Real estate market trends and update

July 2025

Homeowner’s insurance premiums vary widely from state to state, but they are all going up

Source: CNBC

Six months after wind-whipped wildfires killed 30 people and destroyed thousands of homes and businesses in and around Los Angeles, the scenes in Altadena and Pacific Palisades are still horrific, with block after block of burned out homes and businesses. But every so often, there are small signs of rebirth, from a property owner cleaning up their lot, or workers repairing a home that was merely damaged.

“The situation in insurance has actually been remarkably stable, considering everything that happened,” said Scott Wilk, an independent insurance agent and owner of the Santa Clarita, California, branch of TWFG Insurance. That is not to say that premiums are not surging after the wildfires. The online marketplace Insurify projects California premiums will rise 21% this year, even in areas that are far from Los Angeles, in what experts had predicted would be a year of only modest increases in the state. In fact, Insurify is projecting premium increases in all 50 states this year, averaging around 8%. California’s increase is not even the largest. That distinction belongs to Louisiana, where premiums are projected to rise 28%. Nor is the phenomenon limited to coastal states. Iowa and Minnesota are also looking at double-digit increases.

Delistings Surge Nearly 50% as Sellers Who Can’t Get Their Price Quit the Market in Frustration

Source: Realtor.com

After failing to find a buyer at the price they think they deserve, more home sellers are pulling their listings off the market altogether. Delistings jumped 47% nationally in May from a year earlier, in a sign that sellers would increasingly rather wait than negotiate, according to the Realtor.com economic research team’s latest monthly housing trends report. Year to date, delistings are up 35% from the same period in 2024.

The increase is partly due to the overall expansion in active inventory, which was up 29% in June from a year earlier. Newly listed homes increased 6.2% from a year ago, but remained flat over the past two months. Still, delistings are outpacing new listings, with 13 homes delisted in May for every 100 homes hitting the market—up from 10 in the spring of 2024 and 2023, and just six in 2022. The increase in delistings follows a surge in price reductions, as some sellers with unrealistic price expectations faced a softer market with limited buyers. Now, it seems that some sellers would rather wait out the market than accept a lower price for their home.

Priced out of LA homeownership? City Council proposal could allow sale of cheaper ADUs

Source: LAIST.com

Los Angeles City Council members introduced a batch of proposals this week aimed at speeding up the creation of more housing, including new options for achieving what for most Angelenos is an increasingly impossible dream: buying a home. Among the five proposals put forward Tuesday, two focus on accessory dwelling units — or ADUs. Many homeowners have been building these structures in their backyards to create homes for relatives or to rent out for extra income.

One proposal seeks to allow homeowners to put ADUs up for sale, separately from their main home, potentially creating a cheaper pathway to homeownership for the vast majority of Angelenos who cannot afford to buy larger single-family homes. In an interview with LAist, Councilmember Nithya Raman, who is chair of the Housing and Homelessness Committee, said these smaller homes could be ideal for L.A.’s shrinking average household size.

Paying Rent on Time Could Now Help You Get a Mortgage After Key Change at Fannie and Freddie

Source: Yahoo Life

A new policy change at mortgage giants Fannie Mae and Freddie Mac could help first-time homebuyers qualify for a mortgage if they have a track record of paying their rent on time. Effective immediately, Fannie and Freddie will allow mortgage lenders to use VantageScore credit ratings to assess borrower creditworthiness, in addition to or instead of traditional FICO scores, Federal Housing Finance Agency Director Bill Pulte said on Tuesday. Unlike FICO, VantageScore takes rent payment history into account, if those payments are reported to either Equifax, Experian, or TransUnion, the three major credit bureaus.

“We are expanding credit access to millions of forgotten Americans—people who live in rural areas, renters who pay their rent on time every month—and bringing down closing costs,” said Pulte, who is also the chairman of Fannie and Freddie, in a social media post. FICO and VantageScore both issue a credit score between 300 and 850 to potential borrowers, with the goal of projecting the likelihood that a person will fall behind on debt payments.

More luxury homebuyers paying with cash this year, report says

Source: Fox Business

More luxury homebuyers are paying with cash to acquire properties this year, a report from Coldwell Banker Real Estate revealed. The company said in its “2025 Mid-Year Report” that more than half of over 200 surveyed Coldwell Banker luxury property specialists reported an uptick in wealthy buyers purchasing homes with cash. Roughly 34.1% said there has been a “slight increase” while 16.6% said there has been a “significant” rise in that method.

Mortgage rates have played into the increase in buyers paying cash to acquire homes, according to National Association of Realtors Chief Economist and Senior Vice President of Research Lawrence Yun. “High mortgage rates are not appealing for borrowing, and, therefore, that induces the wealthy to pay all cash for real estate (after selling off a few of their assets),” he told FOX Business. Many have been turning to personal savings, stocks or funds they netted from selling another property as the “primary” means to make their luxury home purchases, according to the Coldwell Banker Real Estate report.

Homebuyers finally responded, after mortgage rates hit lowest level in three months

Source: CNBC

A brief drop in interest rates caused a strong bump in otherwise tepid mortgage demand. Total mortgage application volume jumped 9.4% last week compared with the previous week, according to the Mortgage Bankers Association’s seasonally adjusted index. Last week’s results included an adjustment for the July Fourth holiday.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances, $806,500 or less, decreased to 6.77% from 6.79%, with points holding steady at 0.62, including the origination fee, for loans with a 20% down payment. That was the lowest level in three months. Applications to refinance a home loan rose 9% for the week and were 56% higher than the same week one year ago. Refinance demand has been particularly weak because mortgage rates were stuck at high levels for so long. Applications for a mortgage to purchase a home also rose 9% for the week and were 25% higher than the same week one year ago.

Buy now, pay later loans will now impact Americans’ credit scores

Source: Fox Business

FICO announced that it is going to incorporate buy now, pay later data (BNPL) into credit scores as the payment method surges in popularity. FICO said the scores represent a “significant advancement in credit scoring, accounting for the growing importance” of such loans in the U.S. credit ecosystem.

Lending services such as Afterpay, Klarna, Affirm and PayPal have risen to prominence as cash-strapped consumers looked to stretch their wallets as they contend with persisting inflation, high interest rates and student loan payments, which resumed in October 2023 after a pause due to the COVID-19 pandemic. The services allow consumers to make purchases and pay for them in installments, often with no interest or fees. However, interest is tacked on to certain plans, and consumers can get hit with a late fee if they don’t have adequate funds in their account to cover the payments. Traditionally, they have been utilized for big-ticket items. However, these buy now, pay later financing options have become so popular in the current economic environment that a growing number of consumers are even leveraging them to pay for necessities like food.

U.S. home sellers sitting on record $698 billion worth of listings

Source: NBC

There is $698 billion worth of homes for sale in the United States, which is a record since Redfin began tracking data in 2012. A Redfin report shows that the total worth of homes for sale is up 20.3 percent from last year. The data is based on the list price of all active U.S. listings as of the last day of each month.

The value is at an all-time high due to three significant factors: growing inventory, slowing demand, and increasing home-sale prices. In terms of inventory the total number of homes on the market nationwide rose 16.7 percent year over year by April 2025. In terms of demand, the typical home sold in April 2025 took over 40 days to go under contract, five days longer than last April. Redfin’s report indicated that would-be buyers are backing off due to record-high monthly housing costs and widespread economic instability. In addition, home-sale prices rose 1.4 percent year-over-year by April 2025. The report indicated that there are nearly 500,000 more home sellers than buyers in the current market nationwide.

Homeowners face a stiff penalty for staying in their homes too long

Source: Realtor.com

Millions of American homeowners are sitting on a hidden tax burden they never planned for — one that threatens their hard-earned home equity and, at the same time, is tightening the nation’s already strained housing supply. Today, roughly 1 in 3 homeowners — nearly 29 million households — have built more home equity than the federal capital gains tax exclusion for single filers protects when they sell their primary home, according to a recent analysis by the National Association of REALTORS®. By 2030, that number is expected to grow to 56 percent of homeowners.

Most people don’t think of their home as a taxable investment. It’s their nest egg, future college fund, or inheritance for their kids. But an outdated federal rule, left unchanged since 1997, means the longer you stay and the more your home appreciates, the more likely the IRS will claim a cut when you finally sell. In 1997, the tax change allowed homeowners to exclude up to $250,000 in profit is single, or $500,000 if married and filing jointly, every time they sold a primary home. But in the decades since, home prices have climbed more than 260 percent, while the tax exemption has stayed exactly the same because it was not indexed for inflation. If it had kept pace, the cap would now be about $660,000 for individuals and $1.32 million for couples. About 31 percent of households in California could be affected by this capital gains tax.

Consumer confidence unexpectedly declines in June

Source: Yahoo! Finance

Consumer confidence retreated in June after increasing the previous month amid President Trump’s various tariff delays. The latest index reading from the Conference Board was 93 in June, below the 98.4 seen in May and the 99.8 economists had expected.

“Tariffs remained on top of consumers’ minds and were frequently associated with concerns about their negative impacts on the economy and prices,” Stephanie Guichard, senior economist of global indicators at the Conference Board, said in a press release. “Inflation and high prices were another important concern cited by consumers in June.”

Pets drive home buying

Source: NAR

Did you know that there are more households with pets than children? And these beloved pets are a driver of economic activity, namely home buying. About one-fifth of recent home buyers considered their pet when choosing a neighborhood, a share that increases among unmarried couples and single woman buyers.

According to the U.S. Census, in 1985, 58 percent of home buyers had children under the age of 18 in their homes. In 2024, just 27 percent of home buyers had a child under the age of 18 in their home. This is an all-time record low. While the number of children in U.S. households has declined in the last 40 years, there has been a rise in pet ownership. According to the American Pet Products Association, 71 percent of American households own a pet. This is up from 56 percent in 1988. Given the increasing share of pets in households and the growing time and resources devoted to them, it’s no surprise that many home buyers consider their pets the most important factor when making homebuying decisions. Factors such as proximity to a veterinarian and outdoor space for pets are important considerations for buyers with pets. Among all unmarried couples, 24 percent of home buyers considered their pet when deciding on a neighborhood, while 17 percent of single women considered their pets when deciding on a neighborhood compared to 12 percent of single men.

Mortgage rates and demand stuck in a holding pattern

Source: CNBC

Economic uncertainty at home or military conflicts overseas would each, alone, normally have a significant effect on the bond market. But now, even together, they have done little to move mortgage rates. ago.

Last week, the average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances (of $806,500 or less) increased to 6.88 percent from 6.84 percent, with points decreasing to 0.63 from 0.66, including the origination fee, for loans with a 20 percent down payment. That’s according to the Mortgage Bankers Association’s seasonally adjusted index. Applications for a mortgage to buy a home dropped 0.4 percent last week compared with the previous week, including an adjustment for the Juneteenth holiday. Purchase demand was 11 percent higher than the same week one year ago, but overall, it is historically low. Applications to refinance a home loan rose 3 percent for the week and were 29 percent higher than the same week one year ago. Volumes are so low that even small changes make for big percentage moves.

Governor Newsom Extends Emergency Short-term Housing Protections in Los Angeles

Governor Gavin Newsom today issued an executive order to continue his emergency order boosting the availability of short-term housing by making it easier for survivors of the LA area firestorm to stay in hotels and other short-term rentals for more than 30 days. The order was first issued on March 7, 2025, and is now extended to October 1, 2025.

The executive order extends the suspension of rules that could deter hotels, motels, and other short-term rentals from offering shelter to survivors for more than 30 days. The order temporarily allows survivors to remain classified as short-term occupants rather than tenants when they stay beyond 30 days, effectively suspending rules that might limit hotel and short-term rental operators’ flexibility to support extended stays. The order suspends these rules until October 1, 2025.

Fannie Mae’s Existing Home Sales Forecast Revised Lower

Existing single-family home sales are forecast at 4.14 million units for 2025, down slightly from last month’s forecast of 4.24 million units, according to the June 2025 Economic and Housing Outlook from the Fannie Mae Economic and Strategic Research Group. Revisions to the home sales forecast were driven in part by the Group’s higher expectations for mortgage rates, which are now predicted to end 2025 and 2026 at 6.5% and 6.1%, respectively.

Market Update

The U.S. economy encountered some notable developments in the past few weeks, including a decline in new home sales, shifts in consumer confidence, and changes in unemployment claims. While these trends reflect ongoing economic adjustments, they also highlight the dynamic nature of the market and the economy. Rising prices for goods and increasing property insurance costs are also part of the evolving economic landscape. So far, businesses and consumers are able to navigate these changes and adapt their strategies and expectations to the current environment. Hopefully, they will continue to demonstrate their resilience and flexibility in the second half of the year.

Buyers in the priciest housing markets need 80% down to afford monthly costs

Source: Realtor.com

For many, buying a home in some of the most desirable cities such as New York City and Los Angeles is a dream—but it could come with staggering upfront costs, putting homeownership well outside the reach of the typical family. Economists recommend that homebuyers follow the “30% rule,” which suggests that they spend no more than that amount of their pre-tax income on housing to leave enough money in the budget for other essential expenses and savings.

Experts at Realtor.com® looked at where buyers earning a median income could comfortably afford to buy a home without breaking the bank. As part of the analysis contained in the new affordability benchmark report, economists assumed the May 2025 average mortgage rate of 6.82%, a 20% down payment, and a standard tax and insurance estimate of 1.72% of the home’s price annually. Using this formula, the typical family would need to spend 44.6% of their income—well above the 30% affordability benchmark—to afford a median-priced $440,000 home, based on the May Housing Trends Report.

