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Financial market in turmoil, is the house market affected?

Email: myhome@zengrealestate.com

March 17, 2023

Finally, spring has arrived after waiting and waiting. Winter in Southern California can be easily ignored by friends from places with snow. This year, there has been a lot of rain in California. Although it has caused some problems, it has helped many areas in California escape from the continuous drought of the past three years. Spring in Southern California is absolutely beautiful. There is lush greenery everywhere, the temperature is just right, not too cold or too hot, and the air is neither dry nor humid. Snow-capped mountains and palm trees are just a stone's throw away. Is there a better place than this?

The California real estate market cooled off early last winter, and the Federal Reserve hiked interest rates repeatedly. The housing prices in California are considered high compared to other places in the US, and the market started to experience a decline. Buyers stayed at home to avoid the chilly weather.

However, the balanced economic structure and mild climate of the coastal areas in Southern California have shown more stability during the ups and downs of the housing market. Perhaps people here have become accustomed to comfort, as there is not such a strong fear of losing out when the market is booming, nor is there obvious anxiety when the market is declining. From Christmas, the real estate market in Orange County and San Diego has shown signs of warming up again.

The data above showed that a house can be sold in about a month now. Last November, it took an average of four months to sell a house. During the hottest period last year, it still took an average of more than three weeks to sell a house. This roller coaster is moving a bit too fast.

However, the situation has become unpredictable again in the last two to three weeks. First, the inflation rate suddenly rose, and then the unemployment rate remained at its highest level in forty to fifty years. Investors became anxious and decided to charge higher interest rates to American who borrowed money to buy homes. Although the chairman of the Federal Reserve was criticized in Congress, he remains resolute and determined to raise interest rates. However, this seems to have scared off more sellers. There should be many people selling their houses during the peak season, but now the number of houses for sale is extremely low. However, there are always those who are in need of housing, and buyers have become active again after taking a break for two weeks. This week's consumer price index seems to have dropped a bit, but investors are still uncertain whether the interest rate will be raised, and if so, by how much (0.25% or 0.5%).

The situation in the venture capital sector is not optimistic. Whether the run on small and medium-sized banks such as SVB is an isolated panic or just the beginning remains to be seen. How many financial institutions have poor risk management will be revealed later. It is unclear whether ESG investments will be the next flashpoint. There are signs that more people are entering the labor market, which may alleviate the difficulty of hiring workers in the labor market, but many investors and economists still believe that raising interest rates is necessary. At least the government wants to continue printing money, and half of the money distributed during the epidemic has not yet been spent, so if caution is not exercised, inflation may rebound.

Once the Fed Chairman was asked how he relieves work pressure in his daily life, and Powell awkwardly smiled and said that he tries to exercise more and play some musical instruments. It seems that he will have to do more exercise to reduce stress because the road ahead is difficult.

We will continue to keep track of market trends. If you have any questions, feel free to contact me anytime. Our goal is to provide satisfactory buying and selling experiences for our clients. If you have any friends who are looking to buy, sell or rent, please don't hesitate to recommend us to them. ❤️

Phone: (714) 902-3135

Email: myhome@zengrealestate.com