TL;DR: Southern California Real Estate Market Snapshot – February 22, 2024

• Stock Markets at Record Highs: The Dow and S&P 500 hit new records, driven by tech stocks, indicating economic resilience and investor optimism.
• Rising Mortgage Rates: Mortgage rates increased, with the 30-year fixed rate reaching 6.90%, dampening buyer enthusiasm as mortgage applications and pending home sales declined.
• New Listings on the Rise: A 10% year-over-year increase in new listings as sellers aim to capitalize on high sale prices, despite a slowdown in buyer activity due to high mortgage rates.
• Market Dynamics: High mortgage rates are keeping buyers cautious, with a preference for move-in-ready homes and an increasing trend of buyers seeking concessions from sellers.
• Regional Highlights: Significant price increases in metros like San Diego and Anaheim, with varied market recovery signs across different regions.

The Southern California real estate market is navigating through high mortgage rates and economic resilience, with new listings increasing as spring approaches but buyer activity tempered by the cost of borrowing.

Southern California Real Estate Market Weekly Update: February 22, 2024

As we delve deeper into 2024, the Southern California real estate market is witnessing significant shifts influenced by broader economic trends. This week’s update integrates the latest economic indicators with emerging market dynamics as spring approaches:

Economic Indicators and Market Trends:

Stock Market Surge:

• The Dow Jones Industrial Average and the S&P 500 reached record highs this week, propelled by a robust performance in tech stocks. This surge reflects the economy’s resilience, surprising investors with continued expansion.
• Dow Jones: Closed at 39,151.53, up 1.4% from the previous week, marking a 3.9% increase year-to-date.
• S&P 500: Ended at 5,088.80, a 1.7% rise from last week, showing a 6.7% gain since the year’s start.
• Nasdaq: Closed at 15,996.82, up 1.4% from last week, with a 6.6% increase year-to-date.

Bond Yields and Mortgage Rates:

• U.S. Treasury Bond Yields: The 10-year treasury bond yield slightly decreased to 4.26% from 4.30%, and the 30-year bond yield dropped to 4.37% from 4.45%.
• Mortgage Rates: The 30-year fixed mortgage rate climbed to 6.90% from 6.77%, and the 15-year fixed rate increased to 6.29% from 6.12%, as reported by Freddie Mac.

Housing Market Dynamics:

• New Listings Increase: There was a 10% year-over-year increase in new listings for the four weeks ending February 18, signaling more sellers entering the market.
• Mortgage Applications Decline: Mortgage-purchase applications fell by 10% from the previous week, with daily average mortgage rates exceeding 7%, deterring potential buyers.
• Pending Home Sales: Saw a 7% year-over-year decrease, reflecting the impact of high mortgage rates on buyer activity.

Buyer and Seller Insights:

• Buyers are focusing on move-in-ready homes to avoid additional expenses on top of high monthly payments. Sellers, in response, are increasingly open to offering concessions, such as mortgage-rate buydowns or covering closing costs, to attract buyers in a challenging market.

Metro-Level Market Highlights:

• Price Increases: Cities like San Diego and Anaheim witnessed significant year-over-year price increases, indicating localized hotspots of market strength.
• Market Activity: Despite a general slowdown, certain metros showed remarkable increases in new listings, suggesting varying degrees of market recovery across regions.

Implications for Southern California

The juxtaposition of record-high stock market performance against rising mortgage rates and their subsequent impact on the real estate market presents a complex picture for Southern California. The increase in new listings is a positive sign for buyers looking for more options, yet the high mortgage rates remain a significant barrier to entry for many.

The market’s resilience, mirrored in the economic indicators, suggests potential for sustained activity, albeit shaped by cautious buyer behavior and strategic seller concessions. As we move closer to the traditionally active spring season, these dynamics will play a crucial role in shaping the market’s trajectory.

Looking Ahead

The Southern California real estate market is at a pivotal juncture, with economic resilience on one side and mortgage rate challenges on the other. Stakeholders will need to navigate these waters carefully, keeping a close eye on economic indicators and market trends. Flexibility, informed decision-making, and strategic adjustments will be key to capitalizing on opportunities in the weeks ahead.