Newsom signs major rollback of CEQA reviews, with a big carve-out for big tech

Source: SFist.com

Gavin Newsom claims it’s the “most consequential housing reform in modern history” that he just exempted most urban housing projects from environmental review, as the new state budget has some additions that hope to weaken the notorious CEQA.

A policy topic often discussed is the 55-year-old California Environmental Quality Act abbreviated as CEQA (pronounced “SEE-kwa”). It’s an environmental law signed by Governor Ronald Reagan in 1970 when Nixon was in the White House, at a time when the Republican Party felt very differently about environmental conservation. CEQA was designed to ensure legislators conducted full reviews of all environmental impacts that might result from proposed large development projects, but the courts expanded it to allow any common folk to challenge developments. Those challenges could be about major issues like air pollution and traffic, or more frivolous issues like shadows or considering “people as pollution.” These challenges often led to red tape and lengthy, costly litigation that held up some major housing developments. But on Monday, in what Governor Gavin Newsom is calling “Holy Grail reform,” KTVU reports that Newsom has signed a budget bill that purports to be a major rollback of CEQA.

Trump administration moves to count crypto as a federal mortgage asset

Source: CNBC

In a landmark shift for the U.S. housing finance system, the Federal Housing Finance Agency has issued a directive ordering Fannie Mae and Freddie Mac to formally consider cryptocurrency as an asset in single-family mortgage loan risk assessments. The move, signed by FHFA Director William J. Pulte on Wednesday, signals a new era of crypto integration into traditional financial infrastructure — this time within the core of American home lending.

The order directs both housing finance giants to develop proposals that include digital assets — without requiring borrowers to liquidate them into U.S. dollars prior to a loan closing. Pulte said in a post on X that the move aligns with President Donald Trump’s vision “to make the United States the crypto capital of the world.”

Berkeley City Council permits denser housing construction in flats

Source: The Daily Californian

The Berkeley City Council unanimously adopted an ordinance at its special meeting last week that changes the city’s zoning code to allow for “middle housing,” such as duplexes and triplexes, to be built in previously single-family residential zones. The changes include the revamping of building standards to allow for bigger and taller structures to be constructed, loosening permit requirements for the construction and demolition of homes and merging the R-1A and R-2 low-density districts due to their similarity. An exception is made for hillside neighborhoods, which will not be subject to these changes.

A supplemental by District 1 Councilmember Rashi Kesarwani also increased the limit on the number of dwelling units per acre to 70 across all lower-density districts. Additional supplementals by District 4 Councilmember Igor Tregub and District 8 Councilmember Mark Humbert directed the building standards to consider issues such as loss of yard space and solar access and referred to the planning staff to provide annual quantitative reports regarding the status of middle housing projects, respectively.

LA County leaders vote to extend housing price-gouging protections for another month

Source: LAist

A temporary ban on rent hikes of more than 10% after January’s wildfires will continue for another month in Los Angeles County after elected leaders voted to push back a rapidly approaching deadline.

Under an emergency order issued by Gov. Gavin Newsom in March, price gouging limits for rental housing were set to end on July 1. The L.A. County Board of Supervisors voted to extend the rent gouging ban until July 31.

Mortgage refinance demand surges, as interest rates drop further

Source: CNBC

Mortgage rates fell last week to the lowest level since April, leading current homeowners to seek savings. Applications to refinance a home loan rose 7% last week compared with the previous week, according to the Mortgage Bankers Association’s seasonally adjusted index. Demand was 40% higher than the same week one year ago. The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances, $806,500 or less, decreased to 6.79% from 6.88%, with points falling to 0.62 from 0.63, including the origination fee, for loans with a 20% down payment. That rate is 24 basis points lower than the same week one year ago.

Market Minute

June 2025 (June Is National Homeownership Month)

Center for California Real Estate hosts experts to discuss homeowners insurance crisis

Source: Longview News-Journal

As California faces mounting challenges in its homeowners insurance market, the Center for California Real Estate (CCRE) brought together a distinguished group of expert leaders for a groundbreaking event aimed at identifying actionable solutions to one of the state’s most urgent issues.

This exclusive sandbox event convened nearly two dozen experts from the insurance industry, academia, government, and consumer advocacy for a candid, cross-sector dialogue. With homeowners across the state grappling with shrinking coverage options and soaring premiums, the event offered a rare opportunity for collaborative problem-solving at a critical moment. Key themes discussed include regulatory and policy innovation; reform of the California FAIR Plan and wildfire mitigation strategies. Panelists also reviewed comparative models from other states and countries for actionable insights and best practices. The insights and ideas generated during the session will be synthesized into a formal report later this summer.

Calif. is launching a mortgage relief program for fire survivors

Source: LAist

Despite their homes burning down in the Eaton and Palisades fires, survivors still have to pay their mortgages. Now, the state of California is offering grants that could help some homeowners defray costs as they begin efforts to rebuild. On Thursday, the California Housing Finance Agency launched the CalAssist Mortgage Fund program. Applicants can qualify for up to three months of mortgage payments, with a maximum grant of $20,000. Officials said the relief does not need to be repaid.

Online applications will be accepted starting June 12 at CalAssistMortgageFund.org. Officials are urging homeowners to apply quickly, because once the program’s $105 million in funding runs out, future requests will be denied. In order to qualify, an applicant’s primary residence must have been destroyed in a California disaster that occurred between Jan. 1, 2023 and Jan. 8, 2025. This year’s Palisades and Eaton fires are included, as well as previous disasters across the state, such as the 2024 Park Fire and Hurricane Hilary in 2023. Applicants also need to meet the program’s income limits. In Los Angeles County, the maximum annual income will be $140,700, regardless of household size, officials said.

San Benito County reigns supreme in housing construction speed

Source: The Real Deal

When it comes to building the most new housing in California, one rural county in the Central Coast leads the pack. Data from the California Department of Finance shows that San Benito County, south of San Jose, has built homes at the fastest rate in the state over the past five years. It saw a 9.3 percent increase in housing construction between April 2020 and January 2025, more than double the rate seen in San Francisco in the same time frame.

San Benito County’s growth, which was less than 2,000 new units, was largely concentrated in the city of Hollister. The town made famous by the clothing store of the same name has become increasingly popular among Silicon Valley workers since the pandemic. Though California in general has seen a slowdown in housing construction compared to states like Texas, smaller and midsized inland counties have been outpacing the major cities in housing growth relative to population.

Banks are avoiding mortgages in California’s fire zone, study says

Source: The Washington Post

California’s growing wildfire risk is affecting the state’s mortgage market, a new study has found, with brick-and-mortar banks approving fewer home loans in risky areas – while their online counterparts are continuing to lend there. The study is the latest sign that major banks are worried about how global warming could affect their balance sheets – and are taking steps to limit their exposure that could ultimately make it harder for Americans to get home loans.

“What we see over time is the traditional lenders are tightening credit – they are adapting to the risks,” said researcher Jesse Keenan, director of the Center on Climate Change and Urbanism at Tulane University’s School of Architecture and co-author of the study. But online or “fintech” lenders that don’t have physical branches “are coming in and taking up market share,” he said. Using data on wildfire risk from the Federal Emergency Management Agency (FEMA), Keenan and Tyler Haupert, an assistant professor of urban studies at NYU, looked at how traditional and online mortgage lenders were approaching census tracts in California that had been assigned very high fire-risk scores and compared them with parts of the state that are considered less vulnerable.

Calif. lawmakers push for CEQA reforms to address housing crisis

Source: KTLA

Several California bills could lead to significant reforms of the state’s environmental review law, with the goal of addressing the state’s ongoing housing crisis. One of the bills, Assembly Bill 609, would establish a CEQA exemption for most urban housing developments. The bill is part of the Fast Track Housing Package, a collection of 20 bills that aim to expedite the approval of housing projects.

The California Environmental Quality Act (CEQA), enacted in 1970, requires public agencies in California to evaluate the potential environmental impacts of proposed projects and avoid those impacts, if possible. However, many argue that the law has been weaponized to block new housing projects and developments. “Preparation of an Environmental Impact Report under CEQA can take a year or longer and cost hundreds of thousands of dollars, or even, in some cases, more than $1 million,” a 2024 report from the bipartisan Little Hoover Commission said.

Mortgage demand drops for third week, even as interest rates ease

Source: CNBC

Mortgage rates fell slightly last week, but that did nothing to spur mortgage demand. Total mortgage application volume dropped 3.9 percent last week 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 $806,500 or less) decreased to 6.92 percent from 6.98 percent, with points decreasing to 0.66 from 0.67, including the origination fee, for loans with a 20 percent down payment. Applications to refinance a home loan, which are most sensitive to weekly rate moves, still declined 4 percent for the week but were 42 percent higher than the same week one year ago. Applications for a mortgage to purchase a home fell 4 percent for the week but were 18 percent higher than the same week one year ago. The spring season has been sluggish to say the least, with closed sales still coming in lower than last year, despite mortgage demand now being higher. The main driver of increased purchase demand is simply more supply on the market. Given how much more there is, however, the highest level in five years, sales should be even stronger.

CA Launches CalAssist Fund to Aid Homeowners Affected by Disasters

California is launching the CalAssist Mortgage Fund on June 12, 2025, to provide $105 million in relief offering up to $20,000 to homeowners whose homes were destroyed in recent disasters, including the Los Angeles firestorms.

This new disaster mortgage relief program, managed by the California Housing Finance Agency (CalHFA), will be paired with $25 million in additional housing counseling support through CalHFA’s National Mortgage Settlement Housing Counseling Program, and none of the funds impact the proposed 2025-2026 budget.

The CalAssist Mortgage Fund provides relief for the most vulnerable homeowners whose homes have been destroyed or left uninhabitable as the result of a disaster that received a State of Emergency proclamation by the Governor or a Major Disaster Declaration approved by the President between January 2023 and January 2025, such as the Eaton Fire, Palisades Fire, Park Fire and San Diego floods.

Market Update

The housing market remains soft but is showing signs of improvement. The Home Purchase Sentiment Index, for example, reached a six-month high in May, reflecting improved consumer sentiment towards buying and selling homes. Home price reductions, on the other hand, have climbed to levels last seen in 2016 due to elevated mortgage rates and increased inventory. Mortgage demand dipped slightly at the end of May but remained higher than last year’s level. Meanwhile, U.S. job growth exceeded expectations last month, although downward revisions to previous months suggest that the labor market is losing some momentum.

U.S. inventory exceeds 1M homes for sale

Source: Newsweek

The number of homes for sale in the U.S. market has just passed the 1 million mark, according to data from Realtor.com and Reventure App, as inventory continues piling up in the market without finding enough willing buyers. Before the pandemic, in May 2019, there were 1,180,934 active listings on the U.S. market, according to Realtor.com and Reventure App data. During the pandemic homebuying frenzy, spurred by historically low mortgage rates and the rise of remote work, U.S. housing inventory plunged to 447,670 in May 2021 – a shortage that brought up prices for the few homes available on the market.

Since then, inventory crawled back up slowly, but it has never been as high as it is now: last month was the first May since 2019 when active listings were above the 1 million mark. This surge in the number of homes for sale is putting downward pressure on home prices in some areas. Active listings have been growing over the past few months in part because of new homes landing on the market, and in part because existing homeowners who were waiting for mortgage rates to come down to sell their homes have resigned to the fact that it is unlikely to happen anytime soon.

Mortgage misconceptions continue to fuel buyer anxiety

Source: MPAMag

A large majority of Americans continue to view homeownership as a key life milestone, but rising anxieties around affordability and mortgage misconceptions reveal an urgent need for better homebuying education, according to new survey findings from KB Home. In its second annual national survey, conducted by the Harris Poll, KB Home found that 83 percent of Americans still see owning a home as a major life goal. However, 89 percent reported feeling anxious about the process, with affordability concerns, financial stress, and a lack of knowledge fueling buyer hesitation.

The top reasons Americans want to own a home include greater safety and security (47 percent), more space (47 percent), access to outdoor areas like backyards (43 percent), avoiding rent hikes (42 percent), and long-term financial improvement (41 percent). The survey also uncovered major knowledge gaps that could be holding prospective buyers back. Sixty-nine (69) percent mistakenly believe mortgage rates are at an all-time high or are unsure. In fact, rates peaked in 1981 at 18.6 percent, far above today’s average of 6.8 percent. Only 37 percent knew that a 20 percent down payment isn’t required, and just 25 percent were aware that a mortgage is possible with a credit score in the 500s.

U.S. wholesale inflation heated up in May

Source: CNN

U.S. wholesale inflation rose slightly in May, driven in part by costlier goods; however, tariff-related effects were largely muted. The latest Producer Price Index, a closely watched measurement of wholesale inflation showed that prices paid to producers rose 0.1 percent in May, lifting the annual rate to 2.6 percent, according to Bureau of Labor Statistics data released Thursday.

Economists were expecting that prices would rise 0.2 percent from April and 2.6 percent for the 12 months ended in May. Economists warn, however, that sweeping tariffs are expected to eventually result in some price increases for consumers. The upswing marked a turnabout from a 0.2 percent drop in April, which was driven largely by wholesalers and retailers’ margins being squeezed, which economists attributed to high tariffs

41% of CA households “cost burdened”

Source: Yahoo! Finance

In California, where homes cost about twice as much as the typical U.S. home, 41.1 percent of households were cost-burdened in 2023 – the highest proportion in the country, according to California’s Legislative Analyst’s Office housing affordability tracker. The U.S. Dept. of Housing and Urban Development considers homeowners cost-burdened if they spend more than 30 percent of their monthly income on housing, including utilities. They’re severely cost-burdened if that figure tops 50 percent. Severely cost-burdened households may have difficulty affording necessities such as food, clothing, transportation and medical care, according to HUD.

