Stocks rise after Greek default ends in a deal and second quarter U.S. corporate profits are released – Nasdaq at record high – A deal was reached which will keep Greece in the Euro Zone. Greece agreed to raise taxes and the retirement age in exchange for more loans from the European Union, ending the crisis for now. Second quarter profits from U.S. Companies were released, showing that profits were higher than expected. This was just another sign that the economy is continuing to grow. The Dow Jones Industrial Average closed the week at 18,086.45, well above last week’s close of 17,760.41. The S&P 500 closed the week at 2,126.64, up from last week’s close of 2,076.62. The Nasdaq closed Friday at 5,210.14, an all-time high, up from last week’s close of 4,997.70.
Treasury Bond yields drop a little this week – Fed Chairperson, Jennet Yellen testified in front of congress this week. Her remarks included that, while she was going to raise the benchmark Discount Rate from the near 0% it has been since 2008 later this year, that any rise would be slight, and that further raises would be very moderate. Canada also lowered their benchmark rate as the country has slipped into a recession. Yellen’s testimony and Canada’s move seemed to calm investors’ fears of the first fed rate hike since 2006, which caused bond rates to drop. The 10 year Treasury bond yieldclosed the week at 2.34%, down from last week’s 2.42%. The 30 year treasury bond yield closed Friday at 3.08%, down from 3.20% last week.
Mortgage rates unchanged this week – The 30 year fixed rates ended the week around 4.10% for loans up to $417,000, and around 4.25% for loans over $417,000. The 15 year fixed rate loans are about 3.375% for loans up to $417,000, higher loan amounts have rates that are around 3.50%. 5 Year-ARM rate is around 3.00% and 1 Year-ARM mortgages are around 2.75%.
California adds 22,900 jobs in June – The Employment Development Department reported that employers added 22,900 non-farm jobs in June. California’s unemployment rate dropped to 6.3% in June from 6.4% in May. The unemployment rate was 7.5% last June. Although the state’s unemployment rate was 4.8% before the recession in 2006, California, the world’s eighth largest economy’s job growth has expanded 13.5% since the recession ended. U.S. job growth rose 9.4% since the end of the recession. The national unemployment rate is currently 5.3%. Unfortunately, California lost a higher percentage of jobs than the nation during the recession, but the state is on the right track adding jobs at a higher rate than the nation as a whole.
Housing starts continue to rise – The Commerce Department reported that housing starts in June rose 9.8%. they also reported a surge in multifamily construction which was up 28.6 %. This accounted for the majority of the 9.8% overall rise in housing starts.
Home prices continue to rise – Core Logic reported that the median price of a single family home in California rose 3% in June to $417,000. This represents a 7% rise in the median price from last June. The median price is the point at which ½ the homes sell for more and ½ the homes sell for less. It’s really not an indication of any particular home or neighborhood, but it is the only official measure of home price comparisons. It is a good indication of trends. We have seen the higher priced markets have stronger price gains, so our markets have prices rising at a greater rate than markets at the price level of the median price. The California Association of Realtors reported that ( average price, a measurement that is not commonly used) home values were up 2.2% in June from May and 10.1% from June 2014. The average price in California was $634,190, according to the CAR.
The number of existing home sales continue to gain strength – Core Logic reported that same month, year over year home sales rose in June for the 4th straight month. Statewide an estimated 46,095 resale homes changed hands which represents an increase of 10.8% from the number of homes sold in May and a 16.8% increase from June 2014. This rise in sales was despite a tight supply of inventory. The California Association of Realtors reported that home inventory levels had dropped to a 3.7 month supply in June from a 4 month supply in May. A 7 month supply is considered a normal market. Homes are hitting the market in higher numbers than a year ago, but many are selling quickly, which has not allowed the unsold numbers to increase.
Have a nice weekend!
If you’d like more information on the San Fernando Valley or Los Angeles, or to have help looking for your next home, please feel free to reach out! I’m happy to help, no obligation.