Stock Markets
Investor fears and the move out of stocks and into less risky assets, like treasury bonds, are putting downward pressure on mortgage interest rates–they currently sit at 3-year lows.  Companies on the stock markets continue to release additional information about the impact that the Coronavirus is having on their supply chains in China and other foreign countries.

Mortgage Interest Rates
When I inquired with a lender about what the new 30-year fixed would be given the drop in treasury bond yields, he surmised 3.125% for a 30 year fixed purchase.  A 10/1 ARM would be even less. The chances that rates decrease further are insignificant while the chances that rates could bounce back up above 3.5% are greater.  This is a good time to purchase a new home before the buyers out there realize how much more buying power they have and bid up properties so you can imagine what kind of benefit this offers Sellers who are receiving multiple offers and whose homes are selling way above asking price.

Mortgage interest rates might dip a little lower especially if intermediate stock market volatility returns. It is 5:20AM here in Los Angeles and I’ve watched CNBC report that the Dow Jones Stock Market (DOW) is going to open at 6AM down sharply.  An hour ago, DOW futures were down 400 and now they are down 700.

Real Estate Opportunities
Diversifying into real estate may not be a bad idea especially given the stage of things and there are still a lot of good deals to be had out there when you know what makes sense in this market.

I am happy to discuss those, and a strategic approach to buying or selling real estate, or how to successfully pull off a move to a better home without significant risk.  Feel free to call or text me at 310-383-3623.

CALIFORNIA HOMES SALES REPORT
*January 2020*
The California Association of Realtors reported that:

• Existing single-family home sales totaled 396,550 in January on a seasonally adjusted annualized rate. That marked a 10.3% increase from the number of homes sold last January. It should be noted that January 2019 marked the fewest sales in a month in over a decade. The number of sales has rebounded over the last several months.
• The statewide median price was $575,160, down 6.5% from December, and up 7.1% from last January. The median price is the point at which ½ the homes sell for more and ½ the homes sell for less. Perhaps there were an unusual number of sales at the lower end in January, as we have seen prices increasing rapidly due to multiple offers and low inventory.
• The unsold inventory index in January was 3.4 months, down from 4.6 months in January 2019.

REGIONALLY
On a regional level the number of sales, median price, and supply of housing were as follows:

• Los Angeles County:
  • the number of sales increased by 16.7% from last January.
  • the median price paid for a home was $617,520, up 9.1% from January 2019.
  • there was a 3.2-month home supply, down from a 4.9-month supply one year ago.
• Orange County:
  • the number of homes sold increased by 22.1% from one year ago.
  • the median price paid for a home was $855,000, up 7.3% from last January.
  • there was a 3.4-month home supply, down from a 5.4-month supply one year ago.
• Ventura County:
  • the number of sales rose by 13.9% from January 2019.
  • the median price in Ventura County was $660,000, up 7.3% from January 2019
  • there was a 4.8-month supply of homes for sale, down from a 7.2 month supply last January.

STOCK MARKETS
*lost ground this week*
Stocks retreated this week after the number of new coronavirus cases increased, fueling fears of a global economic slowdown. China, the number one exporter of products and the number two economy, has entire regions where people are quarantined in their homes. They cannot go to work or shop. It is widely believed that China’s moves to add stimulus to its economy will help. However, the economic impact to China will still spill over to the rest of the world.

Investors in the U.S. feel safe with the economy so strong, allowing markets to stay quite solid. Major U.S. stock market indexes hit all-time highs just one week ago but dropped off those highs this week as analysts forecasted a softening in corporate profits in the next quarter due to the impact of the coronavirus.

BY THE NUMBERS

• The Dow Jones Industrial Average closed the week at 28,992.41, down 0.4% from 29,108.51 last week. It’s up 2.6% year to date.
• The S&P 500 closed the week at 3,327.75, down 1.6% from 3,380.16 last week. It’s up 3.0% year to date.
• The NASDAQ closed the week at 9,576.59, down 1.6% from 9,731.18 last week. It’s up 6.9% year to date.

US TREASURY BOND YIELDS
*We watch treasury bond yields because mortgage rates often follow bond yields.*

• The 10-year treasury bond closed the week yielding 1.46%, down from 1.59% last week.
• The 30-year treasury bond yield ended the week at 1.90%, down from 2.04% last week.

MORTGAGE RATES
*remain at lowest levels in 3 years–on Friday, rates were even lower than their averages for the week*
The Freddie Mac Primary Mortgage Survey released on February 20, 2020 reported mortgage rates for the most popular loan products as follows:

• The 30-year fixed mortgage rate average was 3.49%, almost unchanged from 3.47% last week.
• The 15-year fixed was 2.99%, almost unchanged from 2.97% last week.
• The 5-year ARM was 3.25%, down slightly from 3.28% last week.

*Expect next week’s rates to be about 1/8% lower if they remain at Friday’s levels.*

Thank you for reading and have a great week!

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