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Americans’ confidence rose to the highest level in six months in September and their spending remained steady despite higher prices. Wage growth, however, is not keeping pace with inflation and thus consumers are increasingly relying on their savings to offset the higher cost of living. As households’ savings dwindle while higher interest rates push up credit card debt, consumer confidence could dip in coming months as economic activity slows. As for the housing market, higher mortgage rates continue to worsen affordability and remain the major factor that holds back demand. Despite a slight improvement in sales in August, home buying activity is expected to be sluggish in the months ahead as rates remain high.

 

Mortgage demand declines as interest rates keep climbing: Applications for both purchase and refinance loans decreased last week as mortgage rates moved up to multi-year highs following another aggressive policy measure from the Fed to bring down inflation. Additionally, ongoing uncertainty about the impact of the Fed’s reduction of its MBS and Treasury holdings is adding upward pressure on mortgage rates. The 30-year fixed-rate mortgage averaged 6.70% as of September 29, the highest level since mid-2007 and was more than a percentage point higher than six weeks ago. With higher rates and economic uncertainty weighing on the decisions to buy, more buyers have opted to finance their home purchases with adjustable-rate mortgages (ARM), which generally have lower rates. The market share of ARM has grown to 10% of applications and reached nearly 20% of dollar volume last week.

 

Consumers gain confidence in September, though it may be short-lived: Both the consumer confidence index and the consumer sentiment survey showed improvement in consumers’ views towards their present situation as well as their inflation expectations. The near five-point gain in consumer confidence in September lifted the index to 108, the highest in five months. However, their views on inflation were likely influenced by declining gas prices and strong labor market during the time each respective survey was taken. With prices flaring up at the pump again in recent weeks and the Fed’s monetary policy tightening likely to have an impact on the economy soon, the confidence level could retreat in the next couple months.

 

Consumer spending rebounds, but high prices are chipping away at savings: Americans increased their spending by 0.4% in August, but stubbornly high inflation and a recent rebound in prices at the gas pump could stifle overall demand in the months ahead. With inflation outpacing wage growth, consumers continue to tap into their excess savings to offset the higher cost of living. The saving rate was as high as 26.3% in March 2021, but has since declined to 3.5% in August 2022, near levels seen during the 2007-09 Great Recession.

 

If you're ready 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.

 

Looking To Sell A Property That Needs Some Work? 

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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. 

3595 Santa Fe Ave. #21

Long Beach 90810

2 Beds | 2 Bath | 1,506 SqFt | $440,000

 

Why rent when you can own! Great opportunity to own this 2 bedroom 2 bath home in a gated community!

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819 Atlantic Ave. #1

Long Beach 90813 

2 Beds | 2 Bath | 1,219 SqFt | $565,000

 

Absolutely beautiful 2-story condo located in prime Long Beach just blocks away from downtown and the beach.

942 N. Loma Vista Dr.

Long Beach 90813 

2 Beds | 1 Bath | 1,158 SqFt | $785,000

 

Beautifully updated Craftsman home located in the Historic Willmore District overlooking Drake Park on a huge 8,536 sf lot.

4271 Petaluma Ave.

Lakewood 90713 

2 Beds | 1 Bath | 949 SqFt | $840,000

 

Looking for a home that is in pristine condition, immaculately clean, open, bright & cozy, in a premier location, on a tree lined street and with "wow factor" curb appeal and reasonably priced? Look no further.

4034 Country Club Dr.

Lakewood 90712 

3 Beds | 4 Baths | 3,358 SqFt | $1,819,798

 

Absolutely beautiful golf course, pool home in Lakewood Country Club Estates.

1210 E 11th St. 

Long Beach 90813

2 Beds | 1 Baths | 702 SqFt | $550,000 

 

Must see remodeled two-bedroom one bath home in Long Beach! Close to schools, shopping, restaurants, and freeways this home is conveniently located to all.

1310 E. Ocean Blvd #1403

Long Beach 90802 

2 Beds | 3 Baths | 2,014 SqFt | $1,575,000

 

Absolutely breathtaking ocean views from every room in this oceanfront penthouse condo at the Ocean Club

100 W 5th St #3C

Long Beach 90802 

3 Beds | 2 Baths | 2,147 SqFt | $955,000

 

Amazing loft at the Kress Lofts in Downtown Long Beach. This was the architect's home and features the largest floor plan in the building.

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