Real estate market trends and update

March 2025

California housing market roars back to life

Source: Newsweek

The California housing market is showing signs of a dramatic rebound, recording its highest number of home sales in more than two years in February. Average house prices have also risen in the state. The surge was fueled by declining mortgage rates at the start of the year and an uptick in available inventory, according to the CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.).

California’s housing market experienced a significant rebound in February, with existing, single-family home sales reaching 283,540 on a seasonally adjusted annualized basis. This marked an 11.6 percent increase from January and a 2.6 percent rise from February 2024 – the highest sales level since October 2022, signaling renewed buyer activity after a sluggish start to the year.

Fed holds interest rates steady, predicts two cuts this year

Source: CNBC

The Federal Reserve in a closely watched decision Wednesday held the line on benchmark interest rates though still indicated that reductions are likely later in the year. Faced with pressing concerns over the impact tariffs will have on a slowing economy, the rate-setting Federal Open Market Committee kept its key borrowing rate targeted in a range between 4.25 percent and 4.5 percent, where it has been since December. Markets had been pricing in virtually zero chance of a move at this week’s two-day policy meeting.

Along with the decision, officials updated their rate and economic projections for this year and through 2027 and altered the pace at which they are reducing bond holdings. Despite the uncertain impact of President Trump’s tariffs as well as an ambitious fiscal policy of tax breaks and deregulation, officials said they still see another half percentage point of rate cuts through 2025. The Fed prefers to move in quarter percentage point increments, so that most likely means two reductions this year.

State Farm allowed to hike rates if it pauses cancellations and proves need

Source: CalMatters

California Insurance Commissioner Ricardo Lara announced that he will grant State Farm’s request to raise home insurance premiums by 22 percent on average if the company agrees to certain conditions – and wins approval at a public rate hearing next month. Lara’s conditions are that State Farm, the stat’s biggest provider of homeowners insurance, commit to pause canceling and not renewing policies through the end of this year. He also is asking that its parent company, State Farm Mutual, give or loan the California entity, State Farm General, $500 million to help boost its finances. In addition, State Farm must prove its need for the interim rate increases at a hearing April 8, where it must present updated and more detailed data.

State Farm asked for “emergency” interim rate increases after fires burned through parts of Los Angeles County in January, saying it expects more than $7 billion in claims from the deadly blazes, a drastically reduced surplus and a potential cut to its credit rating, which could affect its ability to meet mortgage lenders’ insurance requirements. The company, which insures nearly 3 million property owners in the state, including more than 1 million homeowners, has been waiting for a decision on rate hikes it requested last summer.

U.S. labor market holding steady, but job opportunities dwindling

Source: Reuters

The number of Americans filing new applications for unemployment benefits increased slightly last week, suggesting the labor market remained stable in March, though the outlook is darkening amid rising trade tensions and deep cuts in government spending. Despite the low level of layoffs, more people are staying on jobless rolls longer compared to the same period last year, the report from the Labor Department on Thursday showed.

Economists say still-high interest rates and policy uncertainty, especially around import tariffs, are making companies cautious about increasing headcount. Initial claims for state unemployment benefits rose 2,000 to a seasonally adjusted 223,000 for the week ended March 15. Economists polled by Reuters had forecast 224,000 claims for the latest week. Claims have been bouncing in the middle of the 203,000-242,000 range this year, with layoffs generally staying low and hiring cooling off.

Mortgage demand pulls back as rates rise for the first time in 9 weeks

Source: CNBC

After a strong streak of gains, mortgage demand pulled back last week. An increase in mortgage rates, as well as rising uncertainty about the economy, were the likely culprits. Total mortgage application volume dropped 6.2 percent from the previous week, according to the Mortgage Bankers Association’s seasonally adjusted index.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($806,500 or less) increased to 6.72 percent from 6.67 percent, with points increasing to 0.64 from 0.63 (including the origination fee) for loans with a 20 percent down payment. Applications to refinance a home loan fell 13 percent for the week and were 70 percent higher than the same week one year ago. Applications for a mortgage to purchase a home rose 7 percent for the week and were 4 percent higher than the same week one year ago.

Source: Yahoo! News

The city of Los Angeles is launching a new initiative to encourage the construction of starter homes on small, city-owned vacant lots, an effort to provide relatively lower-cost, for-sale housing and show how Los Angeles can densify without turning into Manhattan. The initiative, called Small Lots, Big Impacts, kicked off Wednesday with a design competition for architects and others to craft innovative plans for multiple small homes on one lot, with the hope those units will be less expensive than larger options being built by developers today.

Winnings designs are meant to eventually serve as preapproved city templates that all developers could use. Government officials also plan to start selling off a handful of small, city-owned lots to builders to demonstrate – in real life – what is possible with the designs.

Insurance regulators urge State Farm to expand coverage in exchange for rate hike

Source: Mercury News

After meeting with State Farm executives in Oakland on Wednesday, California’s top insurance regulator said he expects to decide within two weeks whether to approve the insurer’s emergency request for a steep rate hike while also promising to press company officials for guarantees of expanded coverage should it be allowed to charge higher premiums.

Earlier this month, State Farm – the state’s largest home insurance provider – asked the California Dept. of Insurance to approve statewide rate increases averaging 22 percent for homeowners. It also requested a 15 percent increase for renters and condo owners and a 33 percent hike for rental owners. The insurer’s California-only subsidiary, State Farm General, says the increases are necessary to pay out future claims after it expects to cover $7.6 billion in estimated losses from the devastating Los Angeles wildfires. The company said it can cover the staggering damage but will need to raise rates to shore up its shaky financial health.

Tariffs could play a big role in already shaky housing market

Source: Fox Business News

President Donald Trump’s tariffs have caused a rise in lumber prices, which homebuilders have warned will increase construction costs and translate into more expensive housing for U.S. consumers. Lumber prices hit their highest level in two-and-a-half years this week and lumber futures are up more than 14 percent year to date as of Wednesday amid worries over tariffs.

Trump signed an executive order this week launching a national security investigation into “vulnerabilities in the wood supply chain from imported timber, lumber and their derivative products.” That investigation could result in higher tariffs on Canadian lumber being imposed later this year, in addition to the 14.5 percent anti-dumping and anti-subsidy tariff on Canadian softwood lumber that was in effect prior to Trump’s second term, as well as the 25 percent tariff on Canadian imports, including lumber, that took effect on Tuesday. Taken together, that pushed the overall tariff on Canadian lumber to nearly 40 percent.

What FHA layoffs could signal for homebuyers

Source: CNBC

Tens of thousands of federal workers have lost their jobs in recent weeks as the Trump administration attempts to slash government spending. Employees at the Federal Housing Administration (FHA) could be one of the next targets, according to the American Federation of Government Employees national Council 222, a labor union that represents the largest number of employees at the Dept. of Housing and Urban Development (HUD).

Bloomberg reported a potential 40 percent slash to the agency’s headcount. HUD did not return CNBC’s requests for comment, but HUD officials told Bloomberg that the 40 percent figure is “not accurate.” It’s unclear how many and what type of workers are at risk of losing their jobs within the FHA, an agency under HUD.

Mortgage demand surges 20% as interest rates drop

Source: CNBC

A sharp drop in mortgage interest rates finally lit a fire under loan demand. Both current homeowners and potential homebuyers jumped back into the market after a lackluster showing for this year so far. Total mortgage application volume jumped 20 percent for the week, according to the Mortgage Bankers Association’s seasonally adjusted index.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($806,500 or less) decreased to 6.73 percent from 6.88 percent, with points dropping to 0.60 from 0.61 (including the origination fee) for loans with a 20 percent down payment. Applications to refinance a home loan, which are the most sensitive to weekly moves in interest rates, jumped 37 percent for the week and were 83 percent higher than the same week one year ago. Applications for a mortgage to purchase a home rose 9 percent for the week but were still just 2 percent higher than the same week one year ago.

Housing Perspective – 2025 Housing Market Outlook

The California housing market faced a challenging start to 2025, as rising mortgage rates and severe wildfires led to the lowest level of home sales in 13 months. However, as the spring homebuying season approaches, demand is expected to increase and inventory will grow.

C.A.R.’s Housing Perspective is the latest downloadable market analysis, automatically customized with your contact information, for you to share with your clients. The Housing Perspective is designed to keep you and your clients up-to-date on the latest real estate market conditions.

Market Minute

Following a similar pattern as observed in the existing housing market, newly constructed home sales pulled back in January. While elevated mortgage rates may have played a role in the decline, the dip in January was due primarily to harsh weather at the start of the year. With rates declining in recent weeks and the Fed’s preferred inflation gauge slowing down from last year, the housing market could see a bounce back at the beginning of the second quarter. Policy uncertainty and economic worries, however, continue to linger on and begin to take a toll on consumers. CEOs, on the other hand, are a bit more optimistic about the business landscape and their confidence level improved solidly in the first quarter.

Market Minute

January 2025 Sales & Price

A surge in mortgage interest rates and a shortage of homes for sale suppressed California home sales in April, while the statewide median home price climbed above the $800,000 level for the first time in six months a surge in mortgage interest rates and a shortage of homes for sale suppressed California home sales in April, while the statewide median home price climbed above the $800,000 level for the first time in six months

California home sales retreated in January as the effects of elevated interest rates depressed housing demand to the lowest level in more than a year.

Real Quick

California’s housing affordability index dropped to 15% in the fourth quarter of 2024, due to high prices and mortgage rates. With a minimum income of $222,000 needed to afford a median-priced home, affordability is expected to remain a challenge throughout 2025.

California home sales dropped in January as mortgage rates climbed, but with rates starting to ease and more homes being listed, the housing market is expected to pick up as we head into the spring buying season.

Market Update

The economy kicks off the year with some splits in its fundamentals, but the overall condition remains healthy in general. Retail sales pulled back after a strong year-end performance but a rebound in the next couple of months is likely. Consumer prices surged more than expected but January’s wholesale price growth suggests that the inflation fear might be overblown. Small business optimism slipped but the latest index figure remained above the prevailing average for the past four years. One thing is likely true for 2025: Uncertainty will be the theme this year and we will need more time to see how everything plays out.

California home sales decline as homebuyers sit tight

Source: MPA Mag

California’s housing market experienced a slowdown in January as elevated mortgage rates and the aftermath of the Southern California wildfires dampened buyer demand, according to the CALIFORNIA ASSOCIATION OF REALTORS (C.A.R.). Statewide sales of existing single-family homes fell to a seasonally adjusted annualized rate of 254,110 in January, marking a 10 percent decline from December and a 1.9 percent decrease from January 2024. C.A.R. said this represents the lowest level of home sales in over a year and sharpest month-over-month drop in 30 months.

Meanwhile, the median home price in California dipped 2.6 percent from December to $838,850, but remained 6.3 percent higher than the same period last year. The decrease was attributed to seasonal trends and a shift on the mix of homes sold. C.A.R. officials expect prices to moderate further in February before rising again in the spring.

U.S. homebuilders raise alarm over tariffs

Source: CNBC

Sentiment among the nation’s single-family homebuilders dropped to the lowest level in five months in February, largely due to concern over tariffs, which would raise their costs significantly. The National Association of Home Builders’ Housing Market Index dropped a sharp 5 points from January to a reading of 42. Anything below 50 is considered negative sentiment. Last February, the index stood at 48.

“While builders hold out hope for pro-development policies, particularly for regulatory reform, policy uncertainty and cost factors created a reset for 2025 expectations in the most recent HMI,” said NAHB Chairman Carl Harris. Of the index’s three components, current sales conditions fell 4 points to 46, buyer traffic fell 3 points to 29 and sales expectations in the next six months plunged 13 points to 46. That last component hit its lowest level since December 2023.

