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Mortgage rates continue their upward climb as daily rates top 8% this week. This comes as the bond market continues to price in “higher-for-longer” and rates for 10-year notes are quickly approaching 5% after remaining relatively flat through the first half of this year. Despite this, consumers remain a driving force of growth in the U.S. economy and this was reflected in last month’s labor market statistics for California that kept leisure and hospitality at the fore. Housing supply remains depressed and this is behind slower home sales in California, but despite the impacts to buyer demand as rates increase, home prices logged their third consecutive year-to-year increase last month.
Benefits of homeownership still alive and well: The Federal Reserve released its 2022 Survey of Consumer Finance report last week, which showed that homeowners continue to account for the majority of wealth accumulation in the U.S. Last year, the typical, inflation adjusted, net worth for a U.S. household rose to $192,900. However, broken down by housing tenure shows that homeowner wealth reached a median of $396,200 last year, while median net worth for renters was just $10,400. This is only $1,000 higher than the previous all-time high set back in 1995 and demonstrates that renting continues to disappoint when it comes to generating wealth and highlights why owning a home is a wise long-term financial move.
Consumers remain undaunted by rates or debt levels: Despite the fact that credit card debt has risen by nearly $150 billion compared with pre-pandemic levels, retail sales rose again in September as consumers continue their assault on the services sector. Although some of this credit card debt has begun to grow delinquent, spending at bars, hotels, and restaurants remain strong. Even after netting out above-average inflation levels for the past year, real retail sales remain more than 10% above spending levels from January 2020.Given that consumers represent nearly 70% of U.S. gross domestic product (GDP), this suggests that 3rdquarter economic growth could come in much stronger than originally forecast, which will prevent the Federal Reserve from considering any potential rate cuts until next year.
Housing starts up for now, but not many single-family homes: Housing inventory remains the limiting factor on rebounding home sales, which is why last week’s updated housing starts for September were a source of hope against a backdrop of otherwise challenging market news. The number of new residential housing starts rose to a 1.4 million unit pace last month. This is still likely below the level needed to meet demand given the lackluster numbers of the previous two years, but encouraging that new projects are moving forward despite the recent increase in mortgage rates. However, much of the activity was concentrated in multi-family building and the sustainability of the uptick has yet to be proven.
Rates continue to rise as bond market prices in “Higher for longer”: Daily averages for 30-year, fixed-rate mortgages have broken the 8% threshold this week as the bond market digests and accepts the Federal Reserve’s promise to keep rates higher for longer than originally anticipated. The current rate on a 10-year Treasury is quickly approaching 5% despite recent comments from the Fed Chairman that they are unlikely to raise rates before the end of the year and a flight to the safe haven of U.S. Treasuries as the conflict in the Middle East threatens to impact oil supplies. Although this means that the yield curve, which measures the spread between short- and long-term Treasuries and is typically a consistent indicator of future recession, is less inverted, it has come at the cost of higher mortgage rates that are increasingly likely to remain elevated through the end of the year.
California market trends down as rates rise: California’s housing inventory remains very tight, even by the standards of the past few years. However, the recent rise in rates in also having a more pronounced effect on homebuyer demand than it has up to this point in the recovery. Home sales trended back down to roughly 240,000 units last month. This is still slightly above the low-point reached back in November 2022, when sales fell to 235,000 units, but underscores that the return to more ‘normal’ levels of transactions will be a gradual process of fits and starts. Home prices are still on the uptick, and despite dipping slightly from August for seasonal reasons, the median closed price of an existing single-family home in California rose for its 3rd consecutive month on a year to year basis.
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.
Hope you have a great Halloween!
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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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930 E 1st St. #2
Long Beach 90802
1 Bed | 1 Bath | 557 SF | $299,900
Charming top floor, one-bedroom, one-bath gem just steps from the beach in the vibrant heart of Alamitos Beach! This exceptional upper-level, corner unit offers an ideal opportunity for home buyers, savvy investors, or those seeking a beachside retreat.
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251 Elm Ave.
Long Beach 90802
2 Bed+Den | 3.5 Bath | 1,750 SF | $900,000
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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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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2059 W 160th St.
Torrance 90504
2 Bed | 1 Bath | 837 SF | $780,000
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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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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4200 Via Norte
Cypress 90630
4 Bed | 3 Bath | 2,915 SF | $1,470,000
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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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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Tim Majka
(562) 900-9430
Tim@ImagineRealty.com
www.ImagineRealty.com
DRE#01399855
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