The Weekly ™
By G. David Lapin On September 19 2023
Here's Your Roundup Of Recent Major News Affecting California Real Estate, Housing, And Mortgages
Will Home Prices be Affordable Again?
CALIFORNIA - The Fed has continually signaled it will not stop the rates hikes. However, we are coming into an heated election year and there is a lot of pressure built up to start lowering rates.
In the meantime, all eyes are on the Fed’s September 19-20 meeting where committee members will review the latest economic data to inform its monetary policy stance and consider whether they keep rates steady or raise them. So now we wait to see what type of "damage" the market can bear with these rate hikes and inflation.
Inventory would really need to increase to bring housing prices down substantially. Leveling off prices seems far more realistic coming off near peak levels. There will be micro areas that will have price damage. There is not a forecasted wave of foreclosures on the horizon for 2023. Affordable housing inventory coming online is very doubtful.
REAL ESTATE - Artificial intelligence brings demand to the San Francisco office market. San Francisco office demand in the first and second quarter of 2023 has jumped up. Job growth in tech with a heavy emphasis on AI has helped with office demand. Jobs are growing in San Francisco.
Recent hires have offset layoffs in 2022 and early 2023. San Francisco saw a 10.2% quarter over quarter growth yearly growth in tenant interest. Since March of this year, the Bay Area market has also seen an uptick of new prospective tenants seeking spaces larger than 50,000. AI has prompted a surge of newer ventures are mostly in the Bay area, and the uptick for office space is coming from those startups.
MORTGAGE - Jumbo servicing market largely increased in the second quarter of 2023. There are 30 top servicers who have reported a large increase of jumbo mortgages in the second quarter of 2023.
The servicers handled $1.49 trillion of jumbos as of the end of June up 11.8% from the end of March 2023. $50 billion of jumbo mortgages originated in the second quarter. Much of the increase can be tied to Chase’s acquisition of First Republic Bank. First Republic handled servicing on $102 billion of jumbos as of the end of march, shortly before its demise prior to the second quarter, wells had handled the most jumbo servicing overall volume since the end of 2015.