Welcome to my July newsletter featuring insights and economic news impacting our local housing market.
Interest Rates
Benchmark Rates
While yesterday’s job numbers were notably softer, it is widely expected it won’t be enough to keep the Fed from raising rates a quarter-point later this month. Most economists agree that we may see one more small hike in October or November, and then rates will decrease in 2024.
Mortgage Rates
Mortgage rates remain stubbornly high because of inflation fears in the investment markets and supply challenges in the loan industry. Earlier this spring, the regional banking crisis took some significant lenders out of the mortgage market, leading to fewer players who, because of less competition, can keep rates higher.
Here are a few of the latest loan programs I have available. We also do bridge, construction, and cross-collateralization loans.
Fixed-Rate Financing
I have fixed-rate, jumbo purchase loan products at 6% with the following loan-to-value (LTV) financing:
80% LTV up to $5M
75% LTV up to $10M
Bank Statement / Non-QM loans
Non-QM loans that require only bank statements for income documentation are aggressively priced and popular right now because these loans are tied to Wall Street instead of traditional bank money.
NEW! Doctors and Lawyers Programs
90% LTV financing up to $3M
Home Equity Loans
Several clients are staying put in their properties and opting to cash out some equity. I can do home equity lines of credit (HELOC) with 65% LTV financing up to $5M.
Economic Reports Impacting Our Housing Market
Labor Reports
This week was jam-packed with employment data that is both good and not-so-good for inflation and interest rate hikes.
Here are the key findings:
The U.S. Bureau of Labor Statistics Employment Summary reported that the U.S. added 209,000 jobs last month (the lowest since 2020), and unemployment held steady at 3.6%. So while hiring slowed, unemployment is still very low, and wages continue to rise, which makes inflation more challenging to control.
A private-sector labor report released by ADP and the Stanford Digital Economy Labs on Thursday says the private sector added 497,000 jobs last month, nearly doubling economist’s expectations. Private sector jobs generally drive our real estate market, which is positive news.
The monthly Job Openings and Labor Turnover Survey (JOLTS) reported decreased job openings and layoffs. Also, fewer employees are leaving their jobs than last year, indicating that the “great resignation” we saw during the pandemic is cooling.
At the state level, California’s Unemployment Rate Report remains unchanged at 4.5%, demonstrating the stability of our economy.
Local Activity
Supply continues to be the major issue haunting homebuyers in Los Angeles. I see strong demand up to $5M, but above that mark, demand is much lighter, except for several high-priced estates sold to celebrities and business executives.
Recent Transactions
Here are some recent examples:
New Home Purchase | Mid-Wilshire | $3.4M
80% LTV financing
1 Year Tax Return
Full Documentation
Rates in the low 6’s
New Home Purchase | Tarzana | $2.2M
90% LTV financing
No Mortgage Insurance
30 Yr Fixed-rate
5.875% interest rate | 5.99% APR
90% One Loan
Doctors Loan | West L.A. | $3.3M Sales Price
90% LTV FINANCING
No Mortgage Insurance
New Home Purchase | Manhattan Beach | $4.4M
80% LTV Financing
No Tax Returns
12 Months Bank Statements
Cash-Out Refinance | Beverly Hills | $3M
All Cash
No Tax Returns
No Bank Statements
Key Economic Reports to watch for this month:
July 12 – Core Consumer Price Index (CPI)
July 19 – Building Permits, Housing Starts
July 20 – Existing Home Sales
July 26 – Fed Interest Rate Decision, New Home Sales
July 27 – Pending Home Sales
This moment is no doubt a challenging time for everyone in the real estate industry, but bear in mind we are nearing the end of this high-interest rate cycle. Remember the long game, not the temporary challenges of dips in the market. Those who persevere will consistently profit, and I am here to offer my expertise and loan solutions every step of the way.
Sincerely,
Mark Cohen