Silicon Valley Real Estate Market Update 5-11-2023
Here's the weekly round-up of news. Check it out, save it for later, and/or share it with your friends!
It's become more critical to understand green features Consumer interest in sustainability is growing, but real estate pros express confusion about the impact on home value, according to a new NAR report. Full Story: REALTOR® Magazine (5/2)
Yun: Latest Fed hike 'unnecessary and harmful' The Federal Reserve voted Wednesday to raise its benchmark interest rate for the tenth time in a year, putting too much pressure on small regional banks, says NAR's chief economist. Full Story: REALTOR® Magazine (5/3)
Construction job openings down in March Construction sector job openings fell to 341,000 in March from 404,000 the previous month, in parallel with an overall decline in openings across the U.S. economy, according to the Bureau of Labor Statistics. Total job openings in March of 9.6 million is the lowest number in nearly a year and suggests that efforts to ease inflation are working. Full Story: Dodge Data & Analytics (5/3)
Fed issues quarter-point rate hike, signals potential pause The Federal Reserve raised interest rates by 25 basis points Wednesday while also indicating that it might pause its rate-hike cycle. The Fed will analyze the latest economic data in deciding how to proceed, said Chair Jerome Powell. "Looking ahead, we'll take a data-dependent approach to determining the extent to which additional policy firming may be appropriate," said Powell. Full Story: CNBC (5/3), The Wall Street Journal (5/3), The New York Times (5/3), The Associated Press (5/4)
The average monthly mortgage payment is above $2,300 Home buyers are being squeezed tighter by higher mortgage rates and home prices. What are consumers in your state paying? Full Story: REALTOR® Magazine (5/4)
Should you rent or buy? The dream of homeownership is being challenged by high home prices and mortgage rates, leading some to consider renting a wiser option. Experts say purchasing a home is advisable if you plan to stay for at least seven to 10 years, have enough savings for the down payment, closing costs and maintenance expenses, and can afford to pay property taxes. They also suggest setting a budget and not spending more than 28% of your gross monthly income on housing. Full Story: CBS News
How the interest rate hike impacts your money The Federal Reserve raised the federal funds rate by another 0.25 percentage point this week, marking the 10th time the Fed has raised its benchmark interest rate over the past year or so, forcing consumers to pay record high rates to borrow. This rate hike will correspond with a rise in the prime rate and immediately send financing costs higher for many forms of consumer borrowing. On the flip side, higher interest rates also mean savers will earn more money on their deposits Full Story:.CNBC
New mortgage fees explained The Federal Housing Finance Agency implemented changes to the fee structure of conventional mortgages guaranteed by Fannie Mae and Freddie Mac, effectively lowering the fee gap between borrowers with high credit scores and those with low ones. While low-income borrowers and those with credit scores below 680, as well as first-time homebuyers, will likely see lower monthly costs going forward, the changes could also make it harder for borrowers with good — but not great — credit and income to purchase a home. Fees also increased for borrowers who make larger down payments, those who apply for a cash-out refinance and those who buy a second home.Full Story: Money
Millennials fuel housing bubble Millennials are fueling a generational housing bubble that's set to burst over the next decade as demand for homes falls off, according to researchers. In a recent report from the Indiana University Center for Real Estate Studies and the Indiana Business Research Center, researchers said Millennials — who are between their mid-20s and early-40s, are in the prime-homebuying age — have pushed up home prices in recent years as demand outweighs supply. Full Story: Yahoo Finance
What April's strong job numbers mean for the economy There were 253,000 jobs added to the nation's nonfarm payrolls in April, and the unemployment rate dropped to 3.4%. The numbers were stronger than economists had expected, and they have ramifications for many aspects of the economy, including how the Federal Reserve chooses to proceed with its mission to tame inflation. Full Story: Kiplinger (5/5)
Fund managers warn of looming CRE recession Major fund managers are warning of mounting trouble in the U.S. commercial real estate market that could put further pressure on the banking sector. Anne Walsh, chief investment officer of Guggenheim Partners, says certain metropolitan regions are especially vulnerable to a downturn. "We're likely going into a real estate recession, but not across the entire real estate market," Walsh said. "Lenders will be very choosy about what loans they are willing to make." Full Story: Financial Times (5/9)
Market Update Last week, the Fed enacted its 10th rate hike in its battle against inflation. They hinted that it may be the last but reiterated that much depends on incoming data as uncertainty on the health of the banking system and the overall economy amounts. Despite recent challenges, the labor market remains solid and added more jobs than expected. However, fewer job openings suggest that the 2-year labor shortage is beginning to normalize. Total construction spending increased, though single-family outlays continued to weigh on residential spending, which dipped for the tenth month in a row. Fortunately, California’s population decline slowed last year as births stabilized, deaths decreased, and foreign immigration rebounded.Full Story: CAR Market Minute Write Up
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