Insurance commissioner rejects State Farm’s 22% rate increase

Source: KTLA

On Friday, California Insurance Commissioner Ricardo Lara rejected State Farm’s request for “emergency” rate increases, going against the recommendation of his staff experts. The request from State Farm involved insurance rate increases that would have gone into effect on May 1, 2025. The proposed increases were 22 percent for single-family homeowners, 15 percent for condominium owners and 38 percent for rental dwellings.

State Farm General, California’s largest insurer, shared that it has already received over 8,700 claims, has paid out over $1 billion to customers and expects to pay out “significantly more,” with the Los Angeles-area fires being one of the costliest disasters in its history. However, Consumer Watchdog has alleged that the company seeks to charge customers more “not because it cannot pay wildfire claims, but because it wants to protect its Wall Street credit rating,” which is an AA rating and the second-highest possible rating.

What to expect when inheriting a house in California

Source: Forbes

Inheriting a home in California can bring a big windfall. However, recent rule changes may make that inherited home more costly to own. In the past, if you inherited a home in California, you were able to maintain the tax bases (and often much lower property taxes) on the real estate you inherited. However, recent tax law changes may make keeping the family home much more expensive, thanks to Proposition 19.

Before Prop 19 was passed in 2020, you could pass down your home and very low property tax base to your heir. The rules have changed, and now, the inherited property’s value gets reassessed at the time of transfer, and the property taxes that the inheritors will pay could jump substantially. If you live in the inherited home, you can apply for up to $1 million of home value to be excluded from the property tax reassessment. To get this benefit, you must move into the property within a year of the transfer and apply for it.

HUD employees brace for “drastic” staff cuts

Source: NPR

As layoffs ramped up across the federal government this week, Housing Secretary Scott Turner said he had launched his own “DOGE” task force with HUD employees to review every dollar the Department of Housing and Urban Development spends.

The Trump administration aims to lay off half of HUD’s staff, according to an agency worker with direct knowledge of the plans and a union leader who has spoken with other HUD employees. Agency officials said some areas could face less-severe cuts, specifically citing the Federal Housing Administration, which insures mortgages and generates much of its own funding through premiums.

Weekly mortgage demand drops 6% as more buyers stay on fence

Source: CNBC

Mortgage rates dipped slightly last week, but so did mortgage demand, as housing affordability continues to sideline potential buyers. Total mortgage application volume fell 6.6 percent for the week, according to the Mortgage Bankers Association’s seasonally adjusted index.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances decreased to 6.93 percent from 6.95 percent, with points increasing to 0.66 from 0.64 (including the origination fee) for loans with a 20 percent down payment. Applications to refinance a home loan dropped 7 percent for the week but were 39 percent higher than the same week one year ago. Applications for a mortgage to purchase a home declined again, falling 6 percent from one week earlier but were 7 percent higher than the same week one year ago. Housing affordability continues to weigh on potential buyers, and economic uncertainty – especially regarding the potential tariffs – are only adding to the pressure.

C.A.R. Reports: Elevated Mortgage Rates Drag Down January Home Sales

California home sales retreated in January as the effects of elevated interest rates depressed housing demand to the lowest level in more than a year, C.A.R. reported last week.

January’s sales pace fell from the 282,490 homes sold in December and was down 1.9 percent from a year ago, when a revised 259,160 homes were sold on an annualized basis. The January sales level was the lowest in 13 months, and the double-digit month-to-month sales decline was the biggest decrease in 30 months. The year-over-year decline was the first in eight months.

The January statewide median price decreased from December but continued to climb on a year-over-year basis for the 19th straight month. The January median price declined 2.6 percent from $861,020 in December to $838,850 in January and was up 6.3 percent from a revised $789,480 in January 2024. The acceleration in price growth is an indication that further price gain could still be observed in the coming months. The modest January price slip was due partly to seasonality and partly to a change in the mix of sales. Home prices could moderate further in February but should begin to climb in March as the market gears up for the upcoming spring homebuying season.

Market Update

Mortgage rates continue to dictate the direction of the housing market and California had a soft start for 2025 as rates remained elevated. Despite a sluggish beginning in sales in January, housing supply increased more than expected last month, which could lead to slower price growth, more options for buyers to choose from, and allow some demand to be fulfilled as competition heats up in the upcoming homebuying season. There is no doubt though that the market will see challenges in the months ahead, as uncertainties in the policy arena continue to linger on and are affecting the sentiments of both consumers and builders.

Homebuyers’ average down payment rises to 16% of purchase price

Source: Redfin

The typical U.S. homebuyer’s down payment was equal to 16.3 percent of the purchase price in December, up from 15 percent a year earlier, according to Redfin. In dollar terms, the typical homebuyer’s down payment was $63,188. That’s up 7.5 percent from a year earlier, the biggest increase in five months.

The data in Redfin’s report is based on an analysis of county records across 40 of the most populous U.S. metropolitan areas. December 2024 is the most recent month for which data is available. Down payment data, along with data on loan types, is limited to home purchases for which buyers took out a mortgage. The amount of money homebuyers are putting down is higher than a year ago mainly because home prices are up. A higher price means buyers typically make a bigger deposit. The percentage buyers are putting down is relatively high because mortgage rates are elevated near 7 percent and some buyers are putting down more up front to bring down their monthly interest payments.

Mortgage relief in sight for CA homeowners with possible $125M package

Source: Realtor.com

California Gov. Gavin Newsom has proposed a mortgage relief package totaling more than $125 million that would benefit victims of recent natural disasters, including the unprecedented wildfires that devastated Los Angeles County in January.

The plan unveiled by Newsom on Wednesday earmarks over $100 million in direct mortgage assistance for homeowners at risk of foreclosure and whose property was either destroyed or heavily damaged as a result of a declared emergency since Jan. 1, 2023. An additional $25 million would go toward extending an existing program that provides mortgage counseling and offers guidance on FEMA disaster assistance to help victims get back on their feet.

Insurance rates will increase for some CA homeowners as two carriers approved for hike

Source: SFGate

California regulators have cleared the way for two major insurance companies to raise their rates, affecting 666,000 customers in the state, with both insurers blaming skyrocketing construction costs. Mercury General, which is the fifth-largest home insurer in California, will hike its rates by an average of 12 percent beginning in late March, according to the San Francisco Chronicle. The increase is expected to affect 579,300 owners of single-family homes and condos, as well as renters.

Meanwhile, homeowners getting their insurance from Safeco, a subsidiary of Liberty Mutual, will see their rates go up by an average of 7.2 percent in May. A total of 86,700 Safeco customers will be affected by the rate uptick, but they will not include condo owners or renters, because the company said it plans to stop insuring these types of policies by next year.

Sinking new home sales deliver blow to homebuilders

Source: HousingWire

Homebuilders that are facing numerous policy headwinds haven’t had a great start to 2025, and the January new-home sales report doesn’t help. According to the U.S. Census Bureau and the U.S. Dept. of Housing and Urban Development (HUD), new-home sales in January came in at a seasonally adjusted annual rate of 657,000, a 10.5 percent drop compared to December and 1.1 percent below the level of January 2024.

“We expect a challenging environment for homebuilders to persist through the first half of 2025,” Rafe Jadrosich, homebuilder and building products analyst at Bank of America Securities, wrote.

Consumers sound alarm on economy as expectations reach recession level

Source: U.S. News and World Report

A sharp drop in consumer confidence in February has brought Americans’ expectations about the future source of the U.S. economy to a level that often signals a recession on the horizon.

The Conference Board’s consumer confidence index fell by seven points to 98.3. The present situation index – a measure of current business and labor market conditions – fell 3.4 points to 136.5 but it was the expectations index that reflects consumers’ outlook of future economic conditions that tumbled 9.3 points to 72.9. That brings it below the 80 threshold that usually serves as a warning of a recession ahead. The drop in confidence was broad-based across all age groups but was most pessimistic among consumers between 35 and 55 years old.

Mortgage rates drop to lowest in two months, but demand still short

Source: CNBC

Mortgage rates dipped again last week, hitting the lowest level in two months, but demand for mortgages didn’t respond. Total mortgage application volume fell 1.2 percent for the week, according to the Mortgage Bankers Association’s seasonally adjusted index.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($806,500 or less) decreased to 6.88 percent from 6.93 percent, with points dropping to 0.61 from 0.66 (including the origination fee) for loans with a 20 percent down payment. Applications to refinance a home loan fell 4 percent for the week but were 45 percent higher than the same week one year ago. Applications for a mortgage to purchase a home were flat for the week and 3 percent higher than the same week one year ago.

U.S. Court of Appeals Rules in NAR’s Favor in REX Appeal

Earlier today, the US Court of Appeals for the Ninth Circuit ruled in NAR’s favor by denying Real Estate Exchange’s (REX) appeal in the REX v. Zillow et al case. This is an important win that validates NAR’s position in this antitrust litigation.

REX initially filed suit against NAR and Zillow in March 2021, claiming that the defendants conspired to hurt REX’s business and to stop REX from bringing lower fees to consumers. The District Court granted summary judgement in favor of NAR in 2023.

In affirming the decision of the district court, the appeals court emphasized what NAR has said from day one—NAR’s no-commingling rule never constituted an antitrust violation. The rule is optional, leaving MLSs the choice whether to adopt it, and, in fact, 29% of them chose not to.

NAR is pleased to put this lawsuit behind them and to continue to fight for the interests of its members.

Market Update

FinCEN and Treasury Dept. Provide Updates on Enforcement of Corporate Transparency Act

In early December 2024, a Texas Federal District court ruled the Corporate Transparency Act (CTA) unconstitutional and issued a preliminary injunction enjoining enforcement of the Beneficial Owner Information (BOI) reporting requirements. On December 23, 2024, the 5th Circuit Court of Appeals lifted the preliminary injunction.

On December 26, 2024, the 5th Circuit Court of Appeals issued a new order establishing a new preliminary injunction while it considers the substantive arguments on appeal.

On February 5, 2025, the Supreme Court stayed the injunction from the 5th Circuit. On February 18, 2025, the Texas Federal District Court lifted the only remaining nationwide injunction which brought the BOI reporting requirements back into effect.

Following this decision, FinCEN said it is going to focus efforts on those entities that are the highest risk and aim to reduce the burden on small businesses.

Additionally, the U.S. Treasury Department announced that it won’t enforce any penalties or fines against U.S. citizens, domestic reporting companies, or their beneficial owners even after the new rules are issued. Effectively, the reporting requirement is going to apply to foreign companies only.

At this time, and until the final rule is released, brokerages, associations, and MLSs may not need to report at all.

Feb 17, 2025

Market Update

The market has been very fluid since the fires began in the first week of January. Closed sales in the 6 primary cities affected by the fire have dropped considerably from nearly 15 per week in the weeks ending January 4 and January 11, to just 5 over the past two weeks. That represents a nearly 70% cumulative decline in weekly sales volume from the start of January. Winter is typically a slow time for the housing market in general, but this compares with sales that were up 2% cumulatively over the past two weeks in the rest of the state (i.e. excluding Los Angeles County).

Read this week’s Update to learn more about the impacts of the fires on pending sales and inventory.

Over $4 billion in LA fire claims distributed, more to come

Source: CalMatters

Insurance companies have paid out $4.2 billion in claims so far to survivors of the Los Angeles County fires, the state Insurance Department said Thursday. That figure includes home, business, living expenses and other disaster-related claims related to the Eaton and Palisades fires, the department said, citing data from insurance companies and the FAIR Plan, which is a pool of insurers that offers fire insurance to customers who can’t get it elsewhere.

Affected property owners have filed 31,210 claims – 14,417 of which have been partially paid. Part of the point of letting the public know how much has been paid out so far is so that they know that under the law, claimants are eligible for some advance funds without having to file itemized claims, said spokesperson Michael Soller. For some people, it could be “life-changing to know that they can get money up front,” he added.

