California
Are cheaper mortgages bad news for California’s housing market?
Falling mortgage rates should come with a warning label stating: “Be careful what you wish for!”
This summer’s cheaper home loans ignited real estate buzz suggesting California’s two-year homebuying slump may be nearing its end.
The Federal Reserve’s lengthy battle against inflation – fueled by higher interest rates – helped make California homebuying nearly impossible for most house hunters. But mid-2024’s moderating cost of living, plus overall economic lethargy, has already trimmed mortgage rates off 20-year highs. Come September, the Fed is expected to begin cutting its benchmark rates.
Yes, lower rates mildly prune California’s huge affordability challenges. Some industry insiders even speculate these savings could create a rush to buy, forcing California prices even higher.
But the same cheaper mortgages that lead to a “buy now” narrative are often signals of economic trouble. Remember, interest rates typically fall when the business climate cools.
By the numbers
To contemplate the mix of rates and pricing, I filled my trusty spreadsheet with these stats dating to 1977: the average 30-year mortgage from Freddie Mac, California home price data from the Federal Housing Finance Agency, and what you may think is an odd number: the state’s unemployment rate from the Bureau of Labor Statistics.
Consider what we learn when slicing history into 12-month periods, simply based on whether mortgage rates got pricier or cheaper over the past 47 years.
When mortgage rates grew over a year’s time, California home prices averaged 10%-a-year gains.
Then look at what happens when mortgage rates fell. California prices gained only 4.4% on average. Yes, less than half.
Now, let’s not blindly cheer rising rates. Think about a theoretical buyer’s house payment using math that combines these pricing patterns and rate swings.
When rates rise over a year, estimated California house payments jumped 21% on average. Pricier homes plus pricier loans is a painful bite to the wallet. But buyers seem willing to pay up.
Conversely, payments in times of falling rates dropped by 2.6% a year on average. So it’s the cheaper money that creates whatever meager affordability exists in California.
Now, these results may seem illogical as pictured through a traditional real estate lens. But take a broader view of the economy and ponder the cyclical health of California’s job market.
When mortgage rates rose during the past half century, the statewide unemployment was falling by 0.7 percentage points per year on average. Basically, interest rates rise when times are good and bosses are hiring.
Unfortunately, when the economy gets too hot – such we saw in 2