Giving Credit Where It's Due

Below we will take a quick look at?several topics from mortgage trends and housing inventory to inflation and economic conditions. Here's a quick overview of what you'll find:

• Mortgage Trends:?A focus on credit scores and their impact on mortgage originations.
• Housing Inventory and Sales:?Current statistics on home sales and inventory levels.
• Economic Indicators:?Updates on inflation, interest rates, and the national budget deficit.
• California's Job Market:?Competing views on job growth trends in the state.
• Home Equity Insights:?A look at homeowner equity and its implications.

Mortgage Trends

Recent data indicates a tightening in mortgage originations, with very few loans being issued to borrowers with credit scores below 660. Most new mortgages are going to those with scores above 760, underscoring the solid underwriting standards that differentiate the current housing market from the 2007/08 bubble.

Housing Inventory and Sales

• California Home Sales:?October saw a 4.7% increase in single-family home sales compared to September, marking a 9.5% rise from the previous year. This growth is partly due to a low sales base in 2023.
• National Inventory Trends:?Active listings in October were down 21% from pre-pandemic levels in 2019, although some markets have exceeded these levels. There are now 30 renters for every home available for sale in the U.S., highlighting the ongoing inventory shortage.

Economic Indicators

• Inflation Rates:?The annual inflation rate rose to 2.6% in October, with core inflation steady at 3.3%. Shelter costs continue to drive inflation, despite broader price stability.
• Budget Deficit:?The U.S. budget deficit surged to $257 Billion in October, up from $67 Billion a year ago, driven by increased spending on social programs and military expenses. The federal government has spent $1.83 Trillion more than it collected in 2024, which is the largest deficit outside of the COVID-19 pandemic. Increased government spending continues to drive inflation.
• Interest Rates:?Despite Federal Reserve rate cuts, mortgage rates have risen.? We are experiencing higher Treasury yields and bond prices are being driven down.

California's Job Market

California's job market presents mixed signals. While it was recently reported that the state creates nearly one in five new U.S. jobs, there are also reports of much of this growth being attributed to government positions.?

Home Equity Insights

As of Q3 2024, U.S. homeowners hold $17.2 trillion in equity, with $11.2 trillion considered 'tappable.' Despite recent increases in equity withdrawals, they remain below historical averages. The average homeowner with a mortgage has $319K in equity, with $207K tappable.

Wait to Buy?!

The year following 10 of the past 11 elections have produced both home price increases and transaction volume increases.