State Farm requests 22% emergency rate hike for California homeowners

Source: KSBY

If your home is covered by State Farm, you could soon face a 22 percent rate increase. In a letter sent to the California Department of Insurance on Monday, the company requested an emergency rate hike. Following the Los Angeles wildfires, State Farm says it has paid out more than $1 billion and expected to pay out more.

The company is asking for permission to increase rates so they can rebuild capital to keep providing coverage. “All we are asking for in the industry is adequate rates so that we can pay claims and expenses,” said Janet Ruiz, Insurance Information Institute Director of Strategic Communication. Homeowners aren’t the only ones that could be affected. The company is also requesting a 15 percent rate increase for condo owners and a 38 percent increase for rental dwellings.

The LA fires have a shocking price tag

Source: Vox

Now that the extraordinarily fast-moving wildfires that engulfed swaths of Southern California this year have started to die down, the enduring toll is beginning to emerge. The blazes killed 29 people and destroyed at least 16,000 structures including homes, offices, shops and public infrastructure. Verisk, a risk analysis firm, calculated that insured losses would total between $28 billion and $35 billion. CoreLogic, a property analytics company, put the bill between $35 billion and $45 billion. Economists at UCLA pegged the insured losses at $74 billion.

Insured properties weren’t the only things list to the flames. Morgan Stanley estimated that the fires would lead to 20,000 to 40,000 lost jobs in January and will increase local inflation as people try to replace what they’ve lost. The UCLA team found the total property and capital losses range as high as $164 billion. AccuWeather estimated that the total damage plus broader economic slowdown would add up between $250 billion and $275 billion. That would make the 2025 Los Angeles fires the costliest natural disaster in U.S. history.

AG Bonta says Gov. Newsom’s executive order provides protections for LA fire victims

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Source: California Office of the Attorney General

California Attorney General Rob Bonta issued a statement on Governor Newsom’s Executive Order N-17-25. Among other things, the executive order expands rental price gouging protections to leases of any length, adds three new ZIP codes to prior executive orders prohibiting real estate speculation, and exempts housing in ZIP codes with high fair market values, that have not previously been on the rental market, from statutory rent caps.

“Governor Newsom’s executive order will make an important difference in the lives of Californians who have been affected by the wildfires. With today’s executive order, California’s price gouging protections now apply to leases of any length. Unsolicited property offers by predatory buyers are now prohibited in three additional zip codes in Southern California: 91024, 91103, and 91367. And, with the suspension of the statutory rent caps for certain homes that were not previously on the rental market, additional housing options can come on market.”

Homebuyer mortgage demand drops further, boding ill for the spring market

Source: CNBC

Homebuyers are seeing very little reason to get a jump on the all-important spring housing market, even with more listings coming up for sale. Mortgage rates haven’t moved much in the last few weeks, and home prices continue to rise. Mortgage applications to purchase a home last week dropped 4 percent from the previous week, according to the Mortgage Bankers Association’s seasonally adjusted index. Demand was flat compared with the same week a year ago.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances decreased to 6.97 percent from 7.02 percent, with points increasing to 0.64 from 0.63 (including the origination fee) for loans with a 20 percent down payment. Applications to refinance a home loan dropped 7 percent for the week and were 5 percent higher than the same week one year ago. Interest rates are now 24 basis points higher than they were a year ago. Applications for a mortgage to purchase a home rose 12 percent from one week earlier and were 17 percent higher than the same week one year ago. More sellers are offering price cuts, while the supply of homes for sale rose 25 percent compared with a year ago. Much of the supply gain is because homes are sitting on the market longer.

Market Minute

December 2024 Sales & Price

A surge in mortgage interest rates and a shortage of homes for sale suppressed California home sales in April, while the statewide median home price climbed above the $800,000 level for the first time in six monthsA surge in mortgage interest rates and a shortage of homes for sale suppressed California home sales in April, while the statewide median home price climbed above the $800,000 level for the first time in six months

California home sales ended the year with the largest yearly increase since June 2021, but the housing market remained a work in progress in December.

California asks insurers to spare wildfire victims “the list”

Source: The New York Times

California’s top insurance regulator urged insurance carriers on Thursday to pay policyholders the full amount of the belongings in their coverage without requiring them to itemize every object lost – an undertaking that has burdened thousands of residents whose homes were destroyed by wildfires last month. In a notice that said policyholders are “overwhelmed,” California State Insurance Commissioner Ricardo Lara gave insurance companies a deadline of Feb. 28 to inform the agency on whether they would comply.

Consumer advocates have long criticized the demand by many insurance carriers that homeowners make detailed lists if they hope to get their full coverage amount. The stress is compounded in places like California’s burn zone, where many families are scrambling to find new places to live and new schools for their children. The monumental task of remembering all items inside a home that no longer exists is adding unbearable strain, said Deputy Insurance Commissioner Michael Soller.

California homeowners will have to fund half of high-risk insurer’s $1 billion bailout

Source: CalMatters

After saying it would run out of funds by March, California’s last-resort fire insurance provider (the FAIR Plan) will impose a special charge of $1 billion on insurance companies – which will in turn pass the costs along to homeowners – the first such move in more than three decades. The state Insurance Department today approved a request from the provider, the FAIR Plan, to impose the charge and ensure it stays solvent as it covers claims from victims of the Los Angeles County fires, said Commissioner Ricardo Lara.

Most California home and fire insurance customers will see temporary fees added to their insurance bills as part of the charge, known as an assessment – marking the first time insurance companies will have imposed an assessment directly on customers. Many LA fire victims have insurance through the FAIR Plan. Residents of the Pacific Palisades, where thousands of structures burned, held 85 percent more FAIR Plan policies in September than they had a year prior.

L.A. County approves $50K penalty for price gouging during emergency

Source: KTLA

The Los Angeles County Board of Supervisors has approved a temporary increase to the existing penalty for those found guilty of price gouging, raising the maximum civil fine from $10,000 to $50,000 for each violation.

Last week, the Board of Supervisors passed another motion related to price gouging, including directing L.A. County departments to continue outreach efforts to residents and business owners about their rights and responsibilities under the enhanced consumer protection rules. Victims of price gouging, including renters facing excessive rent increases, are urged to contact the California Attorney General’s Office or the Los Angeles County Department of Consumers and Business Affairs at 800-593-8222.

One month left to apply for federal disaster assistance

Source: FEMA

Homeowners and renters who have incurred damage or losses from the Los Angeles County wildfires that began Jan. 7, have until Monday, March 10, 2025 to apply for FEMA Individual Assistance. The program provides financial and other assistance to eligible individuals and households to help meet their basic needs and supplement their wildfire recovery efforts.

FEMA may reimburse eligible applicants for temporary housing, home repairs to their primary home, personal property losses, medical and dental expenses related to the disaster, childcare and other serious disaster-related needs not covered by insurance. Residents who have insurance need to file insurance claims for damage to their homes, personal property and vehicles before applying. FEMA assistance is not taxed and will not affect Social Security, Medicaid or other federal benefits. FEMA grants do not have to be repaid.

Housing supply is piling up as home sellers enter the market but buyers stay on sidelines

Source: Redfin

There are five months of for-sale supply on the market nationwide, up from 4.4 months a year earlier and the most since early 2019. Inventory is piling up because more sellers are listing their homes while fewer buyers are wading into the market. New listings rose 7.4 percent year over year during the four weeks ending February 9, hitting their highest level for any comparable time period since 2022. Just have this time in 2022, mortgage rates started rising quickly, encouraging many homeowners to stay put to hold onto low rates. Now that lock-in effect is starting to ease.

Pending home sales, meanwhile, fell 6 percent, similar to the declines we’ve seen since the start of the year. The typical home that sold in that period took 57 days to go under contract – the longest span since March 2020, when the onset of the pandemic nearly ground the housing market to a halt. Home sale prices are up 4.3 percent year over year.

Mortgage refinance demand jumps to highest level since October

Source: CNBC

Mortgage rates moved slightly lower again last week, keeping refinance demand on the rise. Applications to refinance a home last week jumped 10 percent from the previous week and were 33 percent higher than the same week one year ago, according to the Mortgage Bankers Association’s seasonally adjusted index.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances decreased to 6.95 percent from 6.97 percent, with points remaining unchanged at 0.64 (including the origination fee) for loans with a 20 percent down payment. Applications to refinance a home loan dropped 7 percent for the week and were 5 percent higher than the same week one year ago. Interest rates are now 24 basis points higher than they were a year ago. Applications for a mortgage to purchase a home declined again, falling 2 percent from one week earlier and were 2 percent higher than the same week one year ago. Roughly 17 percent of homeowners with a mortgage have interest rates either at or above 6 percent, according to Redfin. That’s the highest level since 2016. With rates now near 7 percent, however, there are still very few who can benefit from a refinance, given both the rate and the cost

Grants Now Open for Victims of SoCal Wildfires

Thanks to a generous donation by the REALTORS® Relief Foundation, C.A.R. is awarding housing assistance grants to homeowners and renters affected by the Southern California wildfires in January 2025.

Through a $1 million gift from the REALTORS® Relief Foundation, C.A.R. is offering disaster relief grants up to $1,000 per household to provide housing-related financial assistance. Eligible applicants may receive assistance for mortgage relief, rental payments, or temporary housing, such as hotel stays due to displacement from their primary residence.

The grants offered through this program are open to full-time residents who are U.S. citizens or legally admitted for residence in the United States and have experienced displacement or damage to their primary residence due to the recent wildfires.

Applications opened Feb. 10, and the deadline for submission is April 30, 2025, contingent on the availability of funds. Applications will be processed in the order in which they are received.

New Executive Order Exempts Certain Homes From Price Gouging Laws

Gov. Newsom issued an Executive Order last week that suspended the price gouging law as applied to single-family homes of four bedrooms or more in certain ZIP codes.

As of Feb. 4, properties which have not been rented nor offered for rent within one year prior to Jan. 7 and the HUD Fair Market Rent for a four-bedroom unit is or exceeds $5,500 are now exempt from the price gouging law in nearly 30 SoCal ZIP codes.

At the same time, the Executive Order closes a loophole by extending the price gouging protections to leases of ANY length. Previously, a loophole in the price gouging law, sometimes called “the 13-month exception,” exempted leases of greater than one year. This exemption is no longer available.

New Executive Order Exempts Certain Homes From Price Gouging Laws

Gov. Newsom issued an Executive Order last week that suspended the price gouging law as applied to single-family homes of four bedrooms or more in certain ZIP codes.

More good news continued to roll in last week to indicate that the economy and the housing market ended 2024 with a positive note. Newly constructed home sales continued to rise, for example, while business optimism reached its highest level since 2018 as policy uncertainty began to clear up. While California had a rough start to begin the year, we should see some improvement as the state gradually recovers from the devastating wildfires. With mortgage rates coming down from their recent high, demand in the housing market will also likely pick up as the market gears up towards its spring homebuying season

California attorney general cracks down on rental price gouging

Source: HousingWire

California’s attorney general is making it clear that he will not tolerate price gouging for shelter in the wake of the Los Angels wildfires. On Monday, the Office of California Attorney General Rob Bonta announced it was pressing charges against a second unnamed REALTOR® for price gouging.

According to the AG’s office the agent allegedly attempted to price gouge a family who was evacuated due to the Los Angles Eaton Fire. The allegations are the result of a review of complaints received by the California Dept. of Justice (DOJ). Through the investigation, the AG’s office learned that after being evacuated in the Eaton fire, the family contacted their real estate agent to find a rental property and inquired about a home in Glendale. The agent representing the rental property offered the family a new price on the rental “that exceeded the listing price by more than 50 percent, which is in excess of the 10 percent limit laid out in Penal Code section 396 while the Governor’s Emergency Orders are in effect,” according to the AG’s office. “Today’s charges are another example of DOJ’s commitment to put an end to price gouging.”

