The Federal Reserve left interest rates unchanged at their recent meeting and signaled that they will be closely monitoring the data for improving signs on inflation to begin lowering, but a better-than-expected employment figures for January drove 10-year Treasury prices down and bond and mortgage rates rising this past week. The resilience of the macro economy may mean the anticipated rate cuts will be slower to manifest than many had hoped. However, weekly numbers on pending sales show that consumers were taking advantage of the recent reprieve on rates we enjoyed last month, and closed sales could begin to tick up as the spring homebuying season beings in earnest over the next few months.

 

Fed Holds Rates Steady, But Warn They May Be Slow Coming Down: The Federal Reserve’s Open Market Committee (FOMC) met last week and decided to leave rates unchanged, which was anticipated in advance by the market. The FOMC signaled that they were done raising interest rates, but that future cuts would be driven by sustained improvements in inflation. As such, many analysts have pegged May as the earliest that we might see the first cuts with deeper reductions in the Fed Funds Rate not coming until the second half of 2024. Yet despite no surprises from the Fed, the meeting was quickly followed by a very strong jobs report that sent the 10-year back above 4% and the daily reading on mortgage rates back above 7% for the first time this year.

 

Homebuyers Jumped Back In As Rates Came Down: The average 30-year fixed rate mortgage hit 6.61% at the end of 2023 and the beginning of 2024 and recent signs show that homebuyers responded. Mortgage purchase applications have been on the uptick for 4 weeks in a row with the overall index reaching its highest level since September 2023. In addition, pending sales data for January shows a double-digit increase over early 2023 levels with gains being reported in almost every region of the state. The number of new listings has picked up in recent weeks, but the corresponding increase in closed and pending transactions has caused the total active inventory to remain flat. Days on market has likely peaked for the year, reaching a high of 36 days in January compared to a median of 42 days last January. The ongoing competitiveness of California’s residential market suggests that the recent reduction in rates has only deepened the supply imbalance by bringing more buyers to the market with only a minimal amount of new inventory.

 

Strong Jobs Numbers Drive Bearish Bond Market: Last week, the nonfarm employment numbers blew past consensus expectations, which called for 180,000 new jobs in January compared with the actual tally of 335,000. Many of these new jobs were created in the state and local government sector, though many private-sector jobs were created as well. The unemployment rate held steady at 3.7% last month, but the labor force actually shrunk last month for the third time in the past 4 months suggesting that some workers have begun to get discouraged and give up on their job searches. Still, the new data on job openings shows that there are still roughly nine million open positions being advertised and the strong jobs numbers continue to reflect a solid pace of hiring.

 

Labor Markets May Not Be As Tight As We Think: The latest jobs report from the Bureau of Labor Statistics was well above expectations, but upcoming releases could be weaker than these headline numbers suggest. Each state is currently undergoing their annual benchmarking processes, which will bring the typical monthly estimates in line with payments into statewide unemployment insurance systems last year. These figures suggest that we may see 2023 employment levels revised downward in California. This is supported by the fact that initial claims for unemployment insurance (UI) in California have been rising since September of last year while continuing UI claims reached their highest levels since early 2022 last week.

 

Consumers Still Source Of Concern Despite Recent Strength: Although consumers remain unflappable due to strong labor markets and ongoing wage and productivity growth, they face mounting headwinds from rising debt levels, dwindling savings, and higher interest rates. Not only have revolving debt levels (i.e., credit cards) risen by roughly $300 billion dollars since the pandemic, but delinquency on those credit cards is up nearly 130% since 2021. In addition, savings rates dipped below 4% last quarter and the Fed’s report on money supply shows M2, which represents “cash, checking deposits, savings accounts, and other types of deposits that are readily convertible to cash such as CDs and money markets” – in other words, the money U.S. households have available to spend – has been shrinking for 13 months consecutively. This may begin to crimp spending in coming quarters if labor markets soften, which may ease inflationary pressure and help the Fed to justify more rate cuts.

 

If you have any questions or would like personalized advice regarding the current market conditions, please feel free to reach out. Your success in real estate is my top priority.

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For Rent

2892 Walker Lee Dr. 

Rossmoor 90720

5 Bed | 8 Bath | 6,041 SF | $15,000 / mo

 

Welcome home to perfection in this one-of-a-kind home in the highly sought after community of Rossmoor. Breathtaking elegance is evident upon arrival & deepens with the discovery of each exquisitely unique space, feature & divine amenity.  

12661 Martha Ann Dr.

Rossmoor 90720

4 Bed | 3.5 Bath | 2,221 SF | $6,500 / mo

 

Welcome Home - Located in the highly sought-after prestigious community of Rossmoor, Orange County. All elements throughout this 4 bedroom, 3.5 bath turn-key home come together to create a space that radiates contemporary style with modernist amenities.

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8738 Belmont St.

Bellflower 90706

3 Bed | 2 Bath | 1,276 SF | $699,000

 

An incredible opportunity awaits with this charming 3-bed, 2-bath single family home. Set on a spacious 7,004 sq ft lot, that beckons with endless possibilities for entertaining or even possibly adding an ADU. 

 

3825 Linden Ave. 

Long Beach 90807

3 Bed | 2 Bath | 2,142 SF | $1,250,000

 

Charming 1933 Spanish Stucco with many original features. This single story home is situated on one of the prettiest streets, walking distance to to both Atlantic Avenue and Long Beach Blvd. 

2512 W Beachy Pl Long Beach 90815

3 Bed | 2 Bath | 1,695 SF | $875,000

 

Embrace the charm of this lovingly maintained single-story home, cherished by the same family for over 50 years. Nestled on an expansive 10,948 sq ft lot, this property beckons with endless possibilities – from adding an ADU, a pool, more living space, or just simply reveling in the serene, park-like ambiance.

Recently Sold

2174 Stanbridge Ave 

Long Beach 90815

3 Bed | 2 Bath | 1,489 SF | $905,000

 

Nestled in coveted Los Altos... known for being pet & people friendly with awesome schools, parks, walkability & more! This immaculate & inviting 3 bedroom/2 bath home with its upgraded kitchen, baths, living room as well as spacious family room will go fast!

807 Delaware St

Huntington Beach 92648

4 Bed | 5 Bath | 3,237 SF | $2,605,000

 

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. 

5417 Bonfair Ave 

Lakewood 90712

4 Bed | 2 Bath | 1,746 SF | $950,000

 

Welcome to this recently updated 4 bedroom, 2 bath two story home located in the heart of Lakewood. 

251 Elm Ave. 

Long Beach 90802

2 Bed+Den | 3.5 Bath | 1,750 SF | $915,000

 

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.

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.

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. 

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.

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www.ImagineRealty.com

 

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