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A set of refreshing news last week provides a glimpse of hope in an otherwise gloomy forecast for the rest of the year. The biggest news is the cooling of the Consumer Price Index (CPI), which slowed for the third consecutive month in December. While heading in the right direction, inflation remains above the Fed’s target, which means the battle to get it under control isn’t over. With prices easing, consumers assessment of their current situation as well as their future expectations improved, though remain at historical lows. And while the real estate market remains sluggish, the latest retreat in mortgage rates has continued to spur mortgage application activity and offer hope that the market might have already reached its bottom.
Mortgage applications improve as rates resume decline: Total mortgage applications as of January 6 increased 1.2% from the week prior as rates began to retreat. Mortgage demand remains ultra-sensitive to changes in interest rates as applications to purchase and refinance continue to fluctuate from week-to-week. Purchase applications, despite a slight reprieve in interest rates, declined 1% from the week earlier on a seasonally adjusted basis to the lowest level since 2014. Meanwhile, refinance applications, while still 86% behind the same week from a year ago, increased 5% as a result of a sizeable weekly decline in rates. According to Freddie Mac’s weekly survey, the 30-year fixed-rate mortgage (FRM) averaged 6.33% as of January 12, which was down from 6.48% the week prior.
Inflation eases for third consecutive month, Fed’s battle is far from over: The Consumer Price Index (CPI) fell 0.1% in December, recording the largest monthly decline since April 2020. The modest deflation in prices closed out the year as the third consecutive month showing signs of slowing prices. A retreat in prices at the pump, grocery stores and prices for used autos aided the index lower. Nevertheless, services and particularly shelter costs remain elevated which keep the headline CPI and Core inflation above last year’s levels by 6.5% and 5.7% respectively. Persistent elevated prices will likely keep the Fed pressing on – albeit at a slower pace - to get inflation under control.
Consumer sentiment improves as Americans regain some purchasing power: As inflation eases further from its record high established mid-year 2022 and wage growth moderates, consumers are finding relief and feeling optimistic. The latest consumer sentiment reading from the University of Michigan of 64.4 in January, is the highest in the past 12 months and the biggest monthly uptick since August. Consumers current assessment of personal finances surged 16% to its highest level in 8 months. With prices showing signs of cooling, their short-term inflation expectation improved. Alas, while Americans are regaining some purchasing power and are boosting their sentiment, their attitude and spending behavior remain cautionary.
If you would like to discuss today's market and whether now is a good time for you to buy or sell, give me a call at (562) 900-9430.
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5250 E. Lomita Ave.,
Orange 92869
32,924 SqFt of Residential Land | $725,000
Located on a private street with custom homes, this 32,924 SqFt lot comes with plans for a 5000+ SqFt custom home featuring amazing views.
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5221 E Patterson St.,
Long Beach 90815
4 Beds | 2 Baths | 1,627 SqFt | $875,000
Wonderful home in the Stratford Square area of Long Beach. Lovely neighborhood known for its award winning schools.
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5763 Eckleson St.,
Lakewood 90713
3 Beds | 2 Baths | 1,694 SqFt | $799,900
Beautifully updated 3 bedroom, 2 bath home in the heart of Lakewood on a tree lined street only minutes from great parks, schools, and nearby freeways.
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17141 Harvest Ave.,
Cerritos 90703
5 Beds | 3 Baths | 2,739 SqFt | $1,275,000
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635 E Bonds St.,
Carson 90745
3 Beds | 2 Baths | 1,406 SqFt | $650,000
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1215 Ohio Ave #2A,
Long Beach 90804
2 Beds | 2 Baths | 898 SqFt | $453,500
Nicely updated 2 bedroom, 2 bath,
2 story townhome style condo with a private garage.
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853 E. Helmick St.,
Carson 90746
4 Beds | 2 Bath | 1,612 SqFt | $820,000
Welcome home to this beautiful 4 bedroom home in a highly sought after neighborhood in Carson.
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