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Last week we celebrated the recovery of all jobs lost in 2020, and the unemployment rate dipped back to the lowest level since 1969. The latest jobs report showed that the labor market remains strong despite other signs of economic weakness. This unexpected surge in hiring, however, also put further pressure on the Fed to act aggressively in its fight against inflation. Aggressive interest rate hikes from the Fed are a potential threat to the economy at this point of the business cycle and could trigger further slowdown in economic activity in the upcoming quarters. With interest rates expected to rise while home prices remaining elevated, the housing market will continue to face growing affordability challenges in the near term.
California housing market continues to show signs of a slowdown: The latest daily-average weekly-sales number for week ending August 6 fell to the lowest this year and neared the lowest number recorded during the pandemic induced shutdown in 2020. Consistent with a softening single-digit price growth and an increasing share of active listings with price reduction reaching 41.4%, nearly 8/10 members of the California Association of REALTORS® (C.A.R.) indicated in the latest survey that buyers were indeed expecting lower prices. This combined with recent dip in mortgage rates will hopefully boost sales activity again in the coming weeks.
Mortgage rates dip below 5% but will likely bounce back: While mortgage rates remained volatile due to the tug of war between decades-high inflation and the possibility of a recession, the 30-year fixed-rate mortgage (FRM) dipped below 5% for the first time in nearly 4 months averaging 4.99% for the week ending August 4. The week prior, the 30-year FRM averaged 5.30% and the same week of last year it averaged 2.77%. Supply constraints and a tight labor market will likely push rates back up, especially since the Fed is determined to bring inflation down even at a cost of a slight economic downturn.
Strong jobs report cast doubt on the possibility of the recession: Nonfarm payrolls rose 528,000 in July, pushing the unemployment rate down to 3.5%. The unemployment rate is now back to its pre-pandemic level and tied for the lowest since 1969. Meanwhile, wage growth surged higher, as average hourly earnings jumped 0.5% from the prior month and 5.2% from the same time last year. The increase could have an effect on Fed’s monetary policy tightening decision as strong wage growth adds fuel to an inflation picture that already has consumer prices rising at their fastest pace since early 1980s.
More prospective buyers are actively searching for a home: The share of prospective buyers who were actively engaged in the process to buy a home rose to 49% in the second quarter 2022, after declining for 3 consecutive quarters. Fewer competitions and cooling off in demand for housing due to affordability constraints, led to a significant growth in housing inventory, which might have encouraged those who remained in the market to be more aggressive in their home search. An increasing number of homes with a price reduction might also have provided buyers an incentive to get back into the market.
Homeownership rate tickles up despite affordability challenges: The Census Bureau’s Housing Vacancy Survey (CPS/HVS) reported the U.S. homeownership rate at 65.8% in the second quarter of 2022, a slight increase from last quarter’s 65.4%. Buyers were feeling the budget pressure as rates continued to rise, but creative financing and the strong desire to own helped many buyers pushed through in the second quarter anyway. The national rental vacancy rate slipped to 5.6%, while the homeowner vacancy rate stayed at 0.8%. Both rental and homeowner vacancy rates were hovering near historical lows, reflecting tight housing market conditions.
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.
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Looking To Sell A Property That Needs Some Work?
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Does your property need some TLC or would having some improvements help you fetch top dollar? With our new listing concierge service we will coordinate getting your home all fixed up and ready to sell. We will manage the entire process of getting your home ready and all decked out with the latest trends, designs and materials. Our contractors are all licensed, bonded, and insured and do excellent work. Best of all, there is no money due up front. This saves you the time and expense of interviewing contractors, managing the work, and all the headache that goes along with fixing up a property. This enables our clients to position their property as "move in ready" to capture maximum buyer interest.
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700 E Ocean Blvd. #607
Long Beach 90802
1 Bed | 2 Bath | 880 SqFt | $625,000
Amazing ocean views from every room in this spacious, bright, beautifully updated modern open floor plan high-rise condo.
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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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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.
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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.
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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.
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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.
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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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421 N. Bellflower Blvd #221
Long Beach 90814
2 Beds | 2 Baths | 1,271 SqFt | $610,000
Live the beach life at this lovely resort style condo!!! Large 1,271sf, 2 bedroom, 2 bath end unit condo with a bonus room/den located near CSULB.
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1329 E 1st St. #16
Long Beach 90802
2 Beds | 2 Baths | 959 SqFt | $476,000
Great location just 2 blocks from the beach in Long Beach. This condo is on the first floor, faces towards the ocean, and the floor to ceiling windows fill the home with wonderful natural sunlight.
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