January 2025 Federal Reserve interest rate decision: no cuts

Source: NBC News

President Donald Trump took U.S. Federal Reserve officials to task after they left interest rates unchanged following their first policy meeting since he returned to office. Trump raised pressure on policymakers to drive rates lower last week. But the central bank opted to sit tight for now. In their news release announcing the decision, Fed officials struck a more cautious tone on inflation. They removed part of a line in their previous release saying inflation “has made progress toward” a goal of 2 percent, noting in Wednesday’s statement only that it “remains somewhat elevated.”

Federal Reserve Chairman Jerome Powell said that recent inflation data looked “good” but that “we’re not going to over-interpret two good or two bad [inflation] readings.” Powell told reporters that he hadn’t had any direct contact with Trump. “Lots of research shows [independence is] the best way for a central bank to operate.”

U.S. economy ends 2024 with solid growth, up 2.8% for the year

Source: PBS News

The American economy ended 2024 on a solid note with consumer spending continuing to drive growth. The Commerce Department reported Thursday that gross domestic product – the economy’s output of goods and services – expanded at a 2.3 percent annual rate from October through December. For the full year, the economy grew a healthy 2.8 percent, compared with 2.9 percent in 2023.

Consumer spending grew at a 4.2 percent pace, fastest since January-March 2023 and up from 3.7 percent in July-September last year. But business investment tumbled as investment in equipment plunged after two straight strong quarters. Wednesday’s report also showed persistent inflationary pressure at the end of 2024. The Federal Reserve’s favored inflation gauge – called the personal consumption expenditures index, or PCE – rose at a 2.3 percent annual pace last quarter, up from 1.5 percent in the third quarter.

Mortgage demand drops further, even as interest rates settle

Source: CNBC

Mortgage rates didn’t move last week, but demand for new home loans continued to weaken. Both homebuyers and current homeowners are hampered by today’s higher interest rates. Total mortgage application volume decreased 2 percent from the previous week, according to the Mortgage Bankers Association’s seasonally adjusted index.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances remained unchanged at 7.02 percent with points increasing to 0.63 from 0.62 (including the origination fee) for loans with a 20 percent down payment. Applications to refinance a home loan dropped 7 percent for the week and were 5 percent higher than the same week one year ago. Interest rates are now 24 basis points higher than they were a year ago. Applications for a mortgage to purchase a home fell 0.4 percent from one week earlier and were 7 percent lower than the same week one year ago.

Jan 24, 2025

Find wildfire disaster relief and resources on Smart Zone

Source: Smart Zone

The CALIFORNIA ASSOCIATION OF REALTORS®’s website Smart Zone continues to compile a list of resources to help with immediate needs in the wake of the devastating Southern California wildfires, including information for evacuees, filing insurance claims, information on mortgage loan and tax deferrals, and more. It is constantly updated.

Anyone can use the list on Smart Zone to find assistance. Homeowners, renters, buyers, sellers and agents will find information to help during this tragedy.

California REALTORS® donate $600,000 to two wildfire relief funds

Source: C.A.R.

REALTORS® in California and across the nation have launched a massive, industrywide fundraising effort to support those impacted by the Southern California wildfires. C.A.R. is contributing a combined $600,000 toward two REALTOR®-sponsored charitable funds to help those who have incurred substantial losses due to the wildfires and other disasters.

C.A.R. is donating $300,000 to its Disaster Relief Fund (DRF), which provides grants to members of the REALTOR® family, which includes more than 190,000 REALTORS®, their staff and association staff. C.A.R. is currently providing grants of up to $10,000 to those who have suffered losses in the Southern California wildfires. The Association is also contributing $300,000 to the NATIONAL ASSOCIATION OF REALTORS® (NAR)’S REALTOR® Relief Fund (RRF), a national nonprofit that provides financial housing assistance to the public after natural disasters. NAR will donate 100 percent of all contributions between now and January 31, 2025, directly to those impacted by the Los Angeles area wildfires.

IRS and California give tax relief to California fire victims

Source: Forbes

The IRS has announced tax relief for individuals and businesses in Southern California affected by the wildfires that began on Jan. 7, 2025. Governor Gavin Newsom announced that California’s Franchise Tax Board is providing similar tax relief. Under the IRS announcement, impacted taxpayers now have until Oct. 15, 2025 to file various individual and business tax returns and make tax payments. The IRS relief applies to any area designated by the Federal Emergency Management Agency, so individuals and households that reside or have a business in Los Angeles County qualify for tax relief. The relief will be available to any other counties added later to the disaster area as listed on the “Tax relief in disaster situations” page on IRS.gov.

The tax relief postpones various tax filing and payment deadlines that occurred from Jan. 7, 2025 through Oct. 15, 2025 (postponement period). This allows individuals and businesses until Oct. 15, 2025 to file returns and pay any taxes that were originally due during this period.

Hiring blew past expectations with 156,000 jobs in December

hikes un

Source: MSN

The U.S. labor market has found its footing, a relief to households and businesses but a growing cause for concern in financial markets. The economy added 256,000 jobs in December and the unemployment rate edged down to 4.1 percent, the Labor Department said Friday. Last month’s gain in nonfarm payrolls was the biggest since March and well above the 155,000 jobs that economists had expected, according to a Wall Street Journal survey. The unemployment rate was also better than the expected 4.2 percent.

Friday’s jobs report was the latest sign that the U.S. labor market has recovered from its midyear stumble and might even be gaining steam. As such, it shuts the door on an interest rate cut at the Federal Reserve’s next meeting which is January 28-29. It also reduces the chances of a cut at the Fed’s subsequent meeting in March.

Mortgage demand mixed as rates hit highest level since March

Source: CNBC

Mortgage demand started this year stronger than it did last year, even though interest rates are higher. Total mortgage application volume last week was 7 percent higher than the same week one year ago, according to the Mortgage Bankers Association’s seasonally adjusted index.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances of $766,650 or less increased to 7.09 percent from 6.99 percent, with points decreasing to 0.65 from 0.68 (including the origination fee) for loans with a 20 percent down payment. That rate was 34 basis points lower one year ago. The refinance share of applications were 22 percent higher than the same week one year ago. Applications for a mortgage to purchase a home were 2 percent lower than the same week one year ago. Much of the inventory increase can be attributed to houses sitting longer on the market, rather than new listings.

PUBLIC NOTICE

Los Angeles Property Owners Near Wildfires Urged to Report Unsolicited Offers to Buy Their Properties Under Fair Market Value

Sacramento, Calif. – On January 14, 2025, Governor Newsom issued Executive Order N-7-25 (Order) in response to the recent Southern California fires that have devastated multiple communities across the Greater Los Angeles Area.

Following these fires, homeowners, business property owners, and faith leaders have reported receiving unsolicited offers to purchase their property, in many instances, for amounts far less than the fair market value prior to this emergency. Although property owners have the right to sell their property, those impacted by these fires, and particularly property owners who may have lost their family home or businesses, may be vulnerable to the exploitative practices of unscrupulous individuals seeking profit from this disaster. If you receive an unsolicited offer for what seems to be a lower price than what you believe your property to have been worth just before the recent wildfires, please report that to DRE at LAFires@dre.ca.gov.

Summary of Executive Order N-7-25

The Order protects property owners in fire-impacted areas from predatory real estate speculators by prohibiting unsolicited offers to purchase, or acquire any interest in real property, for an amount less than the fair market value of the property or property interest, as it was on January 6, 2025. The Order applies to properties in the zip codes listed below. This prohibition is in effect until Monday, April 14, 2025. Any person who violates the Order can be convicted of a misdemeanor punishable by a fine of up to $1,000 and/or by imprisonment for up to six months.

The Order does not prohibit anyone from selling their property should they wish to do so.

Properties covered under the Order include those in the following zip codes: 90019, 90041, 90049, 90066, 90265, 90272, 90290, 90402, 91001, 91040, 91104, 91106, 91107, 93535, and 93536.

These zip codes cover areas in the Greater Los Angeles Area especially hard hit by the recent fires, such as parts of Altadena, Pacific Palisades, Pasadena, Mid-Wilshire, Eagle Rock, Barrington, Mar Vista, Malibu, Topanga, Santa Monica, Sunland, Lancaster, Culver City, and Mar Vista.

What is an unsolicited offer?

An unsolicited offer is an offer made to a property owner that was not seeking a buyer and may include offers made on properties that have not been listed or otherwise advertised for sale. An unsolicited offer might come to property owners via a variety of means – such as text, email, phone call, or mail. Such an offer may be made by people claiming that they are the prospective buyer or that they represent the buyer.

The person making that offer might offer a description of themselves as someone helping people in financial distress, an investor, a real estate agent or broker, a representative for an investor, or someone with cash on hand who buys any property in any condition.

As you look at the offer, you might notice that the price on the offer seems to be a lower value than what you estimate your property was worth before the recent wildfires.

If you experienced a situation like this after January 6, 2025, it may be in violation of Executive Order N-7-25.

What can unlawful, unfair, or fraudulent practices look like?

The person making the offer or saying that they represent a buyer threatens that you might not qualify for insurance in the future, so you should sell your property to them or their buyer.

The person promises all cash, a quick closing, a hassle-free transaction, a pre-closing cash advance, full payment of any liens, low or no commission, or the opportunity to avoid foreclosure if you sell your property to them or their buyer. While these promises are tempting, remember that the buyer or their representative speaking with you is not considering your best interests and may be trying to take advantage of your situation. It’s also important to remember that any unsolicited offer made in the next three months that is below what your property was worth before the fires is a violation of the Executive Order.

The person making the unsolicited offer is vague when answering your questions.

The offer on the property is far below what your property was worth before the fires. Even if your property is damaged or destroyed, it’s important that you take the time to have a professional help you determine the value of the property. It’s also important to remember that any unsolicited offer made in the next three months that is below what your property was worth before the fires is a violation of the Executive Order.

If you receive an unsolicited offer from a person for what seems to be a lower price than what you believed your property to be worth just before the recent wildfires, or otherwise feels unfair or fraudulent please report that to DRE at LAFires@dre.ca.gov.

Take your time to evaluate an offer.

The Order protects property owners’ ability to make decisions regarding their property free from the pressure and duress which can result from aggressive and unsolicited offers to purchase your property. Keep in mind that the Order relates only to unsolicited offers to purchase your property and does not interfere with your ability or rights to sell or transfer your property otherwise.

You should take your time to make a sound decision before accepting an offer to sell your property, and consider consulting with others as to whether or not the sale is in your best interests, and, if yes, at what price and under what terms and conditions. Before you make any decisions on what to do with your property, it’s important to remember the factors that you would have considered if you were selling your home before the fires:

You would have time to research the value of your property so you could market it at a price you are comfortable with and would be able to pay off any loans and liens (such as a mortgage).

You would continue to make payments on your mortgage loan through the close of the sale/escrow.

You might receive and consider other offers with different terms and conditions.

You would sell to a buyer that best meets your financial needs as a seller.

If it was your preference, you would have reached out to a real estate agent to assist you with the sale and/or an attorney to review the sale agreements.

Relevant Resources

There are many other resources available to you if your property has been damaged or destroyed in the recent fires and you are not sure about next steps with your property.

Your Lender/Loan Servicer

If you have a mortgage loan, you should contact your mortgage lender/loan servicer to learn about programs they may have to assist you such as temporary postponements of payments.

If you have a loan through a federal or state program, contact the program agency to learn of programs they may have to assist you. Such agencies include:

Fannie Mae

Freddie Mac

U.S. Department of Housing and Urban Development

Federal Emergency Management Agency

Your Insurance Provider

If your property has been damaged and you have fire insurance coverage, you should contact your insurance provider for information about a claim to rebuild.

