Blog

As spring heralds new beginnings, so does the housing market witness its usual inventory dance. But this season, there’s more to the waltz than meets the eye. Dive into this week’s bulletin as we unveil the latest in mortgage-backed securities, global yields, and the ever-evolving real estate landscape. And, as always, we add a sprinkle of economic humor to keep the numbers light.

Understanding the Global Rising Yield Phenomenon

While we might’ve woken up on the wrong side of the bed with mortgage-backed securities down 30 basis points, the global story reveals a different tune. It’s a universal crescendo from Japan’s 10-year equivalents touching .88% to Germany’s 10-year bond nearing 3%. But every cloud has a silver lining. The rising yields can become a magnet for bond investors, setting the stage for potentially declining yields.

Unpacking the Domestic Front: Auto Delinquencies and Inventory Build

Back home, Fitch’s latest report highlights subprime borrowers’ auto delinquencies, hitting a record 6.1%. An early sign of cracks in the economic facade? Meanwhile, as per Redfin, February saw a 1.4% month-over-month rise in new listings. The media might have a heyday with these numbers, predicting an impending doom. Still, seasoned investors know that with more inventory come more sales opportunities.

The Week Ahead: Key Numbers and a Not-to-Miss Webinar

This week’s eyes are on the GDP, new home sales, pending home sales, and the pièce de résistance, Friday’s PCE number. The inflation saga continues! 

While the ebb and flow of the mortgage market are par for the course, the global rising yield story offers intriguing insights for the discerning investor. From foreign shores to our home turf, there’s much to glean and strategize. Keep an eagle eye on the 5% yield level, and remember, after the rain, there’s always a rainbow. Here’s to smarter investments and a prosperous future!

Stay savvy, California Platinum Loans readers. Until next time!

Are you a single adult, part of an unmarried couple, or do you have a blended or multi-generational family? You could be wondering if it’s worth it to buy a home in Los Angeles. There are advantages and disadvantages to home ownership. Every situation is unique, but there are a few common considerations that can help you to decide whether you want to undertake a home buying journey now, wait a few months, or postpone it.

Renting Vs. Buying

It’s hard to overlook the fact that as long as you pay rent, you are paying money out of your pocket to someone else who gets to spend or invest that cash. When you buy a home, you will begin to build equity which you can leverage for other purposes. According to Money.com, between 2012 and 2022, the average value of a home in the U.S. increased by $190,000, a gain of nearly $20,000 per year.

All levels of income and all types of households gained wealth through home ownership between 2012 and 2022, according to the National Association of Realtors (NAR). 

The NAR study also discovered that the average homeowner’s net worth is 40 times higher than the net worth of the average renter. If you’re looking to buy a home as a non-traditional buyer, these averages apply to you as well.

Breaking Even On Your Investment

While buying a home isn’t exclusively a money-making investment, every time you make a mortgage payment you will build equity in the property. However, when all of your costs are considered, including closing costs and down payment, most home buyers need to stay in the home for a while before they break even. 

Bankrate reports that “as a general rule of thumb, the longer you stay in your home, the better off you fare, financially speaking.” Most real estate pros say that after 5 years, the majority of home owners have built up enough equity that they can sell or make other decisions about their home, including home equity loans or lines of credit.

Reliable Monthly Expenses Vs. Variable Rent

If you have a mortgage payment, this amount will only change because of property taxes and, potentially, homeowners’ insurance premiums. These changes are likely to be much lower than rent price increases. Los Angeles County restricts maximum rent increases to no more than 5% a year plus the current consumer price index increase. This sounds good until you realize that landlords can legally increase the rent up to 8.8% per year in 2023.

Buying a home as a non-traditional buyer, including singles, multi-generational families, blended families, partners and unmarried couples, can be complex, but fortunately, pros like California Platinum Loans can guide you through the process, explain the pluses and minuses, and help you to make the choices that are best for you today and moving forward.

Sources

Cook, Leslie. “Here’s Who Benefited the Most From Homeownership Over the Past 10 Years,” Money.com, 20 April 2023, url: https://money.com/build-wealth-owning-a-home-study/

County of Los Angeles. “Rent Increases” url: https://dcba.lacounty.gov/portfolio/rent-increases/

Hunt, Meaghan. “How long should you live in a house before selling?” Bankrate, 21 October 2022, url: https://www.bankrate.com/real-estate/how-long-should-you-live-in-your-home-before-selling/

McMillin, David. “Is buying a house worth it?” Bankrate, 12 June 2023, url: https://www.bankrate.com/real-estate/buying-a-house-worth-it/