surrounded by beautiful trees in the Woodlake Villas of La Habra.
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211 Saint Joseph
Long Beach 90803
3 Bed | 2 Bath | 1,057 SF | $1,299,000
Welcome to this charming Belmont Shore home located just 4 blocks to the beach! Enjoy the open concept floor plan, granite countertops, hardwood flooring, and a serene primary suite with a spa-like bathroom. Don't miss this opportunity for coastal living at its finest!
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5528 Pearce Ave.
Lakewood 90712
3 Bed | 2 Bath | 1,592 SF | $845,000
The "Honey Due" list has already been done for you; all you have to do is move in and start enjoying this 3-bedroom 2 bath Lakewood home. Open concept kitchen with newer cabinets, stainless steel appliances and granite countertops.
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Tim Majka
(562) 900-9430
Tim@ImagineRealty.com
www.ImagineRealty.com
DRE#01399855
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