Mortgage lenders generally require that an applicant’s payments for principal, interest, taxes and insurance don’t exceed 25 percent to 28 percent of their gross monthly income. Combined with long-term debt, total obligations usually shouldn’t exceed 33 percent to 36 percent.

Air board rejects smog rules phasing out gas appliances

Source: CalMatters

After a contentious, five-hour hearing, Southern California air quality regulators rejected measures that would have phased out residential gas-powered water heaters and furnaces in the Los Angeles basin. The two rules, designed to clean up one of the biggest sources of the region’s severe smog, would have set increasing targets for sales of zero-emission products in Los Angeles, Orange, Riverside and San Bernadino counties for the next decade – beginning with 30 percent in 2027. The targets would not have been mandatory, although manufacturers would pay fees for each natural gas water heater or furnace they sell.

The South Coast Air Quality Management District board in a 7-5 vote rejected its boldest smog-fighting proposal in years. The decision, driven mostly by concerns about affordability, was a rare rebuke of measures proposed by the agency’s staff, which came after years of compromise and efforts to scale back what originally was a mandate phasing out the polluting heaters. The board voted 7-4 to send the two proposed rules back to a committee, which means any new version likely won’t be considered until next year. More than 200 people testified at the hearing, and the agency received more than 30,000 written comments, fueled by an aggressive push of opposition from the gas and building industries.

Mortgage demand rises to highest level in over a month

Source: CNBC

Mortgage interest rates barely moved at all last week, but demand from homebuyers as well as those looking to refinance a current home loan increased. Total mortgage application volume rose 12.5 percent last week compared with the previous week, according to the Mortgage Bankers Association’s seasonally adjusted index. While the weekly move may seem large, the volume is still quite low historically.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances (of $806,500 or less) increased to 6.93 percent from 6.92 percent, with points decreasing to 0.64 from 0.66, including the origination fee, for loans with a 20 percent down payment. Applications to refinance a home loan, which are most sensitive to weekly rate moves, rose 16 percent for the week and were 28 percent higher than the same week one year ago. Applications for a mortgage to purchase a home climbed 10 percent for the week and were 20 percent higher than the same week one year ago. Much of that may be due simply to the increase in available listings. Supply is now about 31 percent higher than it was at this time last year, according to Realtor.com.

California Home Sales Retreat for Second Straight Month in April, as Median Home Price Hits New All-time High

Amid an environment of economic uncertainty during April, California’s housing market retreated for the second straight month, while the median home price reached an all-time high, surpassing $900,000 for the first time in 10 months, C.A.R. reported.

April’s sales pace fell 3.4 percent from the 277,030 homes sold in March and was down 0.2 percent from a year ago, when 268,170 homes were sold on an annualized basis. April’s sales level was the lowest in three months.

Statewide pending sales in April slipped from last year’s level for the fifth consecutive month as housing sentiment continued to trend downward. The dip in open escrows is likely due partly to mortgage rates spiking and staying elevated throughout the month of April after President Trump’s reciprocal tariff announcement on April 2

Market Update

California’s housing market reached a record high median price of $910,160 in April, marking the 22nd consecutive month of year-over-year increases. Home sales, on the other hand, declined for the second time in four months, as economic uncertainty and elevated interest rates continued to beat down on housing sentiment. Despite inflation easing to a four-year low in April, consumers remain worried about the economy as retail sales growth dipped sharply from the previous month. Until we have more clarity on the ongoing trade negotiations, consumers will likely remain cautious about home buying and selling in the near term. Home sales, as such, could remain soft in the next couple of months.

Congress Moves Closer to Reconciliation Package with Key Provisions for Real Estate

Congress is making progress on a major reconciliation tax reform package, with House committees completing work on their individual sections.

Regarding homeownership, the package does not include some proposals long supported by REALTORS®, such as increasing the capital gains exclusion on the sale of a primary residence and incentives to convert commercial properties to residential use. However, the package does contain a proposed increase to the State and Local Tax (SALT) deduction cap, to $30,000 for individuals and couples under specific income thresholds. While this targeted relief won’t reach all taxpayers, it represents an improvement over the current cap and reflects growing momentum in Congress to revisit SALT policy. Lawmakers from high-cost states, including members of the SALT Caucus such as California’s U.S. Representative Young Kim, continue working for further improvements as the bill moves forward.

Finally, the bill also includes several provisions that align with real estate priorities, particularly in the commercial space. Extending the Opportunity Zones program and improvements to the Low-Income Housing Tax Credit (LIHTC) represent important steps to support rental housing production and community development. These tools will help strengthen investment in underserved areas and expand affordable rental housing options.

The next step in the process is for House leadership to assemble the full bill package and bring it to the floor for a vote. Once passed in the House, the bill will move to the Senate, where additional changes may occur. A final version will need to be agreed upon by both chambers before it heads to the president for signature. While a few items still require negotiation to secure final support, the House is expected to vote on its version of the package in the coming weeks.

April home sales hit slowest pace for that month since 2009

Source: CNBC

The spring housing market continues to struggle amid high interest rates and low consumer confidence. Sales of previously owned homes in April declined 0.5 percent from March to a seasonally adjusted, annualized rate of 4 million units, according to the National Association of REALTORS®. That is the slowest April pace since 2009.

Sales were down 2 percent from April of last year. Housing economists were expecting a gain of 2.7 percent. This count is based on closings, meaning contracts that were likely signed in February and March, before mortgage rates moved higher in April. “Home sales have been at 75 percent of normal or pre-pandemic activity for the past three years, even with seven million jobs added to the economy,” said Lawrence Yun, NAR’s chief economist. Inventory jumped 9 percent month to month and was nearly 21 percent higher than April of last year. More supply is starting to cool prices.

Home sellers are setting “aspirational” prices; buyers have other ideas

Source: Yahoo! FinanceIn the heart of the traditional spring homebuying season, sellers are enthusiastically listing. But increasingly, buyers just aren’t materializing. Inventory of for-sale homes continues to surge in much of the country, but sales aren’t keeping up. In fact, they are down from a year ago. In many cities, the shifting market has increasingly allowed buyers to be picky as homes stay on the market longer.

One driving factor: Sellers are aiming high with their listing prices, even if it means dropping them later. On Zillow, nearly 25 percent of listings had a price cut in April, the highest share since at least 2018, the listing platform said. Brokerage Redfin found that homes in March ultimately sold for 9 percent less than the list price. The gap between buyers and sellers hasn’t been that big since May 2020, when pandemic lockdowns were causing major market disruptions. The mismatched pricing expectations reflect a growing divide in financial security between those who already own homes and those who are trying to gain access to the market for the first time this spring. Compared to a year ago, buyers are doing at least a little better. Incomes are generally rising, and mortgage rates are slightly lower than this time last year, helping boost buying power.

Insurance commissioner announces new smoke claims & remediation task force

Source: KMJ Now

As California faces the aftermath of some of the worst wildfires in its history – urban conflagrations that have devastated entire neighborhoods and spread toxic soot and ash across wide regions – Insurance Commissioner Ricardo Lara announced the formation of a new Smoke Claims & Remediation Task Force within the California Department of Insurance.

The new task force will bring together public health experts, environmental health professionals, smoke remediation specialists, fire safety experts, and consumer advocates to recommend science-based standards, best practices for smoke restoration of homes and personal property, and enforcement tools to the Department that ensure Californians are treated fairly in the wake of wildfire smoke exposure.

What America’s latest credit downgrade means for mortgage rates

Source: Investopedia

The downgrade of the U.S. sovereign credit rating on Friday will likely mean higher borrowing costs on mortgages. On Friday, Moody’s downgraded its rating for debt held by the U.S. government one notch to the second-highest run on its 21-level scale of creditworthiness, citing the government’s persistent and likely worsening budget deficit. Moody’s was the last major credit rating agency to downgrade the U.S. from the highest rating, following S&P in 2011 and Fitch in 2023.

The stock market largely shrugged off the downgrade as old news: the ding to the government’s credit had been brewing since at least 2023, when Moody’s changed its outlook for the rating to “negative” from “stable.” But it was a different story for the bond market, where government-issued debt is bought and sold. Yields on 10-year treasuries – the interest the government pays to borrow money for a decide – are especially sensitive to credit downgrades. For consumers, higher yields on the 10-year treasury have a major consequence in the form of higher mortgage rates. Interest rates on 30-year fixed mortgages are tied to treasury yields, so the uptick could mean higher borrowing costs for homebuyers. Mortgage rates are unlikely to lower in the foreseeable future.

Mortgage demand drops after interest rates jump

Source: CNBC

After shifting in a narrow range for several weeks, mortgage rates moved decidedly higher last week. That caused a 5.1 percent drop in mortgage applications 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 $806,500 or less) increased to 6.92 percent from 6.86 percent, with points rising to 0.69 from 0.68, including the origination fee, for loans with a 20 percent down payment. Applications for a mortgage to purchase a home, which had been rising for a few weeks, dropped 5 percent for the week and were 13 percent higher than the same week one year ago. Homebuyers are seeing many more listings on the market than they did even a few months ago, but higher interest rates, combined with increasing concern over the state of the economy and inflation, have chilled the usually busy spring season. Applications to refinance a home loan also fell 5 percent for the week and were 27 percent higher than the same week one year ago.

Housing contract activity dropped sharply in April

Source: Yahoo! Finance

Home contract signings took a nosedive in April as high mortgage rates and tariff uncertainty weighed on prospective buyers. The Pending Home Sales Index fell 6.3 percent in April from a month earlier to 71.3, according to the National Association of REALTORS®. Economists had been expecting a more modest 1 percent decline. A reading of 100 is equal to the level of housing contract activity in 2001. Homes usually go under contract a month or two before they’re sold, and while not all contracts close, pending home sales are typically an early indicator of housing market activity.

Year over year, pending contracts were down 2.5 percent nationwide. Contract activity was down month over month in all parts of the country and decreased year over year in all regions except the Midwest, which saw a 2.2 percent gain. Although 30 percent more homes were for sale in April than one year prior, prices are still near all-time highs, and mortgage rates remain well above 6 percent, making the market unaffordable for many.

Don’t expect home prices and rates to go down

Source: MPA Mag

Fannie Mae lowered its interest rate forecast on Wednesday, expecting rates to end 2025 at 6.1 percent and 2026 at 5.8 percent. Meanwhile Redfin reported this week that home prices declined by 01 percent in April, marking the first drop since 2022. Elevated interest rates and rising home prices have caused many potential homebuyers to pause looking for a new home. But while home price increases are slowing and lower rates are forecasted, one broker reminds customers not to expect either to plummet in the future.

Stacey Melton, vice president at Reasy Financial, notes that one of the biggest reasons there won’t be a crash now, like there was in 2008, is that mortgages on the books are much more solid. Back in 2005 and 2006, “if you had a good credit score and a pulse, you could get a mortgage,” says Melton. “Now it’s way harder to buy a house than it was then. We’ve prepared the mortgage economy to be stabilized, so we’re not going to go through that crash like we did before.” Melton encourages customers to act now if it makes sense for their situation, because if “interest rates do come down, people will be lining up to buy.”

Housing contract activity dropped sharply in April

Source: Yahoo! Finance

Source: MPA Mag

Fannie, Freddie OTC shares rise as Trump prepares to sell

Source: Reuters

Over-the-counter (OTC) shares of Fannie Mae and Freddie Mac rose on Wednesday after U.S. President Donald Trump said he was working on taking the housing giants public. The administration wants to end the long-standing conservatorship of Fannie Mae and Freddie Mac, which have been under the U.S. government’s control since 2008 after they suffered heavy losses during the subprime mortgage crisis.

The two companies back the majority of the nation’s residential mortgages. Fannie shares rose 3.7 percent to $10.92, while Freddie gained 7 percent to $8.13 by midday trading after a double-digit jump earlier in the session. The shares, which don’t trade on major exchanges, hit their highest since 2008 after Trump said last week he was mulling a spinoff of the U.S. mortgage finance firms. Currently, the United States Treasury owns preferred shares in the firms and warrants to purchase about 80 percent of their common stock. The combined value of the two companies was $17 billion as of the last closing price. They have shot up more than five-fold in value in the past year.

U.S. labor market slows; corporate profits drop most since 2020

Source: Reuters

The number of Americans filing new applications for jobless benefits increased more than expected last week and the unemployment rate appeared to have picked up in May, suggesting layoffs were rising as tariffs cloud the economic outlook.

Initial claims for state unemployment benefits rose 14,000 to a seasonally adjusted 240,000 for the week ended May 24, the Labor Department said. Economists polled by Reuters had forecast 230,000 claims for the latest week. The number of people collecting unemployment checks in mid-May was the largest in 3.5 years. The dimming economic outlook was reinforced by other data showing corporate profits declining by the most in more than four years in the first quarter, pulled down by nonfinancial domestic industries for which Trump’s aggressive trade policy was making it harder for businesses to plan ahead – a sentiment echoed by a Conference Board survey on Thursday, which showed confidence among CEOs plummeting in the second quarter.

Most baby boomers can’t afford assisted living and stay in homes

Source: Yahoo! Finance

Baby boomers are dragging on the housing market because most can’t afford to move out of their homes, according to Meredith Whitney, the “Oracle of Wall Street” who predicted the Great Financial Crisis. In an interview on Bloomberg TV, she said that many cash-strapped Americans have been borrowing against their homes, and 44 percent of home-equity loans are being taken out by seniors.

