Market Update - November 2023
Market Action Index - November 2023
The consensus is that we finally hit the high point on interest rates for the foreseeable future. Over the last few weeks we have seen a big dip that puts rates near their lowest point in the last couple months. If the FED doesn’t intervene, it does look like we’re going to see some relief as we move into 2024.
Additionally, inflation is down, but so is consumer spending and holiday season hiring. That is likely indicating that most consumers are anticipating a bit of an economic downturn. Home buying sentiment was rough in October with just 15% of people thinking it was a good time to buy a home. Low inventory is still a factor which has kept home prices high even if median home prices have dropped over the last month. Coupling, home buying sentiment (due to affordability) along with low inventory has led to a super funky market. It’s plain weird out there right now folks. I’ve had a great home in escrow 3 times with the first two buyers getting cold feet and just canceling for no good reason. Additionally, I had a buyers offer (at list price) not accepted and then the seller withdrew the home completely from the market… As weird as it is, we have worked in these types of market conditions before and we will again. It may not seem like it, but it WILL settle down… eventually. I think 2024 is going to be a much more stable and free flowing year than 2023. It has to be… right?!
Market Segments - November 2023
“With rates reaching a 23-year high in late October, the share of consumers who said that it would be a good time to buy reached a new survey low at 15%.”
Market Profile - November 2023
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Mortgage rates dropped for the third week straight! - After spiking for about two months, the average 30-year fixed-rate mortgage by Freddie Mac fell to 7.44% last week, down around 35 basis points from its late October peak of 7.79%. Mortgage News Daily had rates climbing over 8% for a few days in October but now they're trending below 7.4%. Rates are still much higher than last year, putting a damper on buyer interest, but this recent dip seems to be helping mortgage applications pick up a bit. However, they haven't turned positive yet.
Holiday job demand has dropped, hinting at slower job growth ahead - Economists predict an economic slowdown as spending decreases. Businesses plan to hire fewer seasonal workers this year compared to last year. Recent Labor Department data show a decline in hiring by warehouses and transport companies, typically big seasonal employers. While retailers still hired 60,000 more workers in October than last year, it's the smallest increase in three years during the usual hiring surge. This shift suggests a more cautious approach from employers uncertain about the upcoming business landscape after two years of aggressive hiring.
In October, folks were feeling (a little) better about inflation - Gas prices went down and food prices plus rent started to steady, making people think inflation might ease up. Expectations for both short-term and long-term inflation dropped a tad from September. The one-year outlook went from 3.7% to 3.6%, and the five-year outlook slipped from 2.8% to 2.7%. However, home prices are still expected to rise by 3%, higher than the usual 2.1% average. College and medical costs are predicted to jump up next year by 6% and 9.1% respectively. People are expecting their household income to only grow by 3.1%, which explains why inflation worries are still lingering.
Credit card debt in the US has soared past $1 trillion since August, hitting a record high - This surge, around $170 billion more than pre-pandemic levels, is a big reason behind ongoing strong consumer spending while personal savings rates drop back to low single digits. Right now, credit card delinquency and charge-off rates are relatively low, hovering around 3%, but they've been going up this year and are almost double compared to their lows in 2021. The big question is whether consumers can keep driving the economy next year, dealing with higher borrowing costs, reduced savings, and increasing debt levels.
California's mortgage delinquencies barely moved despite interest rates shooting up this fall - The Mortgage Bankers Association found that only 2.3% of all mortgages were behind in the third quarter of 2023, a small increase from 2.2% in the previous quarter. It's not a big jump in troubled mortgages. Most Californians have mortgages with rates below 6%, making it easier to stay on top of payments. While these low rates might slow down home sales as owners stick with their current mortgages, they're preventing a spike in delinquencies that could trigger another foreclosure mess.
I don’t know about you, but I’m ready for a little break. I’m looking forward to Thanksgiving and spending some quality time with my family. Hope you are able to find some time to relax too!
Reach out anytime! Call, text, or message me 😊
Brendan
P.S. I always appreciate referrals! It’s among the greatest compliments I can receive. If you know someone who is has questions about the real estate market, please send them my way. Thank you!
Brendan