If you have a question about your insurance or a dispute with your insurance company, call the California Department of Insurance at 1-800-927-4357. The California Department of Insurance also offers resources to help wildfire victims here: Resources to Help Recent Wildfire Victims

Housing Counselor

A HUD-approved housing counselor can provide advice on renting, credit issues, foreclosure avoidance, and more. Call HUD at 1-800-569-4287 to find a housing counseling agency near you or visit their website: Housing Counseling | HUD.gov / U.S. Department of Housing and Urban Development (HUD)

Legal Aid

Local non-profit, legal aid services may be able to provide additional information on resources or provide legal help.

Legal Aid Foundation of Los Angeles: Los Angeles Fire Emergency – LAFLA: Legal Aid Foundation of Los Angeles

Los Angeles Regional Small Business Legal Aid Program: LA Regional Small Business Owners Legal Aid Program – Small Business Development

National Do-Not-Call Registry

You can register your phone number on the National Do Not Call Registry to prevent unwanted sales calls. If your phone number is already on the registry, you can also report unwanted calls. Go to www.donotcall.gov for more information.

A Licensed Contractor

If you are at the point where you can start to repair or rebuild, make sure you confirm that the contractor you are looking to hire is a licensed contractor with the Contractors State License Board. https://www.cslb.ca.gov/media_room/disaster_help_center/

How to Report a Violation

If you have received an unsolicited offer to purchase your property that you believe may violate the Executive Order, please file a complaint with DRE by emailing LAFires@dre.ca.gov. We ask that you provide your name, contact information, property address, information about the person who made you an offer, and information about the unsolicited offer. You may also report the violation to the Attorney General’s Office at oag.ca.gov/report.

How DRE Will Evaluate Reports of Violations

Upon receipt of an inquiry or report of violation:

DRE will immediately respond with an acknowledgement of receipt and a list of resources available to you.

If the complaint involves a DRE licensee, DRE will assign the matter to a special investigator for an expedited investigation and will work with the Attorney General and/or local law enforcement authorities to collaborate on enforcement efforts.

If it is a complaint that does not involve a DRE licensee, DRE will immediately refer the matter to the Attorney General and will inform the person who submitted the complaint of the referral.

Violations of Executive Order N-7-25 may be enforced by California’s Office of the Attorney General and your local District Attorney.

012125

California REALTORS® to Donate $600,000 to Two Wildfire Disaster Relief Funds

REALTORS® in California and across the nation have launched a massive, industrywide fundraising effort to support those impacted by the Southern California wildfires.

C.A.R. announced it is contributing a combined $600,000 toward two REALTOR®-sponsored charitable funds to help those who have incurred substantial losses due to these wildfires and other disasters. C.A.R. is donating $300,000 to its Disaster Relief Fund (DRF), which provides grants to members of the REALTOR® family — which includes more than 190,000 REALTORS®, their staff and association staff. C.A.R. is currently providing grants of up to $10,000 to those who have suffered losses in the Southern California wildfires. Since the fund’s inception, C.A.R. has raised more than $2.7 million, thanks to the tremendous generosity of its REALTOR® family and community members, and it has distributed $1.9 million in grants.

C.A.R. also is contributing $300,000 to the NATIONAL ASSOCIATION OF REALTORS®’ (NAR) REALTORS® Relief Foundation, a national nonprofit that provides financial housing assistance to the public after natural disasters. NAR will donate 100% of all contributions made to the REALTORS® Relief Fund (RRF) between now and February 7, 2025, directly to those impacted by the Los Angeles area wildfires.

Market Update

California ended the year with a positive note with home sales reaching the highest level in five months. As projected, both sales activity and the statewide median price were up modestly for the year as a whole as California wrapped up 2024 with a double-digit gain in sales. With mortgage rates remaining at their highest level since early July and devastating wildfires taking a toll on the L.A. region’s housing market, California will likely have a slow start this year, but demand should pick up once we enter the spring homebuying season. The market is expected to improve in 2025, but stickier-than-expected inflation, the ongoing insurance crisis, and policy changes under the new White House administration are challenges that could put a drag on the market.

California Housing Market Closes the Year Strong Despite Challenges

California home sales ended the year with the largest yearly increase since June 2021, but the housing market remained a work in progress in December, C.A.R. reported last week.

Existing, single-family home sales totaled 268,180 in December on a seasonally adjusted annualized rate, up 0.1 percent from 267,800 in November and up 19.8 percent from 223,940 in December 2023.

December’s statewide median home price was $861,020, up 1.0 percent from November and up 5.0 percent from $819,820 in December 2023.

For 2024 as a whole, sales of existing statewide homes were up 4.3 percent from last year, with the annual median price up 6.3 percent from 2023.

C.A.R. updates wildfire recovery resources on Smart Zone

Source: Smart Zone

The CALIFORNIA ASSOCIATION OF REALTORS®’s website Smart Zone continues to post new and revised resources for those dealing with the devastating Southern California wildfires, including information for evacuees, how to file insurance claims, avoiding scams and price gouging, information on mortgage and tax relief, and more. It is constantly updated.

Anyone can use the list on Smart Zone to find assistance. Homeowners, renters, buyers, sellers and agents will find information to help during this tragedy.

CA banks and credit unions offer mortgage relief to wildfire victims

Source: Los Angeles Times

Residents whose homes were damaged or destroyed by the Los Angeles firestorms are being offered mortgage relief by nearly 270 state-chartered banks, credit unions and other financial companies, Gov. Gavin Newsom announced today. The relief includes a 90-day forbearance on mortgage payments and any associated late fees; no reporting of the delayed payments to credit bureaus; protection from new foreclosures or evictions for at least 60 days; and no balloon mortgage payments at the end of the reprieve.

The help is available to qualified Los Angeles County residents in the 90019, 90041, 90049, 90066, 90265, 90272, 90290, 91001, 91104, 91106, 91107 or 93536 ZIP codes. Borrowers must contact their mortgage servicer to obtain relief. Other actions taken by the governor include postponing the state tax filing deadline until Oct. 15 for Los Angeles County residents and postponing this year’s property tax filing deadline to April 2026 without penalty. Longer deferrals of up to four years are also available by applying to the Los Angeles County Treasurer and Tax Collector.

CA governor bans “predatory” land offers following wildfires

Source: USA Today

Beleaguered residents who lost their homes in the Los Angeles-area wildfires are already being offered buyouts for their prime real estate, and now Gov. Gavin Newsom is stepping in to block land speculators. In an executive order issued Tuesday, Newsom temporarily banned “unsolicited undervalued offers” to buy properties in 15 specific fire-damaged ZIP codes, including Pasadena and Pacific Palisades.

In his order, Newsom said he worried that “predatory” developers would try to buy land from traumatized residents facing the loss of everything they own. “As families mourn, the last thing they need is greedy speculators taking advantage of their pain,” said Newsom.

California rushes billions in aid for LA fire victims

Source: CalMatters

As recovery efforts in the Palisades and Eaton fires begin and as new fires continue to burn in San Diego and Castaic, California’s Legislature passed a set of bills Thursday to expedite $2.5 billion in “bridge funding” intended to help state and local agencies respond to relief efforts.

The bills passed unanimously in both the Assembly and the Senate as part of an extended special session called by Gov. Gavin Newsom in response to the Los Angeles area wildfires. Newsome signed the bills on Thursday afternoon, releasing the funds immediately. The funding is in addition to other state and federal government relief efforts, such as extending tax filing deadlines and placing a moratorium on evictions.

How the president’s deportation plans could affect housing

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Source: Yahoo! Finance

As mortgage rates teeter between 6 percent and 7 percent and housing inventory remains limited, purchasing a home has become increasingly difficult. On the campaign trail, President-elect Donald Trump vowed to address the housing affordability crisis by carrying out the country’s largest mass deportation to date, with the aim of reducing demand for housing. However, some real estate experts are concerned about the effects of mass deportations on the U.S. construction workforce.

The Dept. of Homeland Security estimates that there are as many as 11 million undocumented immigrants in the U.S., and around 90 percent are of working age. Furthermore, undocumented workers account for nearly 14 percent of the construction workforce, according to the American Immigration Council, meaning the deportation plans could hit the sector hard. Consequently, the cost of labor and supplies for homebuilders are likely to continue to rise, which may reduce the already slim supply of homes.

Mortgage rates unlikely to fall anytime soon

Source: CNBC

Mortgage rates have risen in recent months, even as the Federal Reserve has cut interest rates. While those opposing movements may seem counterintuitive, they’re due to market forces that seem unlikely to ease much in the near term, according to economists and other finance experts. “If what you’re hoping or wishing for is an interest rate at 4 percent or housing prices to drop 20 percent, I personally don’t think either one of those things is remotely likely in the near term,” said Lee Baker, a certified financial planner based in Atlanta.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances rose above 7 percent in the week ended Jan. 16, according to Freddie Mac data. Mortgage rates are tied more closely to the yield on 10-year U.S. Treasury bonds than to the Fed’s benchmark interest rate, said Baker. Those Treasury yields were about 4.6 percent as of Tuesday, up from about 3.6 percent in September. Investors who buy and sell Treasury bonds influence those yields. They appear to have risen in recent months as investors have gotten worried about the inflationary impact of President Trump’s proposed policies, experts said.

Jan 2025

Market Minute

News on the economy and the housing market last week were mostly positive and encouraging. Black Friday kicked off the holiday shopping season and consumers were able to deliver. Retail sales on the day after Thanksgiving increased 3.4% year-over-year and more money is expected to be spent on Cyber Monday. Consumers feeling more confident about the economy and their financial well-being was one reason for the holiday spending spree. The Consumer Confidence index which measures the level of optimism, indeed, increased for the second straight month in November. There was also good news in the housing market, as conforming loan limits were raised for 2025 and mortgage rates continued to recover after reaching their recent peak in early November. And while it was disappointing to see new home sales dropping to the lowest level in October, a separate housing market index released recently suggests that an improvement in buyers’ traffic and future sales were observed in November.

Market Update

Recent economic data highlights a mix of resilience and challenges across key sectors. The service sector inflation pressures persisted despite a decline in ISM services activity, which can complicate the Fed’s inflation strategy as wage growth remains elevated and tariff-related uncertainties loomed. Construction spending rose in October, driven by solid residential improvements, while nonresidential outlays softened under high interest rates. Consumer sentiment saw a short-term boost in December, but future outlooks remained cautious due to inflation concerns. Meanwhile, November employment bounced back but unemployment rate inched up and labor force participation declined. Additionally, NAR’s 2024 Migration Trends report identified affordability and proximity to family/friends as key drivers for relocation, and the ability to remote work has reduced the importance of job location as a motivating factor for many movers.

November inflation report fuels optimism for Fed interest rate cut

Source: HousingWire

The likelihood of a third Federal Reserve rate cut got higher with Wednesday’s Consumer Price Index from the U.S. Bureau of Labor Statistics, which met expectations from economists on inflation. Headline inflation in November rose 2.7 percent year-over-year and 0.3 percent compared to October. Core inflation – which excludes volatile food and energy costs – rose by 0.3 percent month over month and 3.3 percent year over year.

Inflation on shelter costs remains high, rising 0.3 percent month over month, but that number represents a cooling from the 0.4 percent jump the month prior. Housing made up 45 percent of inflation. Taken together, the report is good news for the real estate industry that eagerly anticipates a drop in mortgage rates. Annual core inflation has cooled considerably since peaking at 6.3 percent in August 2022, as has annual shelter costs, which peaked in March 2023 at 8.2 percent.