That’s contrary to the typical narrative of baby boomers sitting on vast amounts of wealth accumulated over their lifetimes, which spanned unprecedented economic expansions and stock market booms. As a result, seniors with a lot of money have an edge in the tight housing market, accounting for 42 percent of all homebuyers, while millennials account for 29 percent despite the younger generation being in the prime buying years. But while most buyers are boomers, it doesn’t mean most boomers have a giant pile of cash. Boomers collectively have $75 trillion of wealth, but that’s not distributed evenly, and Whitney estimated that just one in 10 seniors can afford assisted-living facilities.

Mortgage rates highest since January, but homebuyers eager

Source: CNBC

Mortgage rates rose for the third straight week last week to the highest level since January, but some homebuyers were undeterred. Mortgage applications to purchase a home climbed 2 percent compared with the previous week and were 18 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 $806,500 or less) increased to 6.98 percent from 6.92 percent, with points decreasing to 0.67 from 0.69, including the origination fee, for loans with a 20 percent down payment. Applications to refinance a home loan fell 7 percent for the week but were 37 percent higher than the same week one year ago. “The Consumer Confidence Index was stronger than expected, but one of its components raised concern over the labor market,” wrote Matthew Graham, chief operating office at Mortgage News Daily. “Weaker labor conditions tend to push rates lower, all else equal. The underlying bond market improved after that and several mortgage lenders issued revised rates in response.”

June Is National Homeownership Month

June is National Homeownership Month, when we raise awareness about the benefits of owning a home and the importance of making homeownership more attainable for all Americans.

Every family deserves to have the opportunity to reap the benefits of homeownership—from building generational wealth to building memories for years to come. As a REALTOR®, you help consumers navigate the homeownership experience, providing critical support and serving as a trusted advisor through one of the biggest financial decisions of their lifetime.

See the resources NAR created for National Homeownership Month, including social media graphics, a digital toolkit, and an upcoming webinar at the link below.

Market Update

The latest economic and market news presents a mixed picture of optimism and concern. Consumer confidence showed a partial rebound in May, driven by the recent U.S./China trade agreement, which boosted optimism and improved the future outlook. However, CEO confidence has significantly declined due to rising concerns about geopolitical instability and tariffs, with many CEOs anticipating a recession in the next 12-18 months. And while the Fed’s preferred inflation gauge continues to ease, potential price hikes by major retailers could reverse this trend in the weeks ahead. In the meantime, the housing market is being put on hold, with mortgage rates staying high, delinquency rates remaining steady, and construction spending declining for the third consecutive month as developers continue to wait and see.

May 2025

State Farm wins first-ever emergency rate-hike in California

Source: LAist

State Farm can raise homeowners and other rates starting next month, becoming the first insurance company to win approval to do so on an emergency interim basis in California. The state’s largest insurer made the unprecedented request for emergency rate hikes earlier this year, after it said it was in financial distress and expected more than $7 billion in claims because of the Los Angeles County fires in January.

The state Insurance Department staff recommended approval of the company’s request, but the Insurance Commissioner Ricardo Lara asked the company for more information about its finances. He also asked whether the insurer could return to its parent company, State Farm Mutual, for help. Lara then conditionally approved but punted the official decision to a judge, who oversaw a three-day public hearing last month to consider the proposed agreement between the department and the insurer. The judge released the decision on Tuesday. The decision means State Farm can raise its rates an average of 17 percent for homeowners, 15 percent for renters and condominiums, and 38 percent for rental dwellings starting June 1.

California homebuyers catch break, but uncertainty persists

Source: Pasadena Now

California’s notoriously tight housing market offered a flicker of relief in the first quarter of the year, with home affordability inching upward even as broader economic uncertainties – including international trade tensions and fluctuating mortgage rates – continued to loom. According to the CALIFORNIA ASSOCIATION OF REALTORS®, the state’s housing affordability index rose by two points to 17 percent, marking a modest improvement from the fourth quarter of 2024. That figure remains historically low – meaning fewer than one in five households can afford a median-priced single family home – but it is a welcome sign for buyers after months of stagnation.

The median home price continued its slow upward trend, while average monthly mortgage payments dropped slightly by 1.8 percent quarter-over-quarter, thanks in part to seasonal adjustments and minor income gains. Still, year-over-year payments rose 4.6 percent, underscoring how far out of reach homeownership remains for many Californians.

Treasury yields rise as US-China tariff truce lowers Fed rate cut expectations

Source: MPA Mag

Mortgage rates could face upward pressure after the 10-year treasury yield jumped Monday, following a US-China deal to pause tariffs that cooled expectations for Federal Reserve interest rate cuts. That yield, a key benchmark for U.S. mortgage rates, climbed seven basis points after Washington and Beijing agreed to a 90-day tariff truce, leading traders to lower the odds of an imminent central bank rate reduction. U.S. officials said massive charges on most Chinese imports would be reduced from 145 percent to 30 percent by May 14, while China will clip its counter-tariffs on U.S. goods to 12 percent from 130 percent.

The détente, which gives both sides three months to agree to a wider trade deal, dramatically lowered the changes of a sharp U.S. economic downturn and boosted confidence on Wall Street, with S&P futures posting a gain of more than 3 percent on the back of the news.

Nationally, housing more affordable for middle-income earners

Source: Fox News

A newly released report from the National Association of REALTORS (NAR) and Realtor.com found that nationwide inventory has gone up compared to last year as of March, but “access to affordable homes remains out of reach for many buyers.” Among the income levels that the report looked at nationally, middle-income buyers with $75,000 in annual pay saw the biggest year-over-year increase in the share of homes listed on the market that they are financially able to purchase, going from 20.8 percent in March 2024 to 21.2 percent this year.

At the same time, that remains 27.6 percentage points lower than the share in pre-pandemic 2019 and 26.9 percentage points short of what they should be capable of buying in a balanced market, according to the report. Middle-income buyers have an “affordability gap” of more than 415,900 homes across the country priced below $254,780. “This income group face the largest shortage of affordable listings, said NAR Senior Economist and Director of Real Estate Research Nadia Evangelou. “So middle-income buyers gained the most and that’s very encouraging, yet still have the furthest to go, so there is this middle-income paradox, like biggest gains and biggest gaps.”

Powell warns of volatile inflation with tariffs’ impact

Source: CNN

U.S. wholesale prices sank in April, logging their biggest monthly drop since COVID stifled the economy, as tariffs put a squeeze on profit margins, according to new data released Thursday. The Producer Price Index, a closely watched measurement of wholesale inflation, showed that the prices paid to U.S. producers dropped 0.5 percent in April from the month before, according to Bureau of Labor Statistics data. Economists were expecting monthly prices to rise in April by 0.2 percent and to slow to 2.4 percent on an annual basis. A driving force behind the downward monthly swing was a 1.7 percent plunge in trade services, a category that measures gross margins for wholesalers and retailers.

Although it’s a volatile category, the sharp downward swing in trade services indicates that companies’ margins are being eaten away by higher costs from President Trump’s tariffs, said Joe Brusuelas, chief economist at RSM US. Separately on Thursday, Federal Reserve Chair Jerome Powell warned that “supply shocks” could force the central bank to keep rates higher over the long term. On Tuesday, the latest Consumer Price Index data showed that overall inflation cooled further for the goods and services Americans commonly purchase. However, some economists pegged some of that softening to weaker demand.

Homebuyer mortgage demand continues to recover despite rates

Source: CNBC

Mortgage demand from homebuyers rose for the second straight week, suggesting that potential buyers are now more enticed by the increasing supply of houses for sale than they are dissuaded by recent economic uncertainty and concern over tariffs. Total mortgage application volume rose 1.1 percent last week 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 $806,500 or less) increased to 6.86 percent from 6.84 percent, with points unchanged at 0.68, including the origination fee, for loans with a 20 percent down payment. Applications for a mortgage to purchase a home rose 2 percent for the week and were 18 percent higher than the same week one year ago. Applications to refinance a home loan fell 0.4 percent for the week but were 44 percent higher than the same week one year ago. The refinance share of mortgage activity decreased to 36.4 percent of total applications from 37.1 percent the previous week.

6 Ways to Take Advantage of a Bad Market

April 11, 2025 • Rob Williams

Certain moves could make more sense during a bad market than during a good one. Here are six.

Tariff, growth, and inflation concerns have been hammering the market in recent weeks. Investors looking for silver linings among all the clouds overhead could feel hard-pressed to find one.

Often, one of the best ways to approach a daunting environment is to remain focused on your goals. If you don’t have to sell anything, you won’t necessarily have to suffer any real losses. And if you can stick to an investing plan, you might be able to pick up some assets at prices better than we’ve seen in a while—so long as they fit with your strategy and goals.

However, patience isn’t the only response. In fact, certain moves could make more sense during a bad market than during a good one. To be clear: This isn’t a call for investors to try to time the market by jumping in when they think asset prices are at their lowest or out when they’re at their highest. Rather, the moves we’ll cover here focus more on tax planning and portfolio maintenance for the longer-term investor.

So, what silver-lining moves do we see?

– Tax-loss harvesting. Investors often want to avoid selling anything at a loss, but selling a losing position can mean significant tax benefits if you have capital gains or income to offset. Why? You can use your losses to lower your capital gains all the way to zero. And if you have more losses than gains, you can offset up to $3,000 of your ordinary income each year. Tax-loss harvesting can also be an opportunity to sell underperforming investments or to re-diversify overly concentrated stock positions (just be aware of wash sale rules).

– Increased retirement savings. Down markets can be a good time to contribute more to your 401(k) or individual retirement account (IRA), as your dollar goes a lot further when assets are selling at depressed prices. If you’re the kind of person who typically waits until the end of the year to make an IRA contribution, consider doing so earlier, so you can have more time in the market and position yourself for any potential recovery. And if you have more cash in a health savings account (HSA)than you’ll need to cover out-of-pocket medical expenses for the next year or two, consider investing those excess funds. Any gains you can earn there could help pay for medical bills in the future.

– 529 plan contributions. Similar arguments apply to funding a 529 college saving plan. You can boost an account’s value by bundling five years of annual gift tax exclusion amounts—totaling up to $95,000 (or $190,000 per couple) in 2025— without reducing your lifetime gift tax exclusion amount ($13.99 million in 20225).

– Roth conversions. Converting assets from a tax-deferred IRA to an after-tax Roth account while your account balance is down could help lower the resulting taxes. If the assets recoup their losses later, they could provide additional tax-free growth and withdrawals over time—potentially even enough to offset the tax hit from the conversion.

– Incentive stock options (ISOs). Investors subject to the Alternative Minimum Tax (AMT) face limits on how many ISOs they can exercise before sacrificing some of their options’ tax advantages. (In short, the spread between the stock’s fair market value and the exercise price of the option could be treated as income in the tax year you exercise your options, potentially leading to additional taxes.) When markets are down, however, you can exercise more ISOs while staying under the AMT exemption ($88,100 for single filers or $137,000 for married filing jointly in 2025). Equity awards can be complicated, so make sure you check with your equity compensation planner and tax advisor before making any moves.

– Certain estate planning strategies. Wealthy individuals and families looking to lighten the burden of gift and estate taxes could consider transferring depressed assets to a trust. For example, one sophisticated estate-planning strategy would involve shifting assets you believe will appreciate substantially in your lifetime into a grantor retained annuity trust (GRATs). A GRAT allows you to move some of that potential future appreciation out of your estate, thereby reducing its overall size. It works like this: The GRAT’s creator transfers assets into a fixed-term, irrevocable trust. During the term (of at least two years), the creator receives annuity payments that pay the value of the assets back to them in their entirety—plus a fixed interest (or “hurdle”) rate set by the IRS. When the term expires, any growth in the invested assets over and above the hurdle rate passes to the trust’s beneficiaries tax-free. (Note: Naming grandchildren as a GRAT’s beneficiaries could trigger generation-skipping transfer taxes. Consult a tax professional before making any decisions.)

Keep cool

Again, if you’re sticking with your plans and can handle seeing a smaller number on your account value, you may not need to do anything when the market falls. It’s never a good idea to act for action’s sake, especially if there’s a chance doing so amid the turbulence of a rough market will make it harder for you to participate in any future recovery or accomplish your most important financial goals.

Sometimes, though, a bad market can actually be an opportunity to set yourself up for something better later on.

Tax-Efficient Investing: Why Is It Important?

April 9, 2025 • Hayden Adams

Making tax-efficiency part of your investing strategy can help lower your tax bill.

Taxes are everywhere, every day, to such an extent that one might let that all-important, mid-April deadline for filing your annual tax returns sneak up on you. One problem with waiting until the last minute: by that point, it may be too late to implement an efficient investment strategy for minimizing your tax bill.

Returns lost to taxes

For investors, it’s not just how much you make that matters—it’s how much you keep after taxes. The amount lost to taxes and other costs is one key factor affecting your returns, according to research done by the Schwab Center for Financial Research. Even small amounts lost to taxes can quickly add up over the years, so anything you can do to reduce the drag of taxes will help in the long run.

The good news is you can exercise more control than you may realize over your taxes. With a bit of planning, you can make your portfolio more tax-efficient and hold onto a greater share of your investment returns.

How do I maximize tax efficiency?

A big part of tax efficiency is putting the right investment in the right account.

Investment accounts can be divided into two main categories:

– Taxable accounts, such as brokerage accounts, are good candidates for investments that tend to lose less of their returns to taxes.

