Welcome to my May newsletter, bringing you new insights, mortgage rate updates, and key economic developments impacting the Los Angeles housing market.
Interest Rates
Benchmark Interest Rates & Fed Outlook
Despite ongoing economic uncertainty, including a shrinking GDP in Q1, the labor market’s resilience and moderating inflation expectations have led most analysts to expect the Fed will keep rates unchanged at its May 6-7 meeting. Markets anticipate a possible rate cut later in the summer if economic data softens further, but as I said last month, the Fed appears content to wait and see.
Mortgage Rate Recap & May Expectations
Mortgage rates have edged down slightly in recent weeks. This marks the second consecutive week of modest declines, reflecting some easing in market volatility. I believe rates for traditional loan products will remain in the 6.4%-6.6% range through May, with only minor week-to-week fluctuations expected unless there are major surprises from the Fed or in upcoming economic data. However, Jumbo loans are firmly entrenched in the mid-5’s, which will help our local housing market.
Here’s a snapshot of current rates on our top loan products:
• 5.425% on 7YR jumbo ARMs up to $20M, with verified income documentation and banking relationship.
• 5.500% on 10YR jumbo ARMs up to $10M, with verified income documentation, no banking relationship required.
• Bank statement loan rates vary from the mid-6% to low 7% range, depending on loan-to-value (LTV) ratios and creditworthiness.
Employment Reports
The April jobs report showed the U.S. labor market remains resilient despite mounting economic headwinds. Employers added 177,000 jobs in April, surpassing analyst expectations of 135,000.
The unemployment rate held steady at 4.2%. Average hourly earnings increased by 0.2% month-over-month and 3.8% year-over-year, consistent with the Federal Reserve’s inflation target. While layoffs have begun to rise in some sectors, especially federal government jobs, due to cost-cutting initiatives—overall jobless claims remain historically low.
Local Activity & Recent Transactions
Local housing activity is a mixed bag. For example, communities like Santa Monica and Brentwood that are experiencing a high influx of buyers from Pacific Palisades are seeing single-family homes sell much faster than other Westside areas. Here’s a quick comparison.
Beverly Hills
• Average Sold Price(Single-Family Home): $8,200,000 (up approximately 12% year-over-year)
• Average Days on Market: 112
West Hollywood
• Average Sold Price (Single-Family Home): $2,170,000 (up about 9% year-over-year)
• Average Days on Market: 123
Santa Monica
• Average Sold Price (Single-Family Home): $4,200,000 (down 5% year-over-year)
• Average Days on Market: 19
Brentwood
• Average Sold Price (Single-Family Home): $6,200,000 (up 62% year-over-year)
• Average Days on Market: 40
Recent Closed Loans
Here are a few recent deals I have closed using my network of institutional and private lenders to get the deal over the finish line.
Investment Property Purchase | Beverly Hills | $4.8M
75% LTV financing
Highly leveraged borrower
6.90% interest rate | 7.02% APR
New Home Purchase | Montecito | $6.8M
80% LTV Financing
5.75% interest rate | 5.87% APR
New Home Purchase | Santa Barbara | $7.3M
80% LTV Financing
10YR ARM
5.875% interest rate | 5.995% APR
Full income documentation
Construction Loan | Ojai | $5M
7YR ARM
5.5% interest rate | 5.62% APR
Full income documentation
New Home Purchase | Rancho Palos Verdes | $3.8M
80% loan asset depletion
No bank statements or tax returns
6.875% interest rate | 6.95% APR
National Housing & Economic Reports to Monitor in May:
May 7 – Fed Interest Rate Decision
May 19 – Building Permits and Housing Starts
May 22 – Existing Home Sales Data
May 28 – New Home Sales Report
May 29 – Pending Home Sales Statistics
The market always presents both challenges and opportunities, and I’m committed to helping you make informed decisions every step of the way. If you’re ready to take the next step toward your real estate goals, let’s connect. I’m confident that with the right strategy, we can achieve your desired outcome.
Sincerely,
Mark Cohen