Welcome to the latest edition of the Orange County Real Estate Update. As February 2024 unfolds, the real estate landscape continues to be an exciting one, shaped by diverse economic forces both locally and globally.
At the Brad Feldman Group, we are dedicated to providing you with the most current insights and analysis to help you navigate these changing tides.
Whether you are planning to buy, sell, or simply stay informed, understanding these trends is key to making informed decisions in Orange County’s real estate market.
In January 2024, Californian consumer confidence reached a seven-month high, as revealed by the Conference Board's California consumer confidence index. This increase reflects a 4% rise from December, though it remains consistent with January 2023 levels and shows only a modest 1% increase compared to the 2022-23 average.
Significantly, the "present situation" component of the index, which assesses current economic conditions, achieved an 11-month peak, growing 8% from December and standing 5% higher than the 2022-23 average. This positive sentiment is attributed to declining inflation and interest rates, coupled with ongoing job growth in the state. However, there's a less optimistic view regarding the future, with the "expectations" segment of the index marking its lowest beginning to a year since 2019. This reflects concerns about a slight increase in unemployment (possible) and the continued unaffordability of California homes (very likely), not to mention global geopolitical risks.
Overall, while Californians have a reasonably positive outlook at the year's start, their enthusiasm is tempered, especially considering the potential challenges of an election year. Compared to the pre-pandemic period of 2018-19, overall consumer confidence is down by 8%, with present situation and expectations down by 9% and 6% respectively.
Meanwhile, the Federal Reserve is currently in a meeting of the FOMC (Federal Open Markets Committee). The big question there is, what will the Fed do with mortgage rates?
Rates have been stable for a few weeks, a welcome change after rates ticked up in early January from the seven-month lows seen in December 2023. Market volatility has been relatively low as investors await significant data and events, notably the Federal Reserve's policy announcement scheduled for tomorrow afternoon.
It is a common misconception that the Federal Reserve directly influences mortgage rates. In reality, the Fed sets the Fed Funds Rate, which impacts short-term financial obligations, while mortgage rates are tied to long-term obligations. Moreover, it is highly unlikely that the Fed will announce a rate hike or cut in the upcoming meeting. Any potential impact on mortgage rates will likely stem from the market's interpretation of comments about future policies, possibly during Fed Chair Powell's press conference.
Current expectations suggest no major shift in the Fed's stance, given the ongoing battle with inflation and the lack of sufficient justification for a rate cut, despite some positive economic indicators. Rather than waiting for rates to drop, we encourage clients to start exploring options now so that they are well-informed and comfortable with their decision when they are personally ready.
Finally, some far-flung news from abroad. The continuing debacle surrounding China’s Evergrande, the world's most indebted property developer, could have global repercussions if it collapses. A court in Hong Kong recently ordered the company’s winding up, exacerbating its financial woes. While this is not a concern for most US consumers, it’s an interesting one at the least.
Such a collapse could trigger a credit crunch in China's financial system, hindering the country's economic growth and potentially deterring foreign investment. (Perhaps fewer products will say ‘Made in China’?) Some experts believe the firm is close to collapse, while others assume the Chinese government will step in. Whatever happens, the US and global economy are now deeply intertwined with China, so it’s a story to keep an eye on.
This February 2024 brings a mixed bag of economic indicators and global events, each with its potential impact on the Orange County real estate market. From rising consumer confidence in California to the suspense around Fed policy decisions, and even the occasional foreign event, these factors collectively influence our local market in unseen ways.
As Orange County home buying and selling specialists, our team at the Brad Feldman Group is committed to guiding you successfully through the market to reach your long-term real estate goals. If you have a question or think you’re ready to make a move, get in touch! It’s our pleasure to assist you.