– Tax-advantaged accounts, such as an IRA, 401(k), or Roth IRA, are generally a better home for investments that lose more of their returns to taxes.

What does that mean in practical terms? Here we’ve matched some common kinds of investments with taxable or tax-advantaged accounts:

Where tax-smart investors typically place their investments

TAXABLE ACCOUNTS

Ideal for:

TAX-ADVANTAGED ACCOUNTS*

Ideal for:

Individual stocks you plan to hold for more than one year Individual stocks you plan to hold one year or less

Tax-managed stock funds, index funds, exchange-traded funds (ETFs), low-turnover stock funds Actively managed funds that may generate significant short-term capital gains

Stocks or mutual funds that pay qualified dividends Taxable bond funds, zero-coupon bonds, inflation-protected bonds or high-yield bond funds

Municipal bonds, I bonds Real estate investment trusts

Disclosure

*Such as Roth IRAs and tax-deferred accounts including traditional IRAs, 401(k)s and deferred annuities.

Of course, this presumes that you hold investments in both types of accounts. If all your investment money is in your 401(k) or IRA, then just focus on picking appropriate investments and allocating to them according to your goals, risk tolerance and timeframe.

Diversifying by tax treatment

Holding your investments in the most tax-appropriate type of account can complement your savings plans by helping to reduce taxes (or, in the case of a Roth, eliminate entirely the taxes on investment returns). But note that if you take a distribution of Roth IRA earnings before you reach age 59½ or before the account is five years old, the earnings may be subject to taxes and penalties. Spreading your investments across accounts with different tax treatments can also give you more flexibility in managing your taxes when you start drawing from your savings in retirement. You might think of this as “tax diversification.”

Diversifying by tax treatment can be especially important if you’re uncertain about the tax bracket you’ll end up in in retirement. For example, by investing in a taxable brokerage account and then splitting your retirement-savings contributions between a tax-deferred IRA or 401(k) and an after-tax Roth account, you would have more options for managing your income in retirement, regardless of your tax bracket.

So if your goal is to minimize your overall tax burden, you could focus on taking tax-free municipal bond income, qualified dividends, and long-term capital gains (which currently tend to be taxed at lower rates) from your taxable accounts and drawing tax-free income from your Roth accounts. Then you could take only enough money from your taxable IRA or 401(k) to cover your spending needs or satisfy required minimum distributions, if applicable.

Of course, this is just one approach. Some investors may prefer to rely on their taxable and tax-deferred accounts (along with Social Security and pensions) for income and allow their tax-free Roth savings to continue growing for as long as possible.

Estate planning, charitable giving considerations

Making strategic use of your different accounts according to their tax treatment can also help you formulate your charitable giving and estate planning goals—different accounts receive different types of gift and estate tax treatment. For example, you might want to give appreciated securities held long-term from your taxable accounts to charity for a full fair market value deduction and no capital gains tax.

You can also leave such shares to your heirs, who will receive a step-up in cost basis after you’re gone (more on that below). Roth IRAs also make a great bequest, as distributions are free from income tax for your beneficiaries.

How to think about your total portfolio

No matter how you decide to split up your portfolio between account types, remember that for asset allocation purposes, you should still think of all your investments as being part of a single portfolio.

Here’s a simplified illustration: If you kept all your stocks in your taxable account and an equal amount of money in bonds in your tax-advantaged account, that would not constitute two portfolios, one 100% stocks and the other 100% bonds. You would actually have one portfolio consisting of 50% stocks and 50% bonds. The different assets just happen to be in different accounts.

Other tax-related investment considerations

In general, holding tax-efficient investments in taxable accounts and less tax-efficient investments in tax-advantaged accounts should have potential to add value over time. However, there are other factors to consider, including:

– There are tax implications to periodically rebalancing your portfolio to maintain your target asset allocation. Rebalancing involves selling and buying assets that have either grown beyond or fallen below your original allocation. When you take profits from your winners and buy assets that have underperformed, it could cause an additional tax drag on returns in your taxable accounts. When you sell an investment in a taxable account you may incur either long- or short-term capital gains. Therefore, you may want to focus your rebalancing efforts on your tax-advantaged accounts and include your taxable accounts only when necessary. Adding new money to underweighted asset classes is also a tax-efficient way to help keep your portfolio allocation in balance.

– Active trading by individual investors or by a mutual fund manager, if successful, tends to be less tax-efficient and better suited for tax-advantaged accounts. A caveat: Realized losses in your tax-advantaged accounts can’t be used to offset realized gains on your tax return through a process known as “tax loss harvesting.”

– A preference for income might prompt you to hold bonds in taxable accounts, even if it makes more sense from a tax perspective to hold them in tax-advantaged accounts. In other situations, it may be impractical to implement all of your portfolio’s fixed income allocation using taxable bonds in tax-advantaged accounts. If so, compare the after-tax return on taxable bonds to the tax-exempt return on municipal bonds to see which makes the most sense on an after-tax basis.

– Estate planning issues and philanthropic intent might play a role in your portfolio planning. If you’re thinking about leaving stocks to your heirs, stocks in taxable accounts are generally preferable. That’s because the cost basis is calculated based on the market value of the stocks at the time of death (rather than at the time they were originally acquired, when they may have been worth substantially less). In contrast, stocks in tax-deferred accounts don’t receive this treatment since distributions are taxed as ordinary income anyway. Additionally, highly appreciated stocks held in taxable accounts for more than a year might be well-suited for charitable giving because you’ll get a bigger deduction. The charity also gets a bigger donation than if you liquidate the stock and pay long-term capital gains tax before donating the proceeds.

– The Roth IRA might be an exception to the general rules of thumb discussed above. Because qualified distributions are tax free, assets you believe will have the greatest potential for higher return are best placed inside a Roth IRA, when possible. Assets in these account can be a good way to pass on assets to your heirs.

Keep more of your money with tax-efficient investments

If you want to keep more of your returns, managing your investments with tax efficiency in mind is a must. What’s more, tax efficient investing techniques are accessible to almost everyone—it just takes some up-front planning to reap the potential benefits.

Deferring Taxes on an Investment Property Sale

April 9, 2025 • Hayden Adams

A 1031 exchange can help you defer capital gains taxes on an investment property by investing sale proceeds into another property.

For investment-property owners looking to sell, high prices could mean commensurately high capital gains taxes. Such sellers might want to consider a so-called 1031 exchange, which could allow them to defer taxes by using the proceeds of the sale of one investment property to purchase a similar property.

What is a 1031 exchange?

Under IRC Section 1031, business owners, individuals, and trusts may perform a tax-deferred exchange of one business or investment property for another. Be aware that only real property, including buildings, land, or other real estate, is eligible for a 1031 exchange. Generally, personal property such as machinery and vehicles, intellectual property like copyrights and patents, securities, and financial instruments such as inventory and partnership interests are excluded.

1031 exchange rules

The IRS has very specific rules regarding 1031 exchanges. Here are a few to keep in mind:

The seller must buy like-kind property. The buildings, land, or other real estate must be “like-kind” in nature—meaning the properties being sold and purchased must both be a real estate investment or part of a business. Property for personal use, such as a primary residence or vacation home, doesn’t qualify.

The seller must make a like-kind exchange. To receive a 100% tax deferral, the property or properties acquired must be equal to or of greater value than the property being sold. If the purchase price of the new property is lower, the seller may be subject to depreciation recapture on any gains—up to a 25% ordinary income tax.

The seller must meet certain time limits. From the date of the sale, the seller has 45 days to identify a potential replacement property or properties and 180 days in total to complete the purchase to minimize tax liabilities.

The seller cannot, even temporarily, take possession of the exchange funds. Proceeds from the sale of the relinquished property must be held by a qualified intermediary (QI)—an independent facilitator or entity with no financial or personal connection to the seller. The QI will hold the funds in a qualified escrow account until the purchase of the replacement property is complete.

1031 exchange tips

Taxpayers run afoul of 1031 requirements all the time. Even one tiny error could nullify the exchange, and you may be left owing taxes, late penalties, interest, and possibly even a 20% negligence penalty.

To avoid a mishap with a 1031 exchange, we recommend that real estate investors:

Document everything: To claim something as a rental property, you need proof that you rented it, including contracts and payments.

Open a dedicated bank account: A separate account makes it easier to prove rental income and property-related expenses.

Create a separate entity: To keep personal and investment properties separate, consider establishing a business entity, like an LLC, for your rental. This has the added benefit of offering potential legal liability protections.

Consult an expert: It’s wise to find a CPA or an attorney who specializes in 1031 exchanges. There are specific experts who know all the legal ins and outs, as well as what paperwork to file and when, and some may even be able to help you find your next property.

Bottom line on 1031 exchanges

A 1031 exchange is sort of like having a tax-deferred investment account, but for real estate. There’s no limit to how many exchange transactions you can do, so you can roll over any gains again and again—and you’ll owe taxes only when you decide to keep, rather than reinvest, the funds. However, the exchange process can be complicated, so consider speaking to a financial advisor and tax professional to avoid any surprises on your tax return.

3 Ways to Pass Down a Home

April 15, 2025 • Austin Jarvis

The pros and cons of different methods for leaving a home to your heirs.

When it comes to estate planning, a family home can be among the most valuable—and complicated—assets to pass down. It’s natural to want to see a cherished home stay within the family, but you’ll want to think about not only your own needs and wishes but also those of your heirs.

For example, your child may love the family home and all the memories that go with it, but do they actually want to live there? If you have multiple heirs, is it realistic for them to co-own the property, or will such an arrangement create conflict?

You also need to consider the role the house will play in your later years. Do you plan to stay in the home, or is it possible you may move at some point? All of this factors into how—and whether—you transfer the property to your kids.

With that in mind, here are three ways to pass along a home to your heirs—both during and after your lifetime—while also potentially lowering your tax bill and avoiding unexpected costs to your heirs.

Sell it

If you’re looking to move or put your home’s equity to use elsewhere, selling the home to a child or other heir could be a good option. Doing so removes the property from your taxable estate and establishes a new cost basis—meaning the capital gains on any future sale will be calculated using the value of the home on the date of the transfer rather than your original purchase price.

Although you might be tempted to sell the home at a low price, be careful not to go below its fair market value. Otherwise, the difference between the sale price and the market value could be subject to gift taxes.

Gift it

As generous as it is to gift a home to an heir during your lifetime, it could have negative tax repercussions. That’s because such a gift counts toward your lifetime gift tax exemption. That might not seem like an issue now that the combined estate and lifetime gift tax exemption is $13.99 million for individuals ($27.98 million for married couples) in 2025, but that number is set to come down by half starting in 2026. Unless Congress extends the limitations, such a gift could result in a federal estate tax of up to 40%, depending on the size of your estate. State-level gift, estate, and inheritance taxes could also be a factor, depending on where you live.

The tax consequences could be even more severe for your heirs, especially if you give your home to your child while you’re alive—such as through a deed transfer. If your child decides to sell the home, the cost basis will be calculated using your original purchase price, potentially increasing the capital gains.

Pass it down

Generally speaking, there are three methods for leaving a home to your heirs:

Last will and testament: You can use your will to designate to whom the home should go and in what proportions. That said, wills are required to go through probate—the sometimes lengthy and often costly legal process of validating your will—which can slow down the transfer of ownership to your heirs.

Transfer-on-death deed: If probate is a concern, you may be able to sign a transfer-on-death deed—available in 29 states and the District of Columbia—which allows you to pass the property to your heirs outside probate upon your death.

Trust: Another way to avoid probate is through a Qualified Personal Residence Trust (QPRT), which transfers the property into an irrevocable living trust, allowing you the benefit of greater control over how the property is managed and under what conditions it can be sold. The home would then pass out of your estate to your beneficiaries upon the termination of the trust.

However generous your intent, the bequest of a home can be an albatross if not accompanied by additional funds to help cover improvements, insurance, maintenance, and taxes—particularly if you plan to leave it to multiple heirs. You don’t want to make your kids house rich and cash poor, nor do you want them fighting about the costs of ongoing maintenance and upkeep. In such cases, setting aside funds in a trust dedicated for this purpose can help ensure the home is well maintained for years to come.

Regardless of the method you use to pass down the home, if it is included in your estate, it will receive a new cost basis upon your death, meaning any capital gains taxes resulting from a future sale would be calculated using the fair market value at the time of the transfer.

Talk it out

Whether you sell, gift, or pass down your property, the transfer could trigger a reassessment of the home’s property taxes, so be sure to factor that into your plan—ideally with the help of an attorney or a tax advisor.

In addition to consulting financial professionals who can help you put your plan in place, you’ll want input from anyone affected by your decision. Including all family members as part of the conversation provides everyone the chance to see their needs and wishes reflected in the plan for your home, which can avoid unnecessary conflict down the road.

California housing market shift: buyers gaining power

Source: Fast Company

While national active housing inventory for sale at the end of March 2025 was still 20 percent below pre-pandemic March 2019 levels on a year-over-year basis, national active listings are up 20 percent between March 2024 and March 2025. This indicates that homebuyers have gained some leverage in many parts of the county over the past year. One of the biggest year-over-year increases is happening in California, where active inventory for sale is up 50 percent year-over-year.

Among California’s 36 major counties with at least 100,000 residents, nine have more active housing inventory for sale in March 2025 compared to pre-pandemic March 2019. The other major California counties still have inventory below pre-pandemic March 2019 levels. In housing markets where active inventory for sale rises significantly, homebuyers are gaining leverage. In housing markets where active inventory for sale has shot up above pre-pandemic 2019 levels, homebuyers have gained considerable leverage relative to part years. Homebuyers in San Francisco (in particular San Francisco proper’s condo market) had a lot more leverage recently than homebuyers in, say, Orange County.

