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Fed Cuts Rates: What This Means for Southern California's Housing Market
For the first time since 2020, the Federal Reserve lowered the fed funds rate by half a percentage point last week. This move, although widely anticipated by the market, didn’t immediately impact mortgage rates. However, the central bank's ongoing strategy of lowering rates is expected to bring long-term benefits to homebuyers and sellers in Southern California.
Rate Cuts and the Impact on Mortgage Rates
The Federal Reserve's recent 50-basis-point (bps) rate cut marks the first in four years, with two additional cuts likely before the year ends. With inflation trending downward and job growth slowing, experts predict that mortgage rates will gradually decline throughout the rest of 2024 and into 2025. Although rates ticked up slightly after the announcement, the overall trend should continue downward, providing relief to prospective homebuyers.
Housing Market Trends: Buyers in ‘Wait and See’ Mode
Despite lower mortgage rates, home sales in California took a step back in August. Closed sales fell by 6.3% from July, reaching a seven-month low. However, pending sales are showing signs of improvement, with a 7.7% year-over-year increase in August. This upward trend in pending sales could lead to a solid rebound in closed sales by September, as buyers who had adopted a “wait and see” approach may return to the market.
Moderating Home Prices in California
Home prices in California continue to grow, but at a slower pace. The statewide median price in August showed a modest 3.4% increase year-over-year, marking the smallest gain since September of last year. Month-over-month, prices rose just 0.2%, the smallest July-to-August increase since 2008. While prices may soften as the market enters the off-season, year-over-year growth is still expected through the end of the year.
Home Building Sees a Boost
In August, U.S. residential construction rebounded, with housing starts surging 9.6% from the previous month. Lower mortgage rates and an improving outlook for builders fueled this growth, particularly in single-family homes, where construction activity saw a strong 15.8% increase. However, the momentum may slow as more existing homes come on the market, potentially reducing demand for new construction.
Outlook for Southern California’s Market
While the Fed's recent rate cuts may not have an immediate impact on mortgage rates, the long-term outlook for the housing market is positive. As rates gradually decline and home prices soften, buyers and sellers in Southern California could see increased activity throughout the fall and into 2025.
If you have any questions about how these trends could affect your home buying or selling decisions, feel free to reach out!
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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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We have negotiated great terms with our contractors and they don't get paid until the work is done and the home is sold.
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488 E Ocean Blvd #P9
Long Beach 90802
2 Bed | 1.5 Bath | 1447 SF | $799,900
Experience Luxury Living with Breathtaking Panoramic Views in this Rare Two-Story Penthouse! AMAZING VIEWS!! Discover unparalleled luxury in this stunning 18th & 19th-floor penthouse in the prestigious Aqua high-rise building in downtown Long Beach.
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3503 Marber Ave.
Long Beach 90808
3 Bed | 2 Bath | 1553 SF | $1,050,000
Impeccable South of Conant Home on a Beautiful Tree-Lined Street! This charming 3-bedroom, 2-bath home in a highly sought-after neighborhood exudes curb appeal with designer touches throughout.
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2101 E 2nd St #205
Long Beach 90803
2 Bed | 2 Bath | 1064 SF | $689,900
Enjoy the ocean breeze in this beautiful condo located just 2 blocks to the beach and across from Bixby Park. Walking distance to the beach, Retro Row, Broadway Ave, dog park, Farmer’s Market, and all the great local restaurants, cafes, and nightlife.
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6713 E Almada St
Long Beach 90815
4 Bed | 3 Bath | 2136 SF | $1,174,900
Welcome to Your Dream Home in Los Altos! This stunning 4-bedroom, 3-bathroom, 2-story home is a rare find in the highly sought-after Los Altos community. Conveniently located near Belmont Shore, this home offers easy freeway access, making commuting a breeze. You'll be close to parks and highly rated schools, perfect for families and outdoor enthusiasts alike.
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6600 Warner Ave #182
Huntington Beach 92647
1 Bed | 1 Bath | 765 SF | $425,900
Highly sought after top floor condo at Villa Warner iin Huntington Beach! This beautiful condo offers plush carpeting, smooth ceilings, recessed lighting, large living room with sunny balcony! Villa Warner is a gated community and offers a large pool, spa, cooking area, weight room, billiards room, Extra storage, close to the Ocean, shopping & restaurants.
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1168 E 10th St #224B
Long Beach 90813
2 Bed | 2 Bath | 698 SF | $410,000
Great opportunity to own this nicely updated 2 bedroom, 2 bath, top floor corner condo with views of Signal Hill. Just a short drive to downtown Long Beach and to the beach!
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525 E Seaside Way #1508
Long Beach 90802
2 Bed | 2 Bath | 1030 SF | $790,000
Enjoy breathtaking ocean views from the living room, bedrooms and the patio in this modern luxury 2 bed, 2 bath highrise condo. Short distance to the beach, harbor, Shoreline Village, Terrace Theater, restaurants, nightlife, and so much more!
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3022 Bostonian Dr.
Rossmoor 90720
4 Bed | 3 Bath | 2,612 SF | $1,700,000
Welcome Home - Updated Kempton model home featuring 4 bed, 3 baths in Rossmoor. Located within a short distance to parks and shopping. Just a short drive to the Seal Beach pier. Great schools in the award winning Los Alamitos school district.
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700 E Ocean Blvd #607
Long Beach 90802
1 Bed | 1.5 Bath | 880 SF | $625,000
Amazing ocean views in this beautifully remodeled open floor plan condo at the iconic International Tower! This beautifully updated modern high-rise condo features hardwood flooring, fresh interior paint, scraped ceilings, and is light and bright with expansive ocean views.
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