Farmers Insurance says it will add more policies in California

Source: NBC Bay Area

In a surprise announcement, California’s second-largest insurance provider, Farmers Insurance, says it is going to add more policies for property owners. Starting Saturday, Farmers will start taking applications for new policies, including for condominiums, renters, umbrella, landlord, vacant and manufactured home policies.

Farmers Insurance stopped writing policies for California renters and condo owners last year, in part because of the huge losses and heightened risk from wildfires across the state. State Farm and Allstate also stopped writing policies in the state, with thousands of homeowners having to go elsewhere for coverage. Farmers says it is adding new customers because the marketplace has improved. The company credits recent changes the Department of Insurance is trying to make.

Housing demand still showing double-digit growth

Source: HousingWire

Last week, a Santa Claus rally in mortgage rates occurred alongside improved housing demand. The economy continues to create jobs, with wages growing at an annual rate of 4 percent. Pending contract data has also grown compared to 2022 and 2023. Additionally, the purchase application data delivered positive results. The weekly pending contract data from Altos Research offers insight into real-time housing demand. Weekly pending sales for last week numbered 315,566, while for the same week in 2023, it was 278,735, and for the same week in 2022, it was 282,313.

In an average year, about one-third of all homes experience price cuts, a standard occurrence in the housing market. When mortgage rates rise, the percentage of homes that reduce their prices significantly increases. Conversely, this trend decreases when rates drop and demand rises, as we recently observed with falling rates. Last week, 38.4 percent of homes for sale had price cuts, compared to 38.7 percent in 2023 and 42 percent in 2022.

Homeownership linked to longer lifespan, finds Oxford study

Source: Fast Company

December 2024

Housing in California bounces back in October

Source: Street Insider

California home sales rebounded in October, reversing two straight months of sales declines and registering the fastest year-over-year sales pace in 40 months, the CALIFORNIA ASSOCIATION OF REALTORS® reported on Tuesday. Closed escrow sales of existing, single-family detached homes in California totaled a seasonally adjusted annualized rate of 264,870 in October, according to information collected by C.A.R. from more than 90 local REALTOR® associations and MLSs statewide. The statewide annualized sales figure represents what would be the total number of homes sold during 2024 if sales maintained the October pace throughout the year. It is adjusted to account for seasonal factors that typically influence home sales.

October’s sales pace climbed 4.7 percent from the 253,010 homes sold in September and was up 9.5 percent from a year ago, when a revised 241,910 homes were sold on an annualized basis. The year-over-year sales pace reached its highest level in 40 months, partly because of a low sales base in 2023, when sales dropped nearly 12 percent compared to the previous year.

U.S. homebuilder confidence at 7-month high in November

Source: Reuters

U.S. homebuilder sentiment rose to a seven-month high in November and expectations for sales in the next six months surged to the highest in about 2.5 years after a Republican election sweep fueled optimism for regulatory changes that could lead to more residential construction, a survey said on Monday. The National Association of Home Builders/Wells Fargo Housing Market Index rose to 46 this month, the highest since April, from 43 in October. The reading was higher than all 28 estimates in a poll of economists by Reuters, which had a median expectation for 43.

NAHB’s measures of current sales and traffic of potential buyers both ticked higher, while expectations for sales over the next six months shot up to the highest since April 2022. While Republicans have promised an aggressive deregulatory push, many of the rules affecting the building industry are determined at the state and local level – zoning laws in particular.

Home prices rise in nearly 9 out of 10 metro areas

Source: MSN

Home prices rose in 87 percent of the nation’s metro areas from July through September, and the national median price for a single-family existing home grew by 3.1 percent over the past year, according to the National Association of REALTORS®. “A typical homeowner accumulated $147,000 in housing wealth in the last five years. Distressed property sales and the number of people defaulting on mortgage payments are both at historic lows,” said NAR Chief Economist Lawrence Yun.

The NAR report on third-quarter home sales also found that 7 percent of U.S. markets experienced double-digit price hikes over the past year, down from 13 percent in the second quarter, and eight of the 10 most expensive housing markets are in California.

Fed in no rush to cut rates, says Powell

Source: MPMag

The Federal Reserve can afford to take its time on interest rate cuts because of a resilient economy, solid consumer spending and low unemployment, chair Jerome Powell said last week. While the central bank has lowered its funds rate twice in recent months, Powell indicated in a speech at the Dallas Fed that decisionmakers saw few signs of an urgent need to lower rates sharply.

In his speech, Powell said it wouldn’t be a surprised to see slow progress on the inflation front moving into 2025, with further upward movement possible. “Core measures of goods and services inflation, excluding housing, fell rapidly over the past two years and have returned to rates closer to those consistent with our goals,” he said. “We expect that these rates will continue to fluctuate in their recent ranges.”

Source: AOL

California homeowners may face noticeable insurance rate hikes under new rules finalized by state regulators that allow property insurers to use complex climate algorithms to set prices. California’s property insurance rates are set by the state. With payouts from wildfires and other disasters exceeding insurance premiums, major insurers such as State Farm and Allstate have stopped accepting new customers or left the state entirely. This leaves California regulators in a tough position – they can let insurers raise rates, which puts more pressure on Californians, or they can refuse to raise rates and let insurers leave. Californians without insurers in the area can purchase insurance from FAIR, the state’s insurer-of-last-resort, but high rates and limited property coverage mean it’s not a great option.

The new regulations will allow insurers to use climate and catastrophe modeling to set higher property insurance rates. Earlier this year, Insurance Commissioner Ricardo Lara proposed letting insurers use these models in exchange for covering 85 percent of homeowners in wildlife areas.

Weekly mortgage demand inched up despite higher rates

Source: CNBC

After flatlining the week before, mortgage demand rose last week, despite mortgage rates increasing for the fourth straight week. Total application volume climbed 1.7 percent compared with the previous week, according to the Mortgage Bankers Association’s seasonally adjusted index.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances of $766,650 or less increased to 6.90 percent from 6.86 percent, with points increasing to 0.70 from 0.60 (including the origination fee) for loans with a 20 percent down payment. Refinance demand rose 2 percent for the week and were 43 percent higher than the same week one year ago. Demand was driven by a 10 percent increase in VA applications. Applications for a mortgage to purchase a home rose 2 percent for the week but were 1 percent lower than the same week one year ago. Homebuyers may be looking at lower rates than last year, but they are also seeing higher home prices while the supply of homes for sale remains lean.

DOJ Files Statement of Interest on NAR’s Broker Commission Settlement

Over the weekend, the U.S. Department of Justice (DOJ) filed a “Statement of Interest” related to NAR’s proposed settlement of claims regarding broker commissions. Based on their dialogue with the DOJ over the course of this year, NAR had expected this possibility.

In its statement, the DOJ raised concerns about the requirement that MLS Participants must enter a written buyer agreement when they are working with buyers prior to touring a home. A new California law requires buyers and their brokers to enter into written agreements, so the DOJ’s concerns should not have much impact in California.

The DOJ is not a party to the settlement agreement or a class member. The Court may consider the DOJ’s perspective alongside the other arguments made by objectors and will decide whether to grant final approval soon.

NAR will continue to advocate for final approval in the lead-up to and at the Nov. 26 hearing.

California Housing Market Bounces Back in October

California home sales rebounded in October, reversing two straight months of sales declines and registering the fastest year-over-year sales pace in 40 months, C.A.R. reported last week.

Existing, single-family home sales totaled 264,870 in October on a seasonally adjusted annualized rate, up 4.7 percent from 253,010 in September and up 9.5 percent from 241,910 in October 2023.

October’s statewide median home price was $888,740, up 2.4 percent from September and up 5.8 percent from $839,990 in October 2023.

Year-to-date statewide home sales edged up 1.7 percent.

Market Update

California housing market bounced back in October and had the fastest year-over-year growth pace in sales in 40 months. Last month’s statewide median price also increased from a year ago and recorded the largest gain in the past three months. The supply condition improved as well with new active listings exceeding the year-ago level for the 10th consecutive month. On the newly construction home front, builder confidence reached a 7-month high, and developers believed that the latest election outcome will provide regulatory relief for the industry in the coming years. The optimism will likely result in more housing units being built, which is encouraging news for the market.

Freddie Mac, Fannie Mae backing bigger home loans in 2025

Source: Fox Business

The U.S. Federal Housing Finance Agency (FHFA) announced on Tuesday that it is raising the loan amount limits for mortgages purchased by Freddie Mac and Fannie Mae by 5.2 percent in 2025, as home prices continue to soar in the U.S. The new conforming loan limit value for a one-unit home will be $806,500 next year, an increase of nearly $40,000 from the 2024 baseline cap. However, in high-cost areas of the country where 115 percent of the local median home value exceeds the baseline loan limit, the loan ceiling is 150 percent higher. So, the loan cap for a single-unit home in those areas will be $1,209,750, which is 150 percent of $806,500, said FHFA.

The FHFA adjusts loan limits for government-sponsored enterprise Freddie and Fannie on an annual basis to reflect changes in the average home price, which climbed 5.21 percent from the third quarter of 2023 to the same quarter this year. Also on Tuesday, the S&P CoreLogic Case-Shiller U.S. National Home Price NSA Index reported home prices hit their 16th consecutive all-time high in September and now sit 51 percent higher than at the start of the pandemic.

Judge approves U.S. REALTOR® group’s $418m sales commission settlement

Source: Reuters

A U.S. judge on Tuesday said he will give final approval to a $418 million nationwide settlement to resolve claims that the National Association of REALTORS® (NAR) conspired with brokerages to inflate commissions that home sellers pay for residential real estate sales. U.S. District Judge Stephen Bough in Kansas City approved the accord at a hearing and said he will later issue a written order.

A lawyer for NAR, Ethan Glass, called the settlement a “path forward” for the industry at Tuesday’s hearing. NAR President Kevin Sears welcomed the court’s order in a statement after the hearing and said “principles of transparency, competition and choice are core to the settlement agreement.” The deal resolves claims that NAR violated antitrust law by requiring home sellers to agree to pay commissions to buyers’ agents in order to list their homes for sale. While commissions have long been negotiable in the state of California, NAR clarified its rules to remove that requirement for MLSs nationwide.

U.S. home-price growth cooled in September

Source: HousingWire

U.S. home-price growth continued to cool in September. The S&P CoreLogic Case-Shiller national home-price index (HPI) rose 3.9 percent annually to a reading of 324.80 in September, according to data released Tuesday. This increase is down from a 4.3 percent annual gain in August and a 5 percent jump in July, and it marks the lowest year-over-year increase since August 2023. Through the first nine months of 2024, annual home-price growth has averaged about 6 percent. Month over month, home prices were down 0.1 percent.

“Traditionally, the HPI has shown an increase in home price growth between August and September,” said Bright MLS Chief Economist Lisa Sturvesant. “This year, the September data could be indicative of a slowdown in home price appreciation in the months ahead.” Looking ahead, Sturvesant expects home-price growth to continue slowing as housing inventory continues to rise.

Californians who left for remote work show signs of returning

Source: Newsweek

While reports have circulated that Americans are fleeing California to lower cost of living areas, the National Association of REALTORS has revealed that the state saw a surge in in-bound migration in recent years. California was the second most popular state for Americans to move to in 2022, according to NAR data. The report found California moves made up 9.4 percent of interstate moves nationally that year. Jessica Lautz, NAR deputy chief economist and vice president of research, said “Californians who flocked to other states with remote work flexibility are showing some signs of returning.”

In the 2024 report, California did not see high net migration numbers. Affordability was cited as a possible issue, especially as remote work continues to be available in many job sectors. However, the job market and the weather in the state has continued to draw people. Many are moving into or back to California to be closer to friends and family, Lautz said.