U.S. economy went into reverse in Q1, GDP shows

Source: CBS News

U.S. economic growth slowed sharply in the first quarter of 2025 as businesses rushed to stockpile goods ahead of President Trump’s sweeping tariff policies. The nation’s gross domestic product – the total value of products and services – shrank at a 0.3 percent annual rate, down from growth of 2.4 percent in the final three months of 2024, the Commerce Department reported Wednesday in its initial GDP estimate. It’s the worth quarterly performance for the U.S. economy since early 2022, when the economy was in recovery after cratering during the COVID pandemic.

The U.S. economy was forecast to show 0.8 percent growth in the first three months of 2025, according to the average estimate of economists polled by FactSet. The slowdown comes amid growing concerns that President Trump’s wide-ranging tariffs could disrupt the U.S. economy, with some economists raising the changes of the U.S. slipping into a recession in 2025. Although the Trump administration’s blanket tariffs were announced on April 2, after the end of the quarter, businesses sought to get ahead of the impact of the import duties by front-loading purchases early in the year.

Trump’s VA strands thousands of veterans by ending a mortgage program

Source: NPR

The U.S. Department of Veterans Affairs, as of Thursday, has ended a new mortgage-rescue program that so far has helped about 20,000 veterans avoid foreclosure and keep their homes. The move leaves millions of military veterans with far worse options than most other American homeowners if they run into trouble paying their home loans. And it comes at a time when nearly 90,000 VA loans are seriously past due, with 33,000 of those already in the foreclosure process, according to the data and analytics firm ICE.

At issue is the VA Servicing Purchase program, or VASP. It was put in place during the Biden administration after missteps by the VA left homeowners with no affordable way to catch up on their VA-backed home loans if they fell behind. VASP rolls the homeowner’s missed payments into a new, low-interest rate loan that the VA then owns outright. With today’s higher mortgage rates of around 7 percent, it is often the only affordable option for homeowners with VA loans. Mortgage industry groups, housing advocates and veterans’ organizations have been warning the VA that shutting down VASP without replacing it with something else first would result in large numbers of veterans losing their homes, many of whom are in this financial peril because of the VA’s own mistakes.

Home insurance rates may rise 21% in California in 2025

Source: Insurify

Homeowners will again face rising insurance costs in 2025 as insurance companies try to recoup massive losses from recent years. Insurify projects the annual cost of home insurance will increase 8 percent by the end of the year to a national average of $3,250. Severe weather is a major factor behind the increase, putting pressure on insurers to raise rates.

Western wildfires, Southern hurricanes, and Midwestern hail have continued to increase in intensity and frequency, leading to larger losses and higher claim payouts. The gap between what insurers charge in premiums and what they pay out in losses is shrinking, with some states costing insurers more than they make. For example, Iowa home insurers pay out $122 in claims for every $100 they make in premiums, according to Insurify analysis. To stay profitable and operational, insurers typically pass increased losses on to consumers through higher premiums. The average annual cost of home insurance increased 8 percent in 2024 – nearly triple the rate of inflation (2.9 percent). Insurify projects California home insurance will rise 21 percent. The Palisades and Eaton fires that ravaged Los Angeles County in January and regulatory changes in the state will contribute to this increase.

Homeowners struggle with property taxes and how to appeal

Source: HousingWire

A majority of U.S. homeowners are feeling the pressure of rising property taxes. But new data reveals that most are not taking advantage of their right to appeal their assessments – often because they don’t know they can. A national survey conducted by property tax appeal platform Ownwell found that nearly 60 percent of homeowners were “shocked” by their most recent property tax bills. However, despite three-quarters of respondents saying they worry about increases in their annual bills, 78 percent reported that they had never challenged their assessment. While almost half of respondents said they would go out of their way to price-match and gain savings of $60 or less, challenging a tax assessment could save homeowners hundreds or even thousands of dollars annually.

Of the homeowners who said they’ve never filed an appeal, more than half (53 percent) admitted they were unaware they had the right to do so. In California, a property’s assessed value generally is established when the property changes ownership or when it is newly constructed. If a taxpayer disagrees with the value established for a property, they should discuss the issue with the Assessor’s staff in the county where the property is located. If an agreement cannot be reached, then taxpayers have a right to appeal the value to the appeals board or a county board of supervisors. For more information, go to the California State Board of Equalization’s Assessment Appeals website.

Sincerely,

Michael Gouel

Begin forwarded message:

From: “C.A.R. Market Matters” <news@car.org>

Date: May 1, 2025 at 18:27:59 PDT

To: MICHAELGOUEL@gmail.com

Subject: C.A.R. Market Matters

Upscale personal care shop

California housing market shift: buyers gaining power

Source: Fast Company

Take care of yourself so you can take care of your clients.

Access your C.A.R. member wellness resources here.

U.S. economy went into reverse in Q1, GDP shows

Source: CBS News

Trump’s VA strands thousands of veterans by ending a mortgage program

Source: NPR

Home insurance rates may rise 21% in California in 2025

Source: Insurify

Homeowners struggle with property taxes and how to appeal

Source: HousingWire

Homebuyer mortgage demand drops on economic uncertainty

Source: CNBC

Mortage rates didn’t move much last week, but homebuyers continued to pull back amid concerns over the broader economy. Applications for a mortgage to purchase a home dropped 4 percent last week compared with the previous week, according to the Mortgage Bankers Association’s seasonally adjusted index. Volume was just 3 percent higher than the same week one year ago, even though interest rates last year were considerably higher.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances (of $806,500 or less) decreased to 6.89 percent from 6.90 percent, with points increasing to 0.67 from 0.66, including the origination fee, for loans with a 20 percent down payment. That rate is 40 basis points lower than the same week one year ago. Mortage application activity, particularly for home purchases, continues to be subdued by broader economic uncertainty and signs of labor market weakness. Those applications dropped 20 percent for the week but were 43 percent higher than the same week one year ago. Applications to refinance a home dropped 4 percent for the week and were 42 percent higher than the previous week.

Market Update

Last week’s news continues to provide some mixed signals for the housing market, with the U.S. economic growth falling by 0.3% in the first quarter, homeowners insurance rates projected to rise by double-digits in 2025, and a solid labor market growing by 177k jobs in April. Construction spending, meanwhile, fell for the first time in six months as builders remained uneasy about the ongoing economic uncertainty. With tariff fears remaining a concern for the economy, interest rates could continue to fluctuate, and the housing market may remain soft in the second quarter.

Fed holds key interest rate steady as it warns of stagflation

Source: CNN

The Federal Reserve said Wednesday it will hold interest rates steady as the U.S. economy begins to show the effects of President Trump’s haphazard trade war. The central bank kept its benchmark, overnight lending rate unchanged at a range of 4.25 percent to 4.5 percent, extending a holding pattern that began in January.

Fed Chair Jerome Powell said in a news conference that uncertainty is pervasive, from where policy is headed to how the economy will evolve in the face of Trump’s ongoing trade spat with the world. He also reiterated the growing threat of stagflation (which comprises a duo of higher unemployment and higher inflation), but said America’s labor market remains a reassuring bright spot in the economy.

Economic uncertainty and insurance costs weigh on California housing market

Source: Pasadena Now

California’s housing market is bracing for a turbulent second quarter, as rising insurance costs, slowing economic growth and ongoing trade tensions converge to rattle consumer confidence, according to a recent analysis by the CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.).

California homeowners are preparing for a sharp spike in insurance premiums. Rates are expected to rise by an average of 21 percent in 2025, on top of a 10 percent increase last year. The hike – outlined in a new Insurify report cited by C.A.R. – would raise the average annual premium by over $500, from $2,424 to $2,930. Contributing factors include growing climate risk models, regulatory changes, and fire-related losses from disasters like the Eaton Fire. Additional pressure may come from higher costs on construction materials, if tariffs continue to escalate. With key economic indicators sending mixed signals such as the consumer confidence’s decline and relative strength of the job market, C.A.R. analysts say the housing market is likely to remain soft in the months ahead.

Fire recovery and housing

Source: LAist

Some 12,000 homes were destroyed in the Eaton and Palisades fires. Real estate experts say that surrounding counties are likely to absorb some of the displaced people, but with a few exceptions, they aren’t seeing a big effect just yet in places like Orange County. There is one notable exception – high-end rentals. The number of homes leased in January for at least $20,000 a month shot up 238 percent in O.C. and 233 percent in L.A., according to Steven Thomas, chief economist with Reports on Housing, which analyzes real estate trends in Southern California. The actual number of people willing and able to pay that price, though, are quite small: 180 high-end rentals in L.A. and 27 in O.C. closed last month, says Thomas.

Displaced residents are considering many factors when deciding where to live, including commute time, schools, and, of course, cost. Josh Schroeder, a real estate agent who works mostly in Laguna Beach and other coastal cities in South O.C., said he’s working with five clients who lost their homes in the Palisades fire. All but one of those clients, an older couple, are looking to rent, not buy a home. Schroeder thinks the biggest factor in residents’ decision-making is the lack of clarity on insurance payouts for fire victims – most are still navigating the insurance process – and deciding whether they can afford and want to rebuild. Despite the region’s infamous housing deficit, the real estate market in L.A. and surrounding counties does, technically, have enough inventory to absorb all the fire victims, experts said. But the increased demand will likely continue to push prices up, at least within legal limits as outlined by rent-gouging laws.

Creative financing is replacing bank loans in real estate

Source: MPA Mag

With traditional banks stuck in prolonged approval cycles and growing risk aversion, borrowers are turning to private lenders who can move quickly and think creatively. For real estate investors caught in a tightening market, that shift is more than a trend – it’s a survival strategy.

Banks, meanwhile, are pulling back from deals they once routinely funded. Applications that might have passed a year ago are now getting kicked back due to concerns around multifamily assets, inflation or tariffs. The growing appeal of private lenders lies in their flexibility. With no credit committee or bureaucratic gauntlet to run through, lenders like Lurie can move fast and make decisions based on business potential – not just spreadsheets.

Trump’s proposed cuts to rental assistance could hit California hard

Source: KFI AM640

President Trump’s proposed 2026 budget includes significant cuts to federal rental assistance programs, which could severely impact California. The plan suggests a 43 percent reduction in funding for housing programs, including Section 8 vouchers, which help low-income families afford rent. The proposal aims to shift the responsibility of these programs to states through a new State Rental Assistance Block Grant, allowing states to design their own initiatives.

The budget could lead to millions of Californians losing housing assistance, exacerbating the state’s housing crisis, reports CalMatters. The budget also proposes a two-year cap on rental assistance for able-bodied adults, a move criticized by housing advocates. Will Fischer from the Center on Budget and Policy Priorities argues that many people will still need assistance beyond two years.

Weekly mortgage demand suddenly surges 11%

Source: CNBC

Mortgage interest rates dropped for the second straight week, although not by a lot. That was thanks to more negative news on the economy. But despite all that, weekly mortgage demand surged higher by 11 percent, 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 $806,500 or less) decreased to 6.84 percent from 6.89 percent, with points rising to 0.68 from 0.67, including the origination fee, for loans with a 20 percent down payment. Applications for a mortgage to purchase a home rose 11 percent for the week and were 13 percent higher than the same week one year ago. Driving the increase was a surge in demand for conventional loans. Applications to refinance a home loan also rose 11 percent for the week and were 51 percent higher than the same week one year ago. That demand was driven by Veterans Affairs, or VA, loans, which rose 26 percent for the week.

44% of sellers giving concessions to buyers

Source: Redfin

Home sellers gave concessions to buyers in 44.4 percent of U.S. home-sales transactions in the first quarter. That’s up from 39.3 percent a year earlier and is just shy of the 45.1 percent record high at the start of 2023. This is based on Redfin’s analysis of data from their buyers’ agents across the country covering rolling three-month periods from 2019 to the present. A concession is recorded when an agent reports a seller provided something that helped reduce the buyer’s total cost of purchasing a home, including money toward repairs, closing costs and/or mortgage-rate buydowns.

Sellers are increasingly handing out concessions because the housing market has tilted in favor of buyers. Homebuyer demand is sluggish due to high home prices, elevated mortgage rates and economic uncertainty. At the same time, sellers are facing more competition from each other, with listings now at a five-year high. When buyers have more options to choose from, it typically means they have more negotiating power. The cities with the highest concession rates are Seattle, Portland, Atlanta, San Diego, Denver and Los Angeles. Sacramento, Riverside, San Jose and San Francisco also made the top 25 areas giving concessions.

March home sales drop to slowest pace since 2009

Source: MSN

Higher mortgage rates and concern over the broader economy are making for a weak start to the all-important spring housing market. Sales of previously owned homes in March fell 5.9 percent from February to 4.02 million units on a seasonally adjusted annualized basis, according to the National Association of REALTORS®. That’s the slowest March sales pace since 2009.

Sales were 2.4 percent lower than in March 2024 and slumped across all regions month to month. They fell hardest in the West, the priciest region of the country, down more than 9 percent. The West, however, was the only region to see a year-over-year gain, due to strong activity in the Rocky Mountain states, where job growth is strong. The count is based on closings, therefore contracts likely signed in January and February, when the average rate on the 30-year fixed mortgage was over 7 percent. It did not fall solidly below 7 percent until Feb. 20, according to Mortgage News Daily.

