The abnormal scarcity — compounded by the region’s long-running underproduction of housing — emerged when homeowners chose not to sell and give up pandemic-era mortgage rates. The so-called seller strike helped pushed home values to new records, despite rising borrowing costs.

Now the inventory picture might be changing.

“It’s getting a little bit better,” said Eneida Contreras, a Compass real estate agent who specializes in the San Fernando, Santa Clarita and Antelope valleys.

In April, the number of homes listed for sale in most Southern California counties rose from the same month a year earlier, according to data from Zillow.

Los Angeles, Riverside, San Bernardino and Ventura counties turned positive for the first time since the first half of 2023, each recording an increase of at least 5%.

Orange was the only county to see a decline, while in San Diego, inventory has risen for two consecutive months and is 18% above what it was a year ago.

To be sure, the availability of homes remains at historically low levels. But as it rises, it opens the possibility that prospective buyers will have an easier time making the largest purchase of their lives.

Jordan Levine, chief economist with the California Assn. of Realtors, said more homes are coming onto the market because owners are increasingly accepting that the new normal is interest rates in the 6%-7% range.

As people get married, divorced and have children, the “benefit of the low rate starts to be outweighed by having a house that doesn’t work,” Levine said. “Ultimately, these are people’s homes, too, and they are not just straight-up investments.”

Levine said he expects inventory levels to increase and home prices to be lower than they would have been if inventory continued to shrink. However, he and other experts said home prices are unlikely to decline. That’s because though more owners are coming to terms with high rates, many will likely choose to keep their sub-4% mortgages — a phenomenon known as the lock-in effect.

Other factors are at play. The economy is growing, and while most Southern California households can’t afford to buy, there’s a sizable population of techies, Hollywood types and other white-collar workers who can funnel excess cash into large down payments that offset high mortgage rates.

“The current level of inventory rise — which is a little bit, but not a lot — is likely to slow price appreciation but not turn it negative,” said Mike Simonsen, founder of Altos Research, a real estate data firm.

The rise in inventory is providing opportunities for buyers with means, but the market is still tough.

Interest rates are above 7%, and even if home prices rise at a slower pace, they will set records.

In Los Angeles County, the average home price in April was $890,516, an increase of 1.4% from March and surpassing the previous record, set in June 2022.

The six-county Southern California region climbed above its 2022 average home price record in March. It set another all-time high last month, reaching $875,388.

If mortgage rates noticeably decline, the lock-in effect could lessen and bring more homes onto the market. Falling mortgage rates would also immediately make housing more affordable.

Whether falling rates provide much relief is another question. Lower borrowing costs may bring a flood of additional buyers who quickly gobble up new listings and supercharge price growth.

“Building more housing is really what is going to break that cycle,” said Nicole Bachaud, a senior economist with Zillow.

According to the latest forecast from the Mortgage Bankers Assn., rates will remain high but will drop to 6.4% by the end of 2024.

Carol Otero of Rodeo Realty is among the Los Angeles agents seeing an increase in inventory. She estimated that the number of homes for sale in some San Fernando Valley neighborhoods has at least doubled in the past few weeks.

Buyers are eager.

Last Friday, Otero listed a four-bedroom home in Northridge. She said she has received six offers, all above the $869,000 asking price.

The post Buying a home in Southern California? There are now more options appeared first on The Hemet & San Jacinto Chronicle.

We can get the national analysis out of the way: There was a higher than expected increase in the employment numbers (275,000) while the even higher initially released January numbers were revised downwards to more reasonable levels (229,000). Yes, the unemployment rate did increase from 3.7% to 3.9%, but that was due to healthy employment growth being outpaced by an even larger increase in the labor force.

Since then, the inflation numbers have also been published, and while they did not improve further and by the magnitude we’d hoped for, the U.S. economy continues to be on a path for a soft landing (reducing inflation rates to 2% without creating a recession).

This is important, because the Federal Reserve would be less likely to lower interest rates during summer if the job market was as hot as initially estimated and inflation remains sticky above the 2% target. The central bank left interest rates unchanged after its meeting last week, but indicated it is close to start lowering the interest rates as policy makers become confident that “it will be appropriate to dial back.” Chairman Jerome Powell said they were “not far from it.” As the UCLA Anderson Forecast put it in its most recent report, we are on a path to normalcy.

Now let us focus on our state and region. For the Riverside-San Bernardino-Ontario Metropolitan Statistical Area, some of the annual revisions were substantial. In the Inland Empire, the Logistics industry lost significantly more jobs (some 5,000 depending on which month you focus on) since last summer than originally assumed and shows a steeper downward trend. On the other hand, Education and Health Services has gained more jobs than previously thought, roughly 10,000 more and the numbers are trending upward, confirming it as the sector with the largest share of labor in the Inland Empire.

The headline news for the Inland Empire is that the unemployment rate jumped up by half percentage points, increasing significantly from 5.0% to 5.5%. Since the Inland Empire’s economy is often described as “first in, last out,” shall we take this as the first sign of the national economy tanking after all, resulting in a “hard landing” (decrease in inflation coinciding with a recession)?

The initially bleak picture is simply an artifact of the data, generated by regularly occurring seasonal patterns. Without getting too technical, we will try to convince you that you should look at seasonally adjusted data rather than the raw data from the EDD. While for some months the difference is negligible, in January it is particularly high, since there are layoffs every year due to the post-holiday season. It is not surprising that the largest raw data (non-seasonally adjusted) employment losses for the Inland Empire came in Retail Trade, Logistics, and Leisure and Hospitality. Filtering out these effects is important since they give a misleading picture of the underlying economy. Total employment reported did not go down 32,300 (which would represent an alarming 2%); instead, it went up by 4,850.

The increase in employment reported by households (+9,100) aligned with the increase in establishment employment (+4,850). Residency measured employment increased by more than what establishments reported. This is probably due to commuters, most of whom work in the coastal areas. The employment status of these commuters is reported by households in the region, not by establishments. This means that significant job growth among commuters could explain the difference for January.

Let us get more specific. Compared to the bleak picture painted by the raw establishment data (decreases of -8,200 in Retail Trade, -7,400 in Logistics, -6,500 in Professional and Business Services, and -3,700 in Leisure and Hospitality), the numbers we get after accounting for seasonal patterns are more positive. The biggest decrease was seen in Professional and Business Services (almost -1,200), at only roughly a fifth of what non-seasonally adjusted data indicated. For Retail Trade (-500), Logistics (+250), and Leisure and Hospitality (-700) numbers also look less worrisome. Bottom line: Do not make major decisions based on non-seasonally adjusted data.

Applying standard statistical techniques to remove seasonal regularities results in the (seasonally adjusted) unemployment rate actually falling by 0.1 percentage points from 5.7% to 5.6% in the Inland Empire.

The change came in the healthiest way possible: through a simultaneous increase in employment and labor force, the former outpacing the latter (+9,100 and +6,200, respectively). After six consecutive months of increases in the civilian unemployment rate, this is encouraging. The result holds despite the fact we only observed significant employment increases during three months in 2023.

The Inland Empire will need more time to recover from the very concerning decreases of 12,800 for the labor force and 13,600 for employment observed between November and December. Despite this, the Inland Empire continues to be the poster child of the economic recovery from the COVID-19 recession,. While we will continue to see some structural adjustment between the industries of the region, we are on a positive path as far as the economy is concerned.

The post Where is employment heading in the Inland Empire? appeared first on The Hemet & San Jacinto Chronicle.