Silicon Valley Real Estate Market Update 5-4-2023
Here's the weekly round-up of news. Check it out, save it for later, and/or share it with your friends!
Low inventory dampens spring market kickoff: Buyers are turning to the new-home market to find more housing options. Read more about the outlook for home sales from NAR's latest report. Full Story: REALTOR® Magazine (4/27)
Sellers consider cashing in equity: Some sellers are deciding to cash in on their equity, despite the current higher mortgage rates. "A lot of people have earned a substantial amount of housing equity," says Jessica Lautz, deputy chief economist for the National Association of REALTORS®. "Even if they have low interest rates on their current loans, they may be willing to make a trade because they're paying all cash for the next property." Full Story: The New York Times (4/26)
Yellen: US debt default would bring economic catastrophe: If Congress does not raise the debt ceiling and prevent a default on U.S. government debt, this would lead to an "economic catastrophe" that will push interest rates higher for even longer, Treasury Secretary Janet Yellen said. "A default would raise the cost of borrowing into perpetuity. Future investments would become substantially more costly," Yellen said. Full Story: Reuters (4/25)
Mortgage rates fluctuate, but market is stabilizing: Despite the weekly volatility in borrowing costs lately, the overall trend is down, NAR says. Full Story: REALTOR® Magazine (4/27)
US GDP growth falls to 1.1% in Q1: The U.S. economy experienced a sharp slowdown in the first quarter of 2023, with a growth rate of 1.1% recorded on an annualized basis compared to economists' expectations of 2%, as the Federal Reserve continued its monetary tightening efforts. Despite this slowdown, the U.S. economy demonstrated resilience with some pockets of strength, including modest consumption growth that countered the negative effect of declining inventories. Full Story: Bloomberg (4/27), The Wall Street Journal (4/27), Financial Times (4/27)
Homeowners tap equity, wait to trade up, expert says: Lenders can look forward to significant opportunities in home equity credit, says Ken Flaherty, senior consumer market analyst at management consultancy Curinos. Flaherty expects "more homeowners to seek home equity credit to be able to make more of what they've got, and ride things out over the next couple of years until rates normalize and/or there's better housing inventory available for them to go out and search for their dream home." Full Story: The Financial Brand (4/27)
Market Update: News from last week shows the economy continues to grow but doing so in a slower pace. The early reading for Gross domestic product (GDP) of the first quarter of this year suggests that the economy expanded but the momentum appeared to have fizzled out. When looking at retail sales and personal spending, consumers had been holding back despite real income improving nine months in a row. While strong labor market continues to support wage growth, it also translates into higher labor costs and puts upward pressure on inflation. On top of that, recent bank failures added uncertainty to the overall health of the economy in the long-run and suppressed consumer confidence on the future expectation. As for the real estate market, the short supply of existing homes for sale steered more home buying activity into the newly constructed housing sector, which comprised 33.2% of total single-family housing inventory in March – nearly double the 17.8% average in the year before the pandemic. Full Story: CAR Market Minute Write Up
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