Aging home inventory creating a tipping point

Source: Forbes

America’s housing market is graying. Baby boomers, holding the lion’s share of homeownership and real estate wealth, are sitting atop an aging housing inventory that could define the future of millennial homeownership. Baby boomers own 37 percent of U.S. homes while making up just over 20 percent of the population, according to the U.S. Census Bureau. They also control 57 percent of the nation’s vacation homes and 58 percent of rental properties that generate income.

Nearly half (45 percent) of millennials (those born between 1981 and 1996) do not own a home. And for many, inheriting property may be the only feasible pathway to homeownership. Economists expect a “Great Wealth Transfer” soon, which will hand off multiple trillions of dollars of assets from boomers to their heirs, which will allow millennials to become homeowners, either through inheritance or the financial flexibility to afford a down payment.

2024 Housing affordability by ethnicity

Source: C.A.R.

Buying a home in California became less affordable for all ethnic groups last year, as interest rates remained elevated and the typical monthly mortgage payment for a median-priced detached home rose 6 percent compared to the previous year, the CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.) said today.

Eighteen percent of all Californians earned the minimum income needed to purchase a median-priced home in 2024, down from 19 percent in 2023. At the same time, housing affordability for White/non-Hispanic households fell from 23 percent in 2023 to 21 percent in 2024. In 2024, 10 percent of Black households and 9 percent of Hispanic/Latino households could afford a median-priced home – figures that remained unchanged from the previous year. The significant difference in housing affordability for Black and Hispanic/Latino households illustrates the homeownership gap and wealth disparity for communities of color, which could worsen as the economy slows and rates remain elevated in 2025.

Weekly mortgage demand plunges 13%

Source: CNBC

Higher interest rates, as well as concern over where the broader economy is headed, is causing mortgage demand to drop sharply. Last week, total mortgage application volume fell 12.7 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 $806,500 or less) increased to 6.90 percent from 6.81 percent, with points rising to 0.66 from 0.62, including the origination fee, for loans with a 20 percent down payment. The rate increase hit refinance demand hard. Those applications dropped 20 percent for the week but were 43 percent higher than the same week one year ago. The refinance share of mortgage activity decreased to 37.3 percent of total applications from 41.3 percent the previous week. Applications for a mortgage to purchase a home dropped 7 percent for the week and were 6 percent higher than the same week one year ago. Homebuyers are contending with more than just higher interest rates. Home prices continue to climb, and the recent plunge in the stock market has some unwilling to sell stocks in order to make a down payment.

Homeownership Slips Further Out of Reach for All California Ethnic Groups Amid Rising Mortgage Costs

Among ethnic groups in California, 21 percent of White households could afford a median-priced home in 2024. In comparison, only 10 percent of Black and 9 percent of Hispanic/Latino households had the same ability. Meanwhile, 27 percent of Asian households could afford a median-priced home.

Less than one-fifth (18 percent) of all Californians earned enough income to support the purchase of an $865,440 statewide median-priced detached home in 2024, down from 19 percent in 2023.

Market Update

The U.S. economy continued to show mixed signals as housing, labor, and consumer sectors navigated rising uncertainty. New home sales unexpectedly surged to a 724,000 annual rate fueled by a temporary dip in mortgage rates, though new tariffs and higher construction costs pose risks ahead. In California, housing affordability continued to decline, with gaps between ethnic groups narrowing but remaining wide in 2024. Nationally, the labor market remained resilient despite slight increases in jobless claims and signs of caution in business investment, particularly in tariff-exposed sectors. Meanwhile, consumer sentiment fell sharply to near-historic lows, reflecting heightened fears of inflation and recession. In regard to the housing market, although supply rose significantly statewide, overall sales remained subdued and will likely stay low as elevated mortgage rates and economic uncertainty continue to weigh on market activity in the near term.

Fannie Mae Revises Forecast for Housing Activity

Single-family home sales are expected to close 2025 at 4.86 million units, and new single-family construction is expected to total approximately 964,000 units this year, according to the April 2025 Economic and Housing Outlook from the Fannie Mae.

Revisions to the housing forecast were driven by a combination of recent actuals and adjustments to the Economic and Research Group’s expectations for the macroeconomy, including economic growth, which is forecast at 0.5% for full-year 2025 and 1.9% for 2026. The ESR Group expects mortgage rates to end 2025 at 6.2% and 2026 at 6.0%, and projects home prices, as measured by the Fannie Mae Home Price Index (FNM-HPI), will rise 4.1% in 2025 and 2.0% in 2026

New requirements for FHA loans will bar non-permanent residents seeking to buy homes

Source: KLTV

The U.S. Department of Housing and Urban Development (HUD) is revising their requirements for Federal Housing Administration (FHA) loans. Starting May 25, non-permanent residents will no longer qualify for FHA loans. This includes individuals here with a work visa, who do have permission to be in the country, such as nurses, doctors, engineers and DACA recipients.

FHA loans allow homebuyers to offer lower down payments (as low as 3.5 percent), make use of down payment assistance, have flexible credit requirements, and often qualify for higher home prices. By contrast, conventional loans require higher credit scores and don’t always offer down payment help. Undocumented immigrants were never eligible for FHA loans, though they are still use their individual taxpayer identification numbers (ITIN) to apply for conventional loans.

Unsolicited predatory offers in fire-hit areas barred through July 1

Source: C.A.R.

Gov. Gavin Newsom has extended an Executive Order from January to protect residents in fire-impacted zip codes in Los Angeles County. The order bars predatory investors from making unsolicited, undervalued property offers in attempts to exploit victims of the Southern California fires. The order extends such unlawful offers through July 1, 2025.

California law makes it a misdemeanor to violate a governor’s order during a state of emergency. 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, 91024, 91040, 91103, 91104, 91106, 91107, 91367, 93535, and 93536. Violations can be reported to the State Attorney General’s office at oag.ca.gov/report.

U.S. Army Corps recycling concrete and steel from burned homes

Source: The Canyon Alliance

Each day, almost 1,200 truckloads of debris, concrete and metal from structures destroyed by January’s wildfires exit Pacific Palisades and Malibu for disposal or recycling, according to Col. Brian D. Sawser of the U.S. Army Corps of Engineers. “The whole purpose … is to gather that debris and get it into a controlled environment as quickly and efficiently as possible,” Sawser said. “Our rate of response right now is exceeding anything at this scale that we’ve ever seen before. We’re moving way fast.”

Two recyclable materials – concrete and metal – are sent to a staging area on Temescal Canyon Road to begin the recycling process. Both substances are first washed at the original debris sites, then loaded onto trucks, covered with plastic tarps and brought to Temescal Canyon. The metal is compacted, while the concrete is crushed. Over the course of each day, Sawser estimated that about 3,000 to 4,000 tons are driven to separate processing centers outside the Palisades for recycling and reuse. On average, the Corps clears 40 homes per day, or 1,200 per month.

Interest rates, uncertainty temper California home sales

Source: The Business Journal

Elevated interest rates and economic uncertainty are being cited for a statewide decline in sales for March, according to the latest data from the CALIFORNIA ASSOCIATION OF REALTORS®. Existing, single-family home sales in California totaled 277,030 in March on a seasonally adjusted annualized rate, down 2.3 percent from 283,540 in February and up 4.9 percent from 264,200 in March 2024.

“Home sales slowed in March as both buyers and sellers grew more concerned about the ongoing tariff situation and its potential impact on their personal finances,” said C.A.R. President Heather Ozur, a Palm Springs REALTOR®. In Fresno, sales were down 9.3 percent in March compared to last year, but were up 21 percent compared to February. The median price for March was $435,000, up 5.3 percent annually and down 1.8 percent month over month.

Why is it so expensive to build affordable homes in California?

Source: Cal Matters

The spiraling cost of housing in California has affected virtually every facet of life. California has the nation’s largest unsheltered homeless population and among the highest rates of cost-burdened renters and overcrowded homes. One reason for the seemingly endless upward trajectory of rents is how expensive it is to build new apartments in California. Those costs are a major contributor to “break-even rents,” or what must be charged for a project to be financially feasible.

A recent study compared total apartment development costs in California to those in Texas. The Average apartment in Texas costs roughly $150,000 to produce; in California, building the same apartment costs around $430,000, or 2.8 times more. For publicly subsidized, affordable apartments – a sector that California has spent billions on in recent years – the gap is even worse. These cost over four times as much as affordable apartments in Texas. Most of the differences stem from policy choices made by state and local governments. A privately financed apartment building that takes just over two years to produce from start to finish in Texas would take over four years in California. It takes twice as long to gain project approvals, and the construction timeline is 1.5 times longer. That means land costs must be carried for longer, equipment and labor are on jobsites longer, and that loans are taken out for a longer term.

Homebuyers take riskier loans as tariffs push up interest rates

Source: CNBC

Mortgage rates jumped to the highest level since February last week, dampening overall demand and sending homebuyers in search of riskier loans with lower rates. Total mortgage application volume fell 8.5 percent last week compared with the previous week, according to the Mortgage Bankers Association’s seasonally adjusted index. The share of mortgages issued with adjustable rates, or ARMs, was 9.6 percent, the highest since November 2023. On a dollar basis, almost a quarter of the application volume last week was for ARMs, as borrowers with larger loans are more likely to opt for an ARM.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($806,500 or less) increased to 6.81 percent from 6.61 percent, with points decreasing to 0.62 from 0.63, including the origination fee, for loans with a 20 percent down payment. Applications for a mortgage to purchase a home dropped 5 percent for the week and were 13 percent higher than the same week one year ago. Demnd from buyers may be higher than a year ago, but there is 30 percent more active inventory on the market than there was last year at this time, according to Realtor.com. That suggests the annual comparison should be much larger, as low inventory was blamed for weak sales last year. Applications to refinance a home loan dropped 12 percent for the week but were 68 percent higher than the same week one year ago.

Elevated Interest Rates and Economic Uncertainty Ease March Home Sales

California home sales dialed back slightly in March as consumers grow increasingly concerned about their financial outlook in the year ahead, according to C.A.R.’s latest sales and price report.

Existing, single-family home sales totaled 277,030 in March on a seasonally adjusted annualized rate, down 2.3 percent from 283,540 in February and up 4.9 percent from 264,200 in March 2024.

March’s statewide median home price was $884,350, up 6.7 percent from February and up 3.5 percent from $854,370 in March 2024.

Unsolicited Predatory Offers in Fire-hit Areas Barred Through July 1

Gov. Gavin Newsom has extended an Executive Order from January (Executive Order N-7-25) to protect residents in fire-impacted zip codes in Los Angeles County. The order bars predatory investors from making unsolicited, undervalued property offers in attempts to exploit victims of the Southern California fires. The order extends such unlawful offers through July 1, 2025. California law makes it a misdemeanor to violate a governor’s order during a state of emergency. The Order does not prohibit anyone from selling their property should they wish to do so.

Market Update

The California housing market remained resilient in March. Despite having a slow start at the beginning of the year, existing single-family homes sales continued to grow modestly on a year-over-year basis for the second straight month. Mortgage rate fluctuations and economic uncertainty, however, began to weigh on housing demand. Pending sales dipped again last month, suggesting a slow start for the upcoming spring homebuying season. Housing supply, on the other hand, continued to grow with total active listings rising at the fastest pace since January 2023. The increase in inventory might have a moderating effect on home prices, as the statewide median price increased only mildly at 3.5% from March 2024. Meanwhile, policy uncertainty continues to have a negative impact on housing sentiment and could slow market activity in the second quarter.

New Report Shows Top Remodeling Projects for Homeowner Satisfaction and Cost Recovery

Top remodeling projects for homeowner satisfaction and cost recovery continue to vary as individuals remodel their homes for diverse reasons, according to NAR and National Association of the Remodeling Industry’s 2025 Remodeling Impact Report.

The remodeling projects that receive the highest Joy Scores upon completion are the addition of a primary bedroom suite, a kitchen upgrade and new roofing. In contrast, the projects with the highest cost recovery include a new steel front door, closet renovation and new fiberglass front door.

The top remodeling projects that have seen increased demand among NAR members over the past two years include kitchen upgrades, new roofing and a bathroom renovation.

New Fire Hazard Severity Maps Available Throughout California

The Calif. Dept. of Forestry and Fire Protection has released new fire hazard severity zone (FHSZ) maps throughout California.

The FHSZ maps are developed using a science-based and field-tested model that assigns a hazard score based on the factors that influence fire likelihood and fire behavior. Many factors are considered such as fire history, existing and potential fuel (natural vegetation), predicted flame length, blowing embers, terrain, and typical fire weather for the area.

The State Fire Marshal is mandated to classify lands within State Responsibility Areas into Fire Hazard Severity Zones (FHSZ). The three levels of hazard in the State Responsibility Areas are: moderate, high, and very high.

Insurance companies typically use their own risk assessment data rather than these maps, so the new designations are unlikely to directly affect insurance rates, according to Cal Fire. However, they will impact real estate transactions, as sellers must disclose to buyers when properties are located in high and very high fire zones. They also must present documentation showing that an inspection was done within six months and that the property complies with defensible space requirements.

CA Housing Market Rebounds in February with Highest Home Sales in More than Two Years

California’s housing market rebounded in February as statewide home sales reached the highest level in more than two years amid declining mortgage rates at the start of the year, C.A.R. reported last week.

February’s sales pace surged 11.6 percent from the 254,110 homes sold in January and was up 2.6 percent from a year ago, when a revised 276,280 homes were sold on an annualized basis. The February sales level was the highest since October 2022. Although home sales have rebounded strongly, they have remained below the 300,000 mark since September 2022.

