September Market + Economic Update 9/1/2022
As summer winds down, I wanted to take a breath and reflect.
Personally, I just returned from a life changing experience in the Middle East - Israel and Jordan. What a complex part of the world, with so much history, beauty and conflict.
From the beaches of Tel Aviv to the wind swept deserts of Wadi Rum, Jordan, this region has so much to offer. To anyone interested in a journey there, please reach out and I can send you my personal recommendations, from restaurants and guided excursions to yoga studios (it's interesting practicing in a different language). And for anyone planning a trip, I can connect you with some key people who know the region well!
State of the Market:
Our Cooling Market
Much like changing direction while operating an oil tanker, our current Los Angeles real estate market is taking some time to adjust; it's a slow burn. The raise in interest rates has driven down mortgage demand and yet a lack of inventory continues to compress the market.
Buyers are asking is it a good time to buy? My answer is simple: "It's never the wrong time to buy the right home, as long as the deal makes sense."
For first time home buyers who are considering getting their first property, I like to say "the best version of rent control is a 30 year fixed mortgage." 10 years from now, you'll be paying with devalued dollars, worth far less than they are today due to inflation. Property ownership is one of the best hedges to inflation.
It's incredibly difficult to time the market precisely. So in my opinion, it's not about timing the market, it's about Time In The Market. Over time, Los Angeles property has consistently appreciated and while prices are slowly coming down, the market is sure to rebound in the not too distant future.
Property ownership provides great tax advantages (while residing and at time of sale), a hedge against inflation, and an appreciating asset that offers great leverage.
Markets ebb and flow and historically, the Los Angeles real estate market is a top 5 real estate market globally year over year with high demand, a highly diversified economy and very high appreciation. Generally, when interest rates go up, prices go down. And we're seeing more regular price reductions from our Spring top of the market prices: about 1/3 of Westside listings have had price reductions of some percentage.
Hyper-locally, Santa Monica is the strongest seller's market, with prices leveling off.
If you are considering buying, whether as a primary residence or an income property, I would be happy to answer any questions you have. Call me today: 310-279-8259
I am grateful to have you all in my life and welcome the opportunity to serve you further. It is a pleasure to help you accomplish your real estate dreams and goals.
Namaste,
Adam
Westside Market Stats:
Message me if you have questions about your specific neighborhood.
September Market + Economic Update
Mark, the Founder of AllOneWealth, and I, are excited to provide an economic update with valuable information, industry insight, and professional guidance on the latest key trends.
Interested in learning more about markets, inflation, QE or how you can take advantage of current investment opportunities? Schedule a call with us.
Warmly,
Adam
National 30-year fixed mortgage rates go up to 5.74%
The current average 30-year fixed mortgage rate climbed 22 basis points from 5.52% to 5.74% on Thursday, Zillow announced.
The 30-year fixed mortgage rate on September 1, 2022 is up 30 basis points from the previous week's average rate of 5.44%.
Mark's Take on the State of the Economy:
It’s all anyone can talk about. So let’s continue to address it head on. As you’ll find in the commentary below, things are improving. But that doesn’t mean that Federal Reserve Chairman, Jerome Powell, will throw us a bone here.
Powell, right along, has done a great job of managing expectation. I personally have been critical of him. And even though I highly dislike the results of Powell’s speech at last week’s Federal Reserve Annual Policy Summit – the market selling off massively on Friday – I do agree with his stance and the way he’s managing investors and economist’s expectations. Now more than ever.
The trend for PCE and CPI is down – which is good. Sure, it’s not tremendous, but it’s headed in favorable direction and we can all rejoice in that. Friday’s selloff was a result of Powells ‘Hawkish’ sentiment – meaning, intent to lower inflation, tighten economic policy, raise unemployment, and influence economic slowdown. This sentiment, I believe, will lighten, as early as next month’s CPI numbers come in (likely lower than the previous month) and almost certainly by year’s end as we continue to see PCE, CPI and PCI number’s contract.
As always, I am an advocate for buying the dip and for buying companies that provide inherent and intrinsic value to our society. Time is the only culprit here – but the duration does seem to be getting shorter and shorter for market recovery.
All the best,
Mark
MARKET UPDATE
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Following Powell’s hawkish commentary from Jackson Hole on Friday market’s sold off heavily. The Nasdaq led the market lower, down -4.4% during the week, while the S&P 500 posted a -4.0% weekly loss and the Dow Jones Industrial Average finished down -4.2%. Developed International stocks struggled with a -3.1% pullback and Emerging Market equities outperformed during the week, up +0.3%.
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10-Year Treasury yields rose mid-week to just over 3.1%, but came down slightly to end the week just over 3.0%. High yield bonds were lower, with the iShares US High Yield ETF (ticker HYG) down -1.5%. High yield bond mutual funds and ETFs had their first outflow in over two months, with $4.72 billion going out during the weekly period ended August 24th.
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Oil prices rose mid-week, briefly rising to over $95 on Thursday. Prices dipped on Friday but still gained for the week, trading around $93 as of Friday afternoon. The Baker Hughes rig count rose by 3 this week, breaking a 3-week streak of declines.
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Compass is a real estate broker licensed by the State of California and abides by Equal Housing Opportunity laws. License Number 01991628. All material presented herein is intended for informational purposes only and is compiled from sources deemed reliable but has not been verified. Changes in price, condition, sale or withdrawal may be made without notice. No statement is made as to accuracy of any description. All measurements and square footage are approximate. If your property is currently listed for sale this is not a solicitation.