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Home prices reached their highest level in the history of the S&P CoreLogic Case-Shiller U.S. National Home Price Index. The mark came in spite of rising mortgage interest rates that have slowed activity.

The data, released by S&P on Tuesday, determined the average price over a three-month period from April to June, showing that prices nationally were 5.4% higher compared to the same end-month the previous year. 

While it may be a record-high for home prices, the annual gain was lower than the 5.9% in May.

The average home prices in the 10-city composite increased by 7.4% annually. The figure was down from the previous month's 7.8%. On the other hand, in a 20-city composite, the rate was 6.5% higher year over year, which was actually down from May's increase of 6.9%, CNBC reported. 

"The upward pressure on home prices is making this the most unaffordable housing market in history," said Bright MLS chief economist Lisa Sturtevant.

"First-time and moderate-income home buyers, in particular, increasingly are being left out of the housing market," she said in NY Post.

In a release, Brian Luke, head of commodities, real and digital assets at S&P Dow Jones Indices, stated that the gap between housing and inflation is larger.

"While both housing and inflation have slowed, the gap between the two is larger than historical norms, with our National Index averaging 2.8% more than the Consumer Price Index," said Luke.

"That is a full percentage point above the 50-year average. Before accounting for inflation, home prices have risen over 1,100% since 1974, but have slightly more than doubled (111%) after accounting for inflation," he added further.

Out of the 20 cities, it was New York that showed the highest annual gain. 

Prices in NY rose up to 9% in June. Next was San Diego with an annual increase of 8.7%. Next to San Diego was Las Vegas, which showed 8.5%.

Home values were also shown by price tier in the most recent report. By perusing the large markets over the past five years, it discovered that 75% of the markets showed that low-price tiers rise faster.

"New York's low tier has the largest five-year out-performance, rising nearly 20% above the overall New York region," Luke said in the release.

 Current Mortgage Rates

• 30-Year Fixed Mortgage Rate: Dropped to 6.06% from 6.37% last week.
• 20-Year Fixed Mortgage Rate: Fell to 5.70%, down 41 basis points.
• 15-Year Fixed Mortgage Rate: Reduced to 5.34%, a 32-basis-point drop from last week.
• 5/1 Adjustable-Rate Mortgage (ARM): Decreased to 6.18%, a drop of 17 bps.
• 7/1 ARM: Now at 6.15%, down 27 bps.
• 30-Year FHA Loan: Slightly decreased to 5.41%, down 9 basis points.
• 30-Year VA Loan: Reduced to 5.28%.
• 15-Year VA Loan: Dropped to 4.60%, a significant decline of 60 basis points.
• 5/1 VA ARM: Now 5.79%, a 19-bps reduction.

• Federal Reserve Expectations: The Federal Reserve is anticipated to cut the federal funds rate in its September meeting. There is speculation that the Fed may cut sooner.
• Advice on Timing: For those aiming for the lowest possible mortgage rates, it might be wise to wait until late 2024. However, with current rates already showing substantial decreases, it could be a good time to buy a home now. Waiting might lead to increased home prices and competition.

• Impact of Rates on Buying: Lower mortgage rates now could lead to increased home prices and competition later if the market heats up. Buyers might find that purchasing sooner rather than later could be  ideal.
• Calculators and Tools: Using mortgage calculators can help in understanding how different rates and terms will affect monthly payments, providing a clearer picture.

• Rate Locking: It's challenging to predict the optimal time for locking in a mortgage rate as rates fluctuate daily. Locking in a rate early can help in budgeting and financial planning.
• Qualifying for Lower Rates: To secure the lowest mortgage rates, it’s beneficial to have a strong credit score, a significant down payment, and a low debt-to-income ratio.

In summary, the current decrease in mortgage rates offers an opportunity for both new homebuyers and those looking to refinance. While future rate cuts might be possible, the current rates are competitive and may warrant action sooner rather than later.

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By Zara Barker | June 12, 2024 | Fox 5 San Diego

SAN DIEGO (FOX 5/KUSI) — Concern is growing online over a map of short-term rentals in San Diego and how it could be impacting the city’s real estate market amid a housing crisis.

The post, originally posted to Reddit, has sparked questions over its impact to the housing crisis in America’s Finest City.