The February statewide median price increased on a year-over-year basis for the 20th straight month, but the gain recorded was the smallest since July 2023. On a month-to-month basis, the February median price dipped from the prior month, and the monthly drop was larger than the 10-year historical average dip of -0.7 percent recorded between the two months.

Market Update

California home sales bounced back solidly after a slow start for the year as mortgage rates declined throughout the month of February. While home sales remain soft by historical standards, the increase is a first step in the right direction. Concurrently, the Federal Reserve held interest rates steady but lowered economic growth forecasts, citing trade policy risks. U.S. housing starts also rebounded, while homebuilder sentiment dropped to a seven-month low. Despite rising uncertainty in the economy and the policy arena, rates are expected to moderate later this year, and the housing market should continue to improve in Q225 and Q325.

HUD to require proof of citizenship, permanent residency to get FHA-insured loans

Source: The Mortgage Point

The U.S. Department of Housing and Urban Development (HUD) announced Wednesday that it will no longer allow non-permanent residents or non-U.S. citizens to obtain FHA-insured mortgages. This significant policy shift aligns with the Trump administration’s tougher stance on illegal immigration. The new rule eliminates the “non-permanent resident” category from the FHA’s Single Family Title I and Title II programs.

The FHA provides mortgage insurance on loans made by FHA-approved lenders, insuring mortgages on single-family homes, multifamily properties, residential care facilities and hospitals throughout the United States and its territories. FHA mortgage insurance protects lenders against losses. If a property owner defaults on their mortgage, the FHA pays a claim to the lender for the unpaid principal balance. Because lenders take on less risk, they are able to offer more mortgages to homebuyers.

Paradise reconstruction to take 20 years, mayor tells California REALTORS®

Source: SiliconValley.com

The mayor of paradise has a message for residents of Pacific Palisades and Altadena: there is hope and they will be able to rebuild their fire-ravaged communities. But it’s going to take decades, and the costs of reconstruction may skyrocket, possibly outpacing insurance, Paradise Mayor Steve Crowder said Wednesday, March 26, during a virtual CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.) forum about wildfire reconstruction in Los Angeles County.

Nearly 19,000 homes and buildings in and around the Northern California town of Paradise were destroyed in the 153,000-acre Camp blaze that cost 85 lives. Crowder, who lost his home in that fire, was one of four speakers on the C.A.R. panel. Crowder said it will take 20 years to complete the rebuilding of Paradise. After six years, reconstruction is about a third done, with about 3,200 houses and 600 multifamily units completed, Crowder said. The pace of reconstruction ranges from 350 to 500 homes a year. Much of the city’s infrastructure was also destroyed, which complicates the rebuilding process. Three chief challenges for Paradise’s reconstruction are building homes that can survive a future fire, finding insurance coverage and construction costs. “Pre-fire, we were building houses at $175-$200 a square foot. Overnight, we went to $300-$350 a foot,” said Crowder, citing a lack of contractors and building materials. “People that had insurance coverage were insured for just $150-$200 a foot.”

LA approves first permits for rebuilding homes after Palisades fire

Source: Los Angeles Times

The city of Los Angeles has cleared the way for three Pacific Palisades homeowners to begin rebuilding on their properties. The approval of the projects, one to repair a damaged home and two for full rebuilds, according to the Department of Building and Safety, represents a key milestone in the recovery from January’s devastating wildfires. The first permit was issued March 5, less than two months after the Palisades fire destroyed or seriously damaged more than 6,000 homes in the Pacific Palisades and surrounding areas.

Mayor Karen Bas and L.A. County leaders have pledged to streamline permitting procedures for property owners who want to rebuild. The Eaton fire, which ignited the same day, displaced 6,900 households from Altadena and nearby communities. The city and county have opened one-stop permitting centers for fire victims and waived discretionary hearings and other zoning reviews for those who want to build new homes that are roughly the same size as they were before. As of last week, 72 property owners had submitted rebuilding applications to the city. An additional 135 property owners submitted blueprints to the L.A. County Department of Public Works for rebuilding in unincorporated areas.

Trump’s housing chief shakes up Fannie Mae and Freddie Mac

Source: Wall Street Journal

In his first full week as head of the Federal Housing Finance Agency, home-builder heir and former private-equity executive William Pulte ousted more than a dozen board members at mortgage giants Fannie Mae and Freddie Mac. Pulte made himself the chairman of the boards and installed a set of new directors (one of them was Christopher Stanley, and Elon Musk ally who resigned from the post a day later). He removed senior executives at the companies and the FHFA, which regulates Fannie and Freddie. At the FHFA, at least dozens have been placed on administrative leave, according to the National Treasury Employees Union.

Trump officials have said they would pursue efforts to privatize Fannie and Freddie, a monumental undertaking that the first Trump administration wasn’t able to pull off. Trump allies view privatization as a way to reduce the country’s deficit and return money to taxpayers. If not done carefully, privatization could drive investors to demand higher premiums in the mortgage-backed securities market, which would trickle through to borrowers in the form of higher mortgage rates.

Consumer confidence continues slide over future economy

Source: U.S. News and World Report

Americans are continuing to turn downbeat on the future health of the economy. The Conference Board’s consumer confidence survey for March fell 7.2 points to 92.9 (the base of 100 was set in 1985). The present situation index – reflecting how Americans feel now about the economy – fell 3.6 points to 134.5, but the forward-looking expectations index tumbled 9.6 points to 65.2. That is the lowest level in 12 years and significantly below the 80 number that often signals a recession.

Although recent surveys have shown deepening pessimism, consumer behavior and spending that drives the U.S. economy has not always responded to the negative sentiment. There was also a split in the confidence by age and income, suggesting that reports of changes to government programs such as Medicare and Social Security may be affecting older Americans’ view of their financial situation. “March’s fall in confidence was driven by consumers over 55 years old and, to a lesser extent, those between 35 and 55 years old,” the Conference Board said.

HUD to require proof of citizenship, permanent residency to get FHA-insured loans

Source: The Mortgage Point

Paradise reconstruction to take 20 years, mayor tells California REALTORS®

Source: SiliconValley.com

LA approves first permits for rebuilding homes after Palisades fire

Source: Los Angeles Times

Trump’s housing chief shakes up Fannie Mae and Freddie Mac

Source: Wall Street Journal

Consumer confidence continues slide over future economy

Source: U.S. News and World Report

Mortgage demand from homebuyers strongest in 2 months, but still low

Source: CNBC

Mortgage rates barely budged last week, but homebuyers may be inching back to the market despite strong spring headwinds. Refinance demand was weaker, however, pushing total application volume down 2 percent last week from 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 ($806,500 or less) decreased to 6.71 percent from 6.72 percent, with points dropping to 0.60 from 0.64 (including the origination fee) for loans with a 20 percent down payment. Applications to purchase a home rose 1 percent for the week and were 7 percent higher than the same week one year ago. Applications for a mortgage to refinance a home loan decreased 5 percent for the week and were 63 percent higher than the same week one year ago.

CCRE To Discuss What Is Happening with Insurance Behind the Scenes

Gov. Newsom Signs Executive Order to Build Los Angeles Back Faster, Prevent Future Fires

Gov. Newsom last week signed an executive order to suspend unnecessary permitting and review requirements to accelerate the rebuild of Altadena, Malibu, and Pacific Palisades following the January fires.

The executive order expedites the process of repairing and replacing electric, gas, water, sewer, and telecommunication infrastructure in communities damaged by the fires. The order also speeds the process of “undergrounding” utility equipment to help communities recover more quickly while building resilience to preventing similar catastrophic fires in the future.

Previously, Gov. Newsom had called upon the electric utilities serving the firestorm-impacted communities in Los Angeles to begin the process of rebuilding safer and more resilient electric infrastructure, including the undergrounding of such infrastructure.

The letters sent to Southern California Edison and Los Angeles Dept. of Water and Power, urged the utilities to rapidly develop rebuilding plans for the communities of Altadena, Pacific Palisades, and Malibu, including plans for undergrounding electric distribution infrastructure by the end of March.

Market Update

After a slow start for the year, new home sales bounced back in February as mortgage rates began trending down and builders continued to offer sales incentives. While rates have been moving mostly sideways in the past few weeks, they have remained relatively moderate compared to recent highs reached in early January. Housing demand, as such, should see an improvement in March and April if market conditions stabilize. New tariffs and their economic implications, however, may have an impact on the housing market and could create headwinds for buyers and sellers in coming months.

AG Bonta tells public to beware of lawyers soliciting clients after the L.A. fires

Source: State Bar of California

California Attorney General Rob Bonta released information for the public and attorneys about California’s ethical obligations after a natural disaster like the Los Angeles fires this year. The legal processes for a disaster of this magnitude often will take place over many months, and even years. Californians should take their time and not rush important legal decisions, including signing legal agreements – especially claims that immediate payment of legal fees or other costs are necessary to protect legal rights or remedies.

California law prohibits lawyers or their representatives from:

– Soliciting clients in person or by telephone calls or other real-time electronic contact

– Soliciting clients who have made known to the lawyer a desire not to be solicited

– Transmission of solicitation that involves intrusion, coercion, duress or harassment

– Mailing written communications offering legal representation unless the communication is clearly labeled as an advertisement on the outside of the envelope

– Sending recorded or electronic communications offering legal representation unless it is clearly labeled as an advertisement at the beginning and end.

Modular housing may finally have its day — as solution to wildfire rebuilding

Source: AZ Daily Sun

Everyone understands the benefits of mass production in cost and speed, especially after disasters. Numerous community groups, architects, builders and others are trying to jointly purchase materials and develop shared designs for new houses, including ones that fire survivors could select from a brochure, similar to the century-old Sears catalogs. But individual property owners have specific circumstances and desires, while varying insurance payouts and design preferences make it harder to act collectively.

Modular construction provides one pathway. Some companies build a whole house in a factory, truck and crane it onto a property and then bolt to the foundation. Others create parts of homes and then snap them together on site like Legos. Factors contributing to the rise of modular construction include labor shortages, increasing costs of materials, advances in automation technology and better environmental sustainability. Last month, Steadfast LA, a wildfire recovery nonprofit founded by developer and former mayoral candidate Rick Caruso, announced it will provide as many as 100 free modular homes to victims. The two-bedroom homes, built by Redwood City-based Samara, will go to residents of low to moderate incomes who are uninsured, underinsured or elderly and otherwise lack the money to rebuild on their land. The homes are 950 square feet and cost roughly $500,000, including site preparation and permitting. They feature fire-safe design aspects such as metal roofs and double-paned windows.

New tariffs could create challenges in the housing market

Source: MPA Mag

The Trump administration’s tariffs may cause a strain on an already challenged housing market, according to a senior economist with the Mortgage Bankers Association (MBA). Trump announced elevated tariff rates on countries that have a trade surplus with the United States, imposing a 10 percent baseline tax on imports from all countries, a 34 percent tax on imports from China, and a 20 percent tax from the European Union.

While the exact impact of the tariffs announced on Wednesday afternoon in Washington are still unknown, MBA Chief Economist Mike Frantantoni believes that tariffs could put a squeeze on household budgets and stifle the new home market. He said there are three areas of potential impact, including the cost of new construction, larger macroeconomic issues such as a slowing global economy and increase in inflation, and interest rates. A recent report form the National Association of Home Builders projected an increase of $7,500 to $10,000 in new home builds due to tariffs, which Franantoni said would make new home affordability an even greater challenge. Finally, while the Fed expects to cut rates three times, a rapid increase in inflation cause by tariffs could make them reconsider.

Newsom signs executive order to accelerate underground utility placement

Source: Pasadena Now

Governor Gavin Newsom signed an executive order late last week that will speed up the recovery of communities devastated by the January fires in Los Angeles County, including Altadena, Malibu and Pacific Palisades. The order suspends certain permitting and review requirements to expedite the rebuilding of utility and telecommunication infrastructure, including efforts to bury power lines underground.

The executive order allows for the accelerated repair and replacement of electric, gas, water, sewer and telecommunication infrastructure. It also facilitates the undergrounding of utility equipment, a measure designed to build resilience against future fires while aiding in quicker recovery for residents. In addition, the order suspends requirements under the California Environmental Quality Act (CEQA) and removes restrictions related to the California Coastal Act, which governs the rebuilding process along the state’s coastline.

Mortgage rates tumble on tariffs, but housing costs still near record high

Source: CNBC

Mortgage rates fell sharply Thursday following the Trump administration’s tariff announcements. The average rate on the popular 30-year fixed loan plunged 12 basis points to 6.63 percent, according to Mortgage News Daily. That put it at the lowest level since October. The massive sell-off in the stock market early Thursday sent investors fleeing to the bond market. That caused bond yields to drop. Mortgage rates loosely follow the yield on the 10-year U.S. Treasury, and they had been moving in a very narrow range since late February.

The drop in rates comes at a good time for the housing market, as the historically busy spring season kicks into gear. But there are several other factors working against buyers and hitting home affordability hard. For the four weeks ending March 30, the typical U.S. homebuyer’s monthly payment hit a record high for the second week in a row, reaching $2,802, according to real estate brokerage Redfin. Even with a slight drop in mortgage rates Thursday, roughly 70 percent of households, or 94 million, cannot afford a $400,000 home. The estimated median price of a new home is around $460,000 in 2025, according to the National Association of Home Builders. While there is a growing supply of homes coming onto the market, the supply is not at the price point where it is most in demand, which is on the lower end. March saw a 10 percent annual jump in new listings, with active listings up roughly 28 percent year over year.

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.

Real estate market trends and update

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