Low-risk homes appreciate as climate concerns shift market

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Source: Inman

A recent Redfin analysis reveals that Americans are increasingly factoring natural disaster risk into their homebuying decisions, with homes in low-risk areas appreciating in value more quickly during the past year than those in high-risk areas. This marks the first time in over a decade that such a shift has occurred.

Redfin’s analysis, based on climate-risk data from First Street and Redfin Estimates for nearly 93 million U.S. residential properties as of June 2024, compares home values from June 2023 against pre-pandemic levels in June 2019. The analysis examines the impact of three major climate risks – heat, flood and fire – on home values. Home values in both high- and low-risk areas have appreciated substantially from pre-pandemic levels. For example, properties in high-risk areas for fire have risen by 67.8 percent compared to a 57.2 percent increase for low-risk homes. However, a notable shift has emerged over the past year. Low-risk homes across all three climate risk categories have started gaining value faster than high-risk homes, a trend last observed in 2010. Homes with low risk of fire have seen a 6.6 percent increase in value year over year, totally $39 trillion, while those facing high fire risk have risen 6.4 p

Homebuyer mortgage demand jumps 12% after first interest rate drop in over 2 months

Source: CNBC

Mortgage rates dropped last week, and homebuyers jumped off the fence. They drove total mortgage demand up 6.3 percent compared with the previous week, according to the Mortgage Bankers Association’s seasonally adjusted index. Applications for a mortgage to purchase a home increased 12 percent for the week and were 52 percent lower than the same week one year ago.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances of $766,650 or less decreased to 6.86 percent from 6.90 percent, with points remaining unchanged at 0.70 (including the origination fee) for loans with a 20 percent down payment. Refinance demand dropped 3 percent for the week but were 119 percent higher than the same week one year ago.

Sacramento, Calif. – The California Department of Real Estate (DRE) reminds licensees that the landscape involving buyer representation and compensation in real estate purchase transactions is changing.

These changes are the result of a nationwide settlement of numerous class-action lawsuits alleging antitrust violations against industry associations, multiple listing services and large national brokerages. The plaintiffs in these lawsuits alleged that the defendants engaged in anti-competitive practices designed to artificially inflate homes prices and commissions.

Past Practice

Prior to the nationwide settlement, the seller and their listing agent typically would set the commission for both the seller’s agent and the buyer’s agent without involving the buyer or the buyer’s agent when the listing agreement was signed. They would discuss what percentage of the sales price should be set aside to compensate the agents for the buyer and seller and how much of that percentage should be allocated to compensate the buyer’s agent.

Post Settlement Outcomes

Following the nationwide settlement, the sellers and their listing agents no longer will determine compensation for the buyers’ agent. The settlement places the buyer at the heart of the discussions. Buyers’ agents will need to negotiate their compensation directly with their buyer clients.

The settlement terms are extensive, but for this Licensee Advisory, pertinent terms include:

the requirement that a buyer’s agent obtain a signed representation agreement with their buyer client.

The agent must obtain the signed representation agreement prior to touring a property and the agreement must address compensation for the buyer’s agent.

Whatever compensation the buyer’s agent and buyer agree upon shall serve as the maximum amount that the agent may receive for brokerage services from any source with respect to that representation.

The settlement covers the majority of the residential real estate license population but does not cover persons who are not members of associations and who do not use a multiple listing service to make an offer for their buyer client.

Coming January 2025

In addition to the nationwide settlement, the California Legislature recently passed Assembly Bill (AB) 2992, which was signed by the Governor on September 24, 2024. Effective January 1, 2025, all buyers’ agents in California will be required to sign a buyer-broker representation agreement with their buyer clients as soon as practicable, but no later than the execution of the buyer’s offer to purchase real property. [Note that the timing in this legal requirement is different from the trade association practice, which requires a buyer-broker representation agreement before an agent tours a home with a buyer.]

AB 2992 also will require the agreement to include the buyer’s agent’s compensation, the services to be rendered, when compensation is due, and the date when the agreement shall expire, provided that the expiration date shall not exceed three months from the date it was executed.

Once the buyer and buyer’s agent agree to compensation terms and sign the buyer-broker representation agreement, the buyer’s agent will know what services to provide and the buyer will know how much they need to pay for those services. Although the buyer will be responsible for compensating their agent, the buyer has several options available to them.

The buyer may compensate their agent out-of-pocket.

The buyer also may request the seller to pay some or all of the compensation owed to the buyer’s agent as a seller’s concession of the purchase price, which the seller may accept or reject.

If the seller accepts, then the buyer may be relieved of some or all of their financial obligation to the extent covered by the seller’s concession.

If the seller rejects, then the buyer remains financially responsible for paying their agent if they proceed with the acquisition.

If the out-of-pocket costs to pay their agent remain too great and the seller and buyer have not yet reached an agreement on the sales price and/or terms, the buyer may walk away from the subject property, proceed without representation, or approach the seller’s agent about possible dual agency representation.

While DRE is not charged with enforcing the terms of the class action lawsuit settlement, DRE will enforce compliance with the requirements added by AB 2992 and the Real Estate Law related to conduct, such as performance of fiduciary duties and appropriate representations.

Practices Licensees Should Avoid

Given the new landscape in buyer representation and compensation, licensees should avoid the following practices in their representation of buyers and sellers:

Failing to Provide a Written Agreement: Licensees must ensure that any agreements regarding compensation are in writing. Any modifications to the compensation agreement must be in writing and agreed upon by both parties. Licensees must avoid making verbal changes or allowing terms to be altered informally through emails or texts.

Not Clarifying Compensation Expectations: If the buyer’s agent fails to clearly explain how they will be compensated, this could lead to misunderstandings or legal disputes. Clear communication is critical. Licensees should clarify that buyers are now more likely responsible for negotiating and paying their agent’s commission directly, unless other terms are negotiated by the seller and buyer.

Misrepresenting Commission Terms: Licensees should not claim that there is a “standard” rate. Commissions are fully negotiable under California law, and it is the licensee’s duty to clearly explain this to the buyer, ensuring transparency in negotiations.

Not Disclosing Dual Agency: If licensees are representing both the seller and buyer, they must disclose this relationship to both parties in writing. A licensee has a fiduciary duty to their clients, meaning they are legally obligated to act in their client’s best interest.

Pressuring the Buyer: Licensees should avoid pressuring buyers into signing contracts or agreements without explaining the practice application of the documents and giving them adequate time to review and understand the terms.

Requesting Advance Fees: If a licensee chooses to piecemeal real estate services (i.e., driving and showing a property, writing an offer, ordering inspections, reviewing disclosures, etc.) and charge for those services individually, these fees may be acceptable if the fee is collected after the service has been rendered. However, if the licensee’s affiliated broker wishes to collect advance fees for services, the broker will need to submit an advance fee agreement to DRE for review and receive a letter of “no objection” before demanding or receiving any advance fees. For more information about advance fee agreements, see the following link: adv fees essential elements (ca.gov).

Licensees are encouraged to thoroughly vet new practices with their affiliated brokers and legal counsel for compliance with applicable laws.

California Leaders Call for Bold Solutions to Solve State Housing Crisis at Summit

Top housing industry experts from across the state and nation gathered last month for the Center for California Real Estate’s flagship event of the year, the CCRE Housing Summit: Charting California’s Future. The forum brought together academics, state and local officials, and private sector experts to examine California’s political and socioeconomic landscape, homeownership trends, and strategies to expand housing supply.

Featuring keynotes from Senate President pro Tempore Emeritus Toni G. Atkins and Nobel laureate Dr. Douglas W. Diamond, the forum sparked critical conversations on the state’s housing crisis, drawing hundreds of attendees across California. The event built upon a year of CCRE dialogue on many converging issues around housing — yielding important emerging insights and setting the stage for crucial conversations in 2025.

Victory for California Homeownership: Proposition 33 Defeated

We did it! Thanks to the strength and collective efforts of California REALTORS®, we successfully defeated Proposition 33. This is a significant win for housing affordability, homeownership rights and the overall housing supply, benefiting both renters and property owners alike. Voters across California recognized the negative impact Prop 33’s extreme rent control measures would have had on housing affordability and homeownership rights, and decisively rejected it in every county.

Market Update

The economy continued to do well last month with consumer spending remaining resilient and businesses turning more positive. Overall price level, meanwhile, inched up in October, but the Inflation rate was in line with economists’ expectations. With consumer prices rising only modestly in October, the Federal Reserve should remain on track to lower its policy rates again in the upcoming FOMC meeting. The outlook for inflation next year, however, is murkier than a few weeks ago as the election outcome has raised new questions about the path ahead for price growth. As such, the uncertainty is keeping mortgage rates elevated and could slow down the Fed’s rate cut pace in 2025.

November 2024

Judge Approves Gibson Commission Lawsuit Settlements

Judge Stephen Bough last week granted final approval for nine settlements involving Compass, Douglas Elliman, The Real Brokerage, @properties, Redfin, Realty ONE Group, Engel & Völkers, HomeSmart and United Real Estate. The companies will pay $110 million collectively.

Known as the Gibson case filed in U.S. District Court for the Western District of Missouri, the suit targeted NAR’s Participation Rule, which requires listing brokers to make an offer of compensation to buyer brokers in order to submit a listing to a REALTOR®-affiliated MLS.

The court granted preliminary approval of settlements in April, finding the proposed settlements “fair, reasonable and adequate.”

Market Update

While Americans are heading to the polls to vote for the next President, state and local representatives, and a range of crucial local issues, the economy remains strong. The Federal Reserve, meanwhile, is ready to cut rates for the second time this year during their upcoming November FOMC meeting. Mortgage rates, after last week’s surge, stabilized while remaining above 7%. As a result, mortgage applications trended downward. The October jobs report was a mixed bag, with low job creation and significant data issues; other positive economic indicators meant the market did not react strongly to the weak report.

Fed cuts interest rates again

Source: U.S. News and World Report

The U.S. Federal Reserve cut interest rates again by a quarter of a percent, continuing on its path to bring down borrowing costs just two days after an election that many economists fear might bring an uptick in inflation. The move was expected, and markets are already pricing in another 25 basis points cut in December.

“Since earlier in the year, labor market conditions have generally eased, and the unemployment rate has moved up but remains low,” the Fed said in a statement. “Inflation has made progress toward the Committee’s 2 percent but remains somewhat elevated. The committee judges that the risks to achieving its employment and inflation goals are roughly in balance.”

California housing affordability improves from prior quarter and year

Source: C.A.R.

Slower home price growth and more favorable interest rates in third-quarter 2024 buoyed California’s housing affordability from both the previous quarter and a year ago, the CALIFORNIA ASSOCIATION OF REALTORS (C.A.R.) said today. Sixteen percent of the state’s homebuyers could afford to purchase a median-price, existing single-family home in California in third-quarter 2024, up from 14 percent in the second quarter of 2024 and 15 percent in the third quarter of 2023, according to C.A.R.’s Traditional Housing Affordability Index (HAI).

The third-quarter 2024 figure is less than a third of the affordability index peak of 56 percent in the third quarter of 2012. Rates started the quarter on a downward trend but have climbed since bottoming out in early September. With the dwindling chance of another sizable Fed rate cut in 2024 due to a stronger-than-expected economy, mortgage rates shot back up above 7 percent in recent weeks, reaching their highest levels since early July. Rates could still come down before the end of the year, but the odds of a meaningful decline in the next couple of months have reduced sharply from three months ago.

Investors betting Trump will privatize Fannie Mae, Freddie Mac

Source: Inman

Shares in mortgage giants Fannie Mae and Freddie Mac soared Wednesday on expectations that Donald Trump’s return to the White House – and potential Republican control of Congress – will revive efforts to privatize the companies. During his first term as president, Trump began the process of “recapitalizing” Fannie and Freddie, which were placed in government conservatorship in 2008 as mortgage delinquencies and foreclosures climbed during the Great Recession of 2007-9. But Democrats derailed the plan to privatize Fannie and Freddie after Trump lost the 2020 election.

