Welcome to my November newsletter featuring insights and economic news impacting our local housing market.
Interest Rates
This week, we finally had some much-needed relief on mortgage rates. Rates are down approximately 0.25% to 0.375%, thanks to the bond market’s best week in over three years. The rally was partly fueled by the US Treasury Department’s recent decision on Tuesday to reduce the number of bonds being issued, which curbs supply and creates more demand. (See jobs report commentary).
Rates are lower, running at 6.625% on jumbo and 10/1 ARM products and 6.875% for jumbo 30-YR fixed loans. Conforming loans are running in the high 6’s. I think we will see these numbers edge down a little more, but the decline will be gradual for the time being.
Another market boost was the interpretation that the Fed’s decision was a dovish stance that monetary policy is working and the economy is slowing down to more desired levels. Chairman Powell cited slowing wage gains and slowly decreasing inflation were partially behind the decision, but warned that another rate increase could be in store for December if the data is too strong. Personally, I don’t think another rate increase will happen.
Economic Reports Impacting Our Housing Market
Labor Reports
The US Bureau of Labor Statistics Employment Summary on Friday reported an addition of 150,000 jobs, which fell below analyst expectations but represents the 34th consecutive month of job gains. The national unemployment rate is up a tad to 3.9%. Wage inflation also increased 0.2% from last month as wage inflation continues to moderate, which is positive for interest rates. For economists and the Fed, this data points to a healthy market normalizing versus overheating. A normalizing job market reassures the Fed that interest rate hikes have done their job and there is no need for further increases. It also points to a soft economic landing instead of a recession.
Inflation
I haven’t touched on inflation numbers in my last few newsletters, but it’s worth noting that although we are all still feeling the sting of inflation, the tide is receding. The US inflation rate now sits at 3.7%, down from a high of 9.06% in June 2022. Adding to a positive economic landscape for lower rates.
Local Activity & Recent Transactions
In LA, housing inventory is finally up a bit, and buyer activity is decent given the past few months’ interest rate environment. In my opinion, the strongest part of the market is especially in the $1M-$2.5M range. These buyers, many of whom will be first-time homeowners, are happy to take advantage of lower home prices in exchange for some short-term rate pain. This started to come to fruition this week when rates started to decrease. I also see some new life in the high-end market for buyers with special circumstances.
Additionally, we are proud to offer some of the best mortgage financing rates in Southern California and can create various loan solutions for buyers and homeowners.
Here are some recent examples:
Home Equity Line of Credit | Calabasas
90% LTV Financing
Credit Line up to $500K
New Home Purchase | Encino | $3.7M
80% LTV Financing
10-YR Interest-Only ARM
Interest Rate in the 6’s
Refinance | West LA
80% LTV Financing
$2M Cash Out
Bank Statement Income Verification
No Tax Returns Required
Second Home Purchase | Oxnard | $2.9M
80% LTV Financing
10/1 ARM
6.5% Interest Rate | 6.62% APR
Key Economic Reports to watch for this month:
November 14 – Core Consumer Price Index (CPI)
November 17 – Building Permits, Housing Starts
November 21 – Existing Home Sales
It is nice to see so much positive economic news this month, especially as we head into the holidays. Since Thanksgiving is a few weeks away, I want to thank all my clients and colleagues for your continued trust and support. I look forward to the opportunity to continue to earn your business through my knowledge of the market and ability to provide the best rates and loan products in town.
Sincerely,
Mark Cohen