A quick dive on the latest trends in the rental market, property insurance, retail sales, home equity, and mortgage refinancing -
The rental market is showing interesting dynamics across different segments:
- The median asking rent in the 50 largest metros was $1,753 in August 2024, marking the 13th consecutive month of rent declines.
- Despite the recent decline, rents are still $293 higher than in 2019.
- High-end single-family rentals saw rent increases in July 2024, while low-end rentals experienced price declines...a tale of two markets.
Property Insurance Update
The property insurance landscape is evolving:
- For the first time since 2017, the average U.S. property insurance rate decreased by 0.94% in Q2 compared to the previous year.
- The insurance industry continues to face challenges from extreme weather and inflation.
- Allstate Insurance received approval to raise some insurance premiums by up to 34% in California, but the hike includes discounts for homeowners who take steps to reduce wildfire risks.
Retail Sales and Consumer Spending
Recent data shows resilience in consumer spending:
- U.S. retail sales rose by 0.1% in August, reaching $710.8 billion, despite expectations of a decline.
- Year-over-year retail sales grew by 2.1%.
- Online sales surged by 1.4%, while health and personal care outlets saw a 0.7% rise.
Interesting fact:?In the last three recessions, consumption never declined during the economic downturn.
Home Equity and Mortgage Trends
Homeowners are seeing positive trends in equity:
- U.S. homeowners with mortgages experienced an 8.0% year-over-year increase in home equity, representing a collective gain of $1.3 trillion.
- The average increase per borrower was $25,000 since the second quarter of 2023.
- The number of homes in negative equity decreased by 15% year-over-year.
Climbing equity has eased overall leverage in the market. Home foreclosures can destabilize home prices, while fewer foreclosures can boost buyer confidence.
Refinancing Opportunities
As interest rates evolve, refinancing opportunities may arise:
- Over 80% of mortgage holders currently have rates below 5%.
- If 30-year fixed mortgage rates fall below 5%, we may see a surge in refinancing activity.
- Homeowners with expiring adjustable-rate mortgages (ARMs) may want to consider locking in longer-term rates as the 30-year fixed rate mortgage trends towards 6%.
- A new ordinance in Santa Cruz County will permit home kitchens for commercial use, opening up opportunities for home-based food businesses.? This ordinance is already in effect in Monterey County, and it was made possible by CA AB 626.