The Wall Street Journal reported in September that former Trump administration officials and banking industry leaders were working behind the scenes to restart the privatization process. Congress would need to get on board, but the process could be fast-tracked if Republicans control both chambers of Congress. While the GOP wrested control of the Senate from Democrats on Tuesday, control of the House remains up in the air, with a number of races too close call, the Associated Press reported Wednesday afternoon. Preferred shares in Fannie Mae and Freddie Mac, which were delisted in 2010 but still trade over the counter, were up more than 70 percent Wednesday, while prices for Fannie and Freddie common stock climbed by nearly 40 percent.

Number of renter households growing 3x the rate of homeowner households

Source: Redin

The number of renter households rose 2.7 percent in the third quarter year over year, to a record 45.6 million, according to a new report from Redfin. That rate of growth is three times faster than the 0.9 percent increase in homeowner households, which now total a record 86.9 million. The 2.7 percent increase – representing 1.18 million additional renter households – was the second fastest pace since 2015, only trailing the first quarter’s 2.8 percent rate.

Renter households have formed faster than homeowner households for the past four quarters, as the cost of buying a home rose raster than the cost of renting. The median asking rent was up 0.6 percent year-over-year in September, but rents have remained largely flat for the past two years. In contrast, home prices climbed 6 percent year-over-year in September and have grown more than 10 percent in the last two years. Just 2.5 percent of U.S. homes changed hands in the first eight months of 2024 – the lowest rate in decades. Part of the reason rents have remained stable is the boom in multifamily construction over the past two years, adding units at an annual rate of 647,000, which is the fastest pace since 1994. San Jose has a rentership rate of 52 percent, followed by Los Angeles at 50.8 percent, New York at 49.1 percent, San Diego at 48 percent and Fresno at 47.7 percent.

First-time homebuyers feel affordability squeeze, face historically tough market

Source: Bankrate

With home prices setting one record after another, it’s a difficult time to be a first-time homebuyer. New data from the National Association of REALTORS (NAR) shows just how challenging today’s housing market is. First-time homebuyers in the past year fell to a record low of just 24 percent of all buyers, according to NAR’s 2024 Profile of Home Buyers and Sellers, released Nov. 4. Before 2008, the share of first-time buyers hovered around 40 percent. Meanwhile, the median age of first-time buyers has risen to 38, the highest ever. The previous record was 36.

“We have 50 million people in this country who are between 30 and 40 – peak homebuying years. We just have this enormous cohort of people who are looking for housing,” said Michael Fratantoni, chief economist at the Mortgage Bankers Association. “We have been underbuilding by a lot.” Builders have both slowed the pace of housing starts since the Great Recession and shifted focus away from starter homes and toward higher-priced, higher-profit new home

Weekly mortgage demand tanks as interest rates surge higher

Source: CNBC

Mortgage rates rose again last week, pulling demand from both the refinance and purchase markets. Total mortgage application volume dropped 10.8 percent compared with the prior week, according to the Mortgage Bankers Association’s seasonally adjusted index.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances of $766,650 or less increased to 6.81 percent from 6.73 percent, with points decreasing to 0.68 from 0.69 (including the origination fee) for loans with a 20 percent down payment. Refinance demand, which is most sensitive to weekly rate moves, fell 19 percent for the week but were 48 percent higher than the same week one year ago. Last year at this time, the 30-year fixed rate mortgage was 80 basis points higher. Applications for a mortgage to purchase a home decreased 5 percent for the week and were just 2 percent higher than the same week one year ago. Homebuying activity has picked up over the past few months as more supply comes on the market and home prices ease slightly. Mortgage rates, however, are pricing some buyers out again, and concern over the economy and the election may have some sitting on the sidelines right now.

Market Update

California home sales dropped to the lowest level in nine months but will likely improve, albeit slowly, as the market enters the final quarter of 2024. In the latest sale & price report, the number of opened escrows once again exceeded last year’s levels for the third consecutive month and point to an increase in home sales in October. The median home price in California continued growing for fifteen consecutive months, but at a more moderate pace, and is expected to continue moderating for the rest of year. With prices expected to soften and rates likely to normalize by the end of the year, the fourth quarter is a window of opportunity for homebuyers on the sideline to re-enter the market. In the broader U.S. market, housing starts dipped 0.5%, with single-family construction holding steady while multifamily development slowed. The economy remains solid with retail sales showing strong growth, despite concerns about consumers’ financial wellbeing and a slowing job market.

U.S. firms point to steady economy despite lower profit margins, Fed says

Source: Yahoo! Finance

U.S. economic activity was little changed from September through October and firms saw a slight uptick in hiring, continuing recent trends that have reinforced expectations the Federal Reserve will opt for a smaller, 25 basis-point reduction in borrowing costs in two weeks. “On balance, economic activity was little changed in nearly all Districts since September, though two Districts reported modest growth,” the Fed said on Wednesday in the survey known as the “Beige Book,” which poled the business contacts of each of its 12 regional banks through Oct. 11. “Despite elevated uncertainty, contacts were somewhat more optimistic about the longer-term outlook.”

The U.S. central bank’s latest temperature check on the health of the economy showed that inflation pressures continued to moderate while input price generally rose faster than selling prices, slightly denting firms’ profit margins. The central bank last month began an easing cycle with an unusually large half-a-percentage-point cut in its policy rate, lowering it to the 4.75-5.00 percent range.

U.S. home prices grew 0.5% in September, the fastest pace since April

Source: Redfin

U.S. home prices grew 0.5 percent from a month earlier in September on a seasonally adjusted basis. That’s the fastest pace since April and the third consecutive month in which the growth rate has increased. On a year-over-year basis, home prices rose 6 percent, the lowest annual increase since December. This is according to the Redfin Home Price Index (RHPI), which uses the repeat-sales pricing method to calculate seasonally adjusted changes in prices of single-family homes. The RHPI measures sale prices of homes that sold during a given period, and how those prices have changes since the last time those same homes sold.

Mortgage affordability improved in September when rates dropped as low as 6.08 percent, but home prices are continuing to tick up because demand outweighs supply. “There are around 20 percent fewer homes on the market today than there were five years ago, mainly because so many homeowners locked in a low mortgage rate during the pandemic,” said Redfin Senior Economist Sheharyar Bokhari. “With mortgage rates back above 6.5 percent this month, and unlikely to drop below 6 percent this year – home prices will likely continue their consistent climb until more inventory comes onto the market in the spring.”

Existing home sales plunge to 14-year low

Source: USA Today

U.S. existing home sales dropped to a 14-year low in September, weighed down by higher mortgage rates and house prices. The second straight monthly decline in home resales reinforced economists’ views that the slump in residential investment, which includes homebuilding, deepened in the third quarter. The housing market has struggled to rebound after being knocked down by a resurgence in mortgage rates in the spring.

Though supply has improved, entry-level homes remain scarce in most regions of the country, keeping home prices at levels that are unaffordable for most first-time buyers. “It will take more rate cuts and more options to bring buyers back,” said Jennifer Lee, senior economist at BMO Capital Markets. Home sales fell 1.0 percent last month to a seasonally adjusted annual rate of 3.84 million units.

Gen Z is burdened by rent, boding ill for future wealth

Source: MarketPlace

If you know someone between the ages of 18 and 25, chances are they are “rent burdened,” meaning they spend at least 30 percent of their pre-tax income on housing. That was true of 58 percent of people in that age group in 2022, according to a new analysis out from Zillow. That’s better than millennials had it when they were in that same age bracket, but not by much: 12 years ago, 60 percent of young adults were rent burdened. Rent burdened young adults peaked in 2011, and everything was getting better until 2020.

If you pay a lot in rent, you save less. Jordan Levine, chief economist at the CALIFORNIA ASSOCIATION OF REALTORS®, said if you save less, “it prevents you from building up that down payment, getting into that first home, then that forever home.” And the longer these young adults are renting – and rent-burdened – the wider the wealth gap becomes. Levine said the big fix is increasing the supply of started homes.

Mortgage companies, trade groups launch program to address racial homeownership gap

Source: RisMedia

The Mortgage Bankers Association (MBA) and 13 industry stakeholders such as Fannie Mae, Freddie Mac, Lennar Mortgage, and Wells Fargo Home Lending announced the formation of the CONVERGENCE Collaborative, a coordinated effort to identify and develop solutions to help close the racial homeownership gap. Over the next three years, the CONVERGENCE Collaborative will deploy more than $1 million annually to build on the existing network of location-based CONVERGENCE sites focused on expanding minority homeownership. Pilot sites will test and incubate new solutions to improve access to homeownership using online tools such as a down payment assistance finder, and in-person resources such as homebuyer education courses.

For decades, the national homeownership rates of Black and Hispanic people have lagged that of white people by well over 20 percent, with much larger gaps in some markets, MBA noted. Despite public, private and non-profit investments, these gaps have remained high. The challenge of closing these gaps becomes more urgent considering that most new households formed over the next two decades will be comprised of people of color, MBA stated. The Collaborative will focus on the intersection between business development and expanding socioeconomic opportunities for historically underserved people and communities.

Mortgage demand drops to lowest level since July as rates bump higher

Source: CNBC

Mortgage demand lowered again last week, even though mortgage interest rates didn’t move. Total mortgage application volume dropped 6.7 percent for the week compared to the previous week, hitting its lowest level since July, according to the Mortgage Bankers Association’s seasonally adjusted index.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances of $766,650 or less remained unchanged at 6.52 percent, with points decreasing to 0.64 from 0.65 (including the origination fee) for loans with a 20 percent down payment. Refinance demand continued to lead the way down, declining 8 percent for the week. However, it was 90 percent higher than the same week one year ago. Applications for a mortgage to purchase a home fell 5 percent for the week and were just 3 percent higher than the same week one year ago. Some real estate agents say buyers are also taking a wait-and-see approach before next month’s presidential election.

The Center for California Real Estate (CCRE) has just released its list of top issues and insights in housing this year, reflecting the past 10 months of conversations among the state’s leading government, academia, nonprofit and business leaders working together to tackle California’s multi-faceted housing challenges.

The list comes just ahead of the Center’s flagship event, the CCRE Housing Summit: Charting California’s Future, on Wednesday, Oct. 30 in Los Angeles. Arguably the most important statewide housing event of the year, the Summit features industry, academic, civic and private sector experts convening to analyze the current political environment for implementing housing policy changes, examine the state of homeownership for Californians, and explore broad strategies for enhancing housing supply.

Prop 33 Social Media Takeover on Nov. 1

Election Day deadline is around the corner! On Friday, November 1, we’re asking all REALTORS® across the state to make a powerful statement on social media. We need your help to flood ALL your social media platforms (LinkedIn, Facebook, Instagram etc.) timelines with a Vote NO on Prop 33 graphic. By posting it on your social media platforms on the same day, we can amplify our message and reach more Californians. Let’s come together to protect homeownership and stand up for our communities. Join us in spreading the word — every post counts! Be sure to include the hashtags #NoOn33 #VoteNoOnProp33 #ProtectHomeownership

Market Update

With mortgage rates climbing to a 3-month high, housing demand in the past few weeks has gone down as the number of mortgage applications reached its recent low since July. Home sales, as such, will likely remain soft in October and November until rates start coming down again. Meanwhile, new home sales last month reached the highest level since May 2023 as new housing markets benefited from low rates in September. However, with rates back to 7% recently, sales momentum in the new housing market will likely slow in the near future. On a brighter note, consumer short-term inflation expectations in September continued to stay at the lowest level since early 202, which at least offers hopes that rates could gradually come down in the coming months.

Real estate market trends and update

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