Fazaeli Realty Group

10/01/2024

Market Update

The housing market continues to adjust to the first rate cut by the Federal Reserve in years, sliding mortgage rates, and an economy that keeps surprising to the upside. Putting all of these factors together, C.A.R. released its forecast for 2025 and expects both home sales and home prices to continue their upward trend. Consumer confidence has slid, reflecting the normalizing labor market and more muted economic growth, but income and spending continue to rise. New home sales have yet to rebound despite the recent rate cut, but demand is already picking up and preliminary indications suggest an unseasonably strong winter in California.

09/17/2024

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09/17/2024

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09/17/2024

Market Update

As the market awaits for the Fed’s announcement on their upcoming rate cut later this week, latest inflation reports continue to provide mixed signals on how much the fed funds rate will be reduced in the September meeting. The market currently projects a 63% chance of a 50-basis-points (bps) rate reduction, and a 37% chance of a 25-bps rate cut. Regardless of the size of the reduction, if mortgage rates remain near the current level or dip further in the coming months, the housing market should begin to see a more consistent bounce-back as we move toward the end of the year.

09/10/2024

Market Update

The market has been relatively quiet in the lead-up to the Federal Reserve’s meeting on interest rates next week. Although recent economic data remains relatively strong, markets remain optimistic that the key policy rate will be cut by the Federal Open Market Committee. This has already begun to have a positive impact on the market as signs of homebuyer demand have perked up in recent weeks. However, prices continue to rise as well and that has helped to keep homebuyer sentiment restrained. The full benefit of lower rates will continue to play out in the coming months, but fortunately, the anticipated uptick in demand is also poised to be met with additional inventory, which is also slowly being unlocked as interest rates normalize.

09/03/2024

Market Update

Latest macroeconomic data released last week suggest that the economy remains solid, with the cooling trend in inflation continuing at the start of Q3 2024. Both consumers and business leaders feel upbeat in general and have a positive outlook about the near future. With the Fed expected to adjust rates downward in their next few meetings, the housing market should pick up some momentum throughout the rest of the year. There are challenges that could hinder the housing progress in the next couple years though. The ongoing insurance crisis, for example, is one such huddle that has presented difficulties for homebuying and could remain a major headache for the market in at least the next couple of years.

08/27/2024

Market Update

California home sales bounced back solidly in July, as prices moderated, and housing supply continued to grow from last year. While the rebound is not a V-shaped recovery, the turn-around is encouraging nevertheless, and offers hope that the boost in sales could kickstart the second half of the year. With the Fed signaling a policy rate cut in September and additional cuts to follow in the near term, mortgage rates will moderate further - albeit slowly- in the next couple quarters. Assuming that the economy will continue to slow but at a gradual pace, the housing market is expected to see more improvement in the next few months.

08/20/2024

Market Update

California labor markets signaled full steam ahead in the latest jobs report released Friday with hiring posting its best showing in 6 months. However, the underlying details suggest that things may not be as rosy as the headline numbers suggest, which may help to provide cover for the Fed to lower rates later this year. With inflation slowing further in July, mortgage rates continue to rally, and homebuyer demand is finally approaching positive territory for the first time since rates began to rise in 2022. Mortgage delinquency rates remain very low in California and the percentage of homeowners with significant equity to stave off foreclosure in a worst-case scenario remains remarkably high. Fundamentals are also bolstered by the fact homeowners currently have very attractive mortgage payments, with roughly two-thirds of the state in a 4% rate or lower (90% of which are fixed-rate loans).

08/13/2024

Market Update

The Olympics is officially over, and the market’s attention is back on inflation. Two reports on inflation will be released this week and will hopefully provide more evidence that prices remain on a cooling trend. Another report on retail sales is also scheduled to come out before the end of the week and should offer more insights on the well-being of the economy. Mortgage rates had declined to the lowest point since April 2023 before bouncing back up in the last several days, and a positive spin from these reports could help bring them back down.

08/06/2024

Market Update

The summer remains hot, and the Olympics has taken over. The Federal Reserve, meanwhile, is ready to cut rates for the first time in more than four years in the upcoming September FOMC meeting (or sooner), especially since the last jobs report suggested that the labor market is cooling faster than expected, and the stock market has been reacting negatively to the news. The economy will likely slow down further in coming months, but a recession is not warranted. Mortgage rates, nevertheless, took a deep dive late last week and early this week as traders moved money to safe havens like bonds, sending Treasury yields tumbling down to the lowest levels since February. Should the downward momentum in rates continue, lower costs of borrowing could help push home sales back up in the third and the fourth quarters.

07/30/2024

Market Update

The economy expanded at a faster pace than expected in Q2, but the latest growth rate could be the highest we will see in the next few quarters. There are signs in recent months that suggest consumers are increasingly tapped out and could pull back further in coming months. An economic slowdown, however, is not necessarily bad news for the housing market. Mortgage rates, in fact, started this week at six-month lows, as the market has become more convinced that the Fed’s rate cuts will begin in September. Home sales should begin to bounce back and improve more consistently in Q3 and Q4.

07/23/2024

Market Update

The latest macroeconomic data has been helpful to California’s housing market, which continue to battle back from the surge in interest rates last year. Home sales did slide modestly in June as interest rates in April and May disrupted the upward trajectory the market has experienced since the end of 2023. However, pending sales suggest that the recent decline in mortgage rates helped demand to begin ticking up over the past few weeks. Fortunately, the recent reduction in rates has been coupled with an increase in supply—both from an uptick in resale inventory as well as a rebound in new construction in the latest data. After last week’s inflation report, homebuyers and homebuilders appear to be slowly regaining their confidence.