City of San Diego data shows there’s 8,651 city-licensed short-term rentals in the city, with 490,219 households in the city at the last count, according to city data.

That means about 1.7% of San Diego houses are short-term rentals.

The city limits the number of short-term rentals to 1% of the city’s total housing and 30% in Mission Beach (which is likely accounting for the extra .7% in the city’s total number of rentals).

Some residents still think the limit is too high and taking away from residents needing to buy or rent.

“There might be a little too many Airbnbs,” San Diego resident Ilana Melkonian said.

However, since San Diego attracts a lot of visitors, it’s a double-edged sword.

“I would love to buy something and also buy one as an Airbnb, so it’s a love-hate with the situation,” Melkonian added.

“Airbnb’s, they’re here, they’re going to stay,” Real Estate Expert, No Bull Agent Ken Kaplan said.

On the original post, one Reddit user commented, “So this is why I can’t find affordable rental housing for my family.”

“How expensive?” tracks measurements of California’s totally unaffordable housing market.

The pain: California apartment dwellers not only face sky-high rents, they don’t get much space for the dollars they pay to landlords.

The source: My trusty spreadsheet reviewed a RentCafe study of average rents and apartment sizes by state as of March 2024, tracking what kind of bang for the buck California tenants get.

The pinch

California rents in early 2024 equaled $2.96 per square foot, the fifth-highest expense among the states and 55% above the $1.91 per square foot charged nationally.

And where is this cost yardstick higher? Washington, D.C. is tops at $3.20 per square foot, followed by New York at $3.18, Massachusetts at $3.06 and Hawaii at $2.98.

Now, if you’re seeking a space bargain, head to North Dakota for $1.08 per square foot. Next is Oklahoma at $1.17, Arkansas at $1.19, South Dakota at $1.23 and Mississippi at $1.26.

Oh, and California’s big economic rivals? Texas is 29th highest at $1.64 and Florida No. 19 at $2.

Pressure points

How did we get to this cost absurdity? Well, it’s a painful mix of tiny units at big prices in California.

Let’s start with what space a renter gets.

California’s average apartment size is the 11th-smallest nationally at 851 square feet, which is 5% below the 899 square feet for the U.S.

It’s the Inland Empire with its fast-growing economy. It could not keep pace with the rising cost of being a tenant by the widest margin in California. But how did San Diego fare?

Orange County Register article by Jonathan Lansner

May 12, 2024

The pain: Rent hikes outpaced pay raises in 44 of 50 big U.S. metropolitan areas during the past four years — and in four of six metros from California in this study.

The source: My trusty spreadsheet reviewed Zillow’s analysis of the growth in rents vs. increases in average hourly earnings between 2019 and 2023 across the nation.

The pandemic economy was not kind to renters. Nationally, rents jumped 30.4 percent over four years vs. pay hikes of 20.2 percent — a 10.2 percentage-point cost shortfall for the typical tenant.

Next, consider the Inland Empire’s fast-growing economy. It could not keep pace with the rising cost of being a tenant by the widest margin in California.

In the past four years, rents in Riverside and San Bernardino counties jumped by 41.4 percent (the fourth-largest bump among the 50 metros). Meanwhile, wages in the Inland Empire rose by 23.3 percent (No. 7 nationally).

That meant the Inland Empire’s typical paycheck trailed the monthly rent check by 18.1 percentage points — the 16th worst gap among the 50.

The worst shortfall, nationally speaking? Tampa! Its 50 percent rent hike (No. 2 of the 50) badly trailed 15.3 percent raises (No. 27) — for a 34.7-point gap.

Planning commissioners said Hillcrest and University City are ideal for high-rise housing and dense development because they’re already something like a second downtown for San Diego.

The San Diego Union-Tribune article by David Garrick

May 30, 2024

SAN DIEGO —  Hillcrest and University City got one step closer to becoming more urban and heavily populated Thursday when the San Diego Planning Commission approved aggressive new growth blueprints for both neighborhoods.

The new blueprints, which aim to double the populations of both neighborhoods within 30 years, now move to the City Council’s housing committee in mid-June and then the full council for final approval in July.

The Planning Commission’s unanimous vote came despite ardent opposition from many residents in both neighborhoods. They raised concerns about insufficient parks, gentrification, congestion and evacuation routes.

Planning commissioners said the two neighborhoods are ideal for high-rise housing and dense development because they are already job centers in appealing locations with strong demand for housing.

They characterized Hillcrest and University City as the two city neighborhoods that could best be described as a second downtown for San Diego.

“The university neighborhood’s always been our second downtown,” said Commissioner Matthew Boomhower. 

“More housing and employment options here make so much sense.”

Last year developers completed 39% more new rental homes than in 2022

The Wall Street Journal article by Will Parker

May 14, 2024

Developers are building new houses for rent at an unprecedented rate, aiming to capitalize on the steep home prices and higher mortgage rates that are forcing many Americans to keep renting. 

In 2023, 93,000 new single-family homes for rent were completed, according to estimates from housing consulting firm John Burns Research and Consulting.

That was 39% more rental homes than in 2022, and the most in any year ever. The breakneck pace is poised to continue this year before easing by 2025.

New rental homes come in all shapes and sizes, from one-bedroom cottages to five-bedroom spreads with big backyards. Some are townhomes, others are detached houses. They are sprouting up especially in outer-ring suburbs of Arizona, Texas and Florida cities, and in other places with fast population and job growth. 

While rent growth has slowed from its double-digit-percentage pandemic peaks, rents for houses are still trending higher than those for apartments, according to JBRC. Occupancy, which has been slipping in multifamily buildings, has also been more resilient in the rental-house sector, indicating more sustained demand.

Rental builders are betting that the lowest level of home affordability since the 1980s means that even relatively affluent Americans will remain renters, squeezed by near record home prices, mortgage rates above 7% and other rising home-related costs. A large number of people also simply prefer to rent a house, builders say.

The latest news on realtor commissions is that the National Association of Realtors (NAR) has reached a national settlement that could change the way real estate agents are paid. The settlement, which was announced on March 15, 2024, could potentially end the 6% commission rate that has been standard in the industry for decades.

According to the settlement, the NAR will pay $418 million in damages to settle lawsuits alleging that the organization and its members artificially inflated commissions. As part of the agreement, the NAR will also eliminate its rules on commissions, which could lead to a reduction in commission rates for real estate agents.

The news has sent shockwaves through the real estate industry, with some experts predicting that commission rates could be slashed by up to 30%. This could have a significant impact on the earnings of the 1.6 million real estate agents who rely on commissions for their income.

The settlement is expected to be filed in court within weeks and still needs to be approved by a federal court. However, if approved, it could have far-reaching implications for the real estate industry and the way that agents are paid.

Key points:

• The National Association of Realtors has reached a national settlement that could end the 6% commission rate.
• The settlement includes a $418 million payment to settle lawsuits alleging artificial inflation of commissions.
• The NAR will eliminate its rules on commissions, which could lead to a reduction in commission rates.
• Commission rates could be slashed by up to 30%, impacting the earnings of 1.6 million real estate agents.
• The settlement is expected to be filed in court within weeks and needs to be approved by a federal court.

By Phillip Molnar, The San Diego Union-Tribune March 29, 2024

Nearly 31,000 more people left San Diego County than moved here between July of 2022 and July of 2023, the U.S. Census Bureau recently reported.

With the exception of the first year of the pandemic, when the net outflow exceeded 33,000, that volume of people exiting the county hasn’t been seen in nearly three decades.

Most experts, and people interviewed for the Union-Tribune’s article, said housing costs were the biggest reason for the exodus.

The departures were much higher than early estimates and it was unclear if it was an exceptionally bad year or the acceleration of a trend.

Q: Will San Diego County see similarly high volumes of people moving out next year?

David Ely, San Diego State University

NO: Housing affordability will continue to cause many San Diegans to move to less expensive areas. Net migration will likely be negative over the next year but at a lower volume. Rental rates appear to have eased and many employees who shifted to remote work and wanted to move have already relocated. Also, the number of job quits in the U.S. is declining, suggesting that workers are more hesitant to leave their current jobs.

Ray Major, SANDAG

YES: The San Diego region is one of the most unaffordable places to live in the nation. A slowing job market, lack of affordable housing, and increasing costs such as utilities, food, gas and other expenses will force San Diegans to move out of the region to afford their basic needs. This trend is likely to continue until significant changes are made to some of the fundamentals associated with the region’s cost of living.

Caroline Freund, UC San Diego School of Global Policy and Strategy

YES: High and rising housing costs are driving folks away. The most common concern that I hear from people considering moving to or from San Diego is the high cost of living here. Streamlining building regulations and taxing property more equitably would help expand the housing supply, lower prices and stem the outflow of people.

Kelly Cunningham, San Diego Institute for Economic Research

YES: Unfortunately, as more productive people and businesses leave San Diego because of unaffordable housing, excessive taxes and out-of-balance living expenses, out-migration will continue. The movement of younger residents especially, including children, will compound as prohibitive costs of living make it difficult to become established and compel many to move away despite appealing weather and desirability of living in Southern California. Shrinking birth rates and foreign migration are not enough to offset the out-migration of residents.

Preventing squatters from occupying your vacant properties requires proactive measures to secure the premises and deter unauthorized entry. Here are some strategies to help prevent squatters:

1. Secure All Entry Points: Ensure that all doors, windows, and other entry points are securely locked and reinforced. Consider installing sturdy locks, deadbolts, and security bars to make it more difficult for squatters to gain access.
2. Install Security Systems: Consider installing a security system with motion sensors, surveillance cameras, and alarms. Visible security measures can deter potential squatters and alert you to any unauthorized activity on the property.
3. Maintain Regular Maintenance: Keep the property well-maintained and regularly inspect it for signs of trespassing or attempted entry. This includes mowing the lawn, trimming bushes, and securing any fencing around the property.
4. Use Timers for Lights: Install timers for interior and exterior lights to create the impression that the property is occupied. This can help deter squatters and other unwanted visitors.
5. Utilize Property Management Services: If you have multiple vacant properties or live far away from the vacant property, consider hiring a property management company to oversee the property. They can perform regular inspections, address maintenance issues promptly, and respond to any unauthorized occupancy.
6. Form Relationships with Neighbors: Develop a good relationship with neighbors who can keep an eye on the property and report any suspicious activity. They can serve as additional eyes and ears, helping to deter squatters and other intruders.
7. Post No Trespassing Signs: Clearly post signs indicating that the property is private and that trespassing is prohibited. This establishes legal notice and can be used as evidence if legal action becomes necessary.
8. Consider Physical Barriers: Depending on the property's location and layout, you may consider installing physical barriers such as fencing, gates, or bollards to restrict access and prevent unauthorized entry.
9. Regularly Monitor the Property: Make regular visits to the property to check for signs of unauthorized occupancy or damage. Promptly address any issues that may arise to prevent further problems.
10. Stay Informed About Local Laws: Familiarize yourself with local laws and regulations regarding vacant properties, trespassing, and squatting. Understanding your rights and legal options can help you take appropriate action if squatters do attempt to occupy your property.

Accessory Dwelling Units (ADUs) have been gaining popularity in San Diego and many other areas across the United States for several reasons:

1. Increased Housing Options: San Diego, like many other urban areas, faces housing shortages and high housing costs. ADUs offer a way to increase housing options within existing residential areas without the need for large-scale development projects.
2. Additional Income: Homeowners can benefit financially from ADUs by renting them out to tenants. This additional rental income can help offset mortgage payments or provide supplemental income.
3. Multigenerational Living: ADUs provide an opportunity for multigenerational living arrangements, allowing families to accommodate elderly parents, adult children, or other relatives while still maintaining some degree of privacy and independence.
4. Flexibility: ADUs can serve various purposes, including rental units, guest houses, home offices, or even personal living spaces for homeowners. This flexibility appeals to homeowners looking to maximize the utility of their property.
5. Zoning Regulations: Changes in zoning regulations and permitting processes in San Diego and other areas have made it easier for homeowners to build ADUs. Relaxing restrictions on ADU construction has encouraged more homeowners to consider adding these units to their properties.
6. Environmental Benefits: ADUs can promote sustainability by utilizing existing infrastructure and reducing the need for new construction. They also offer opportunities for energy-efficient design and can contribute to more compact, walkable neighborhoods.

We at Fidelis Private Fund have been financing ADU projects since the the demand to finance such projects started gaining popularity a few years back. This trend aligns with our commitment to providing innovative financing solutions that support sustainable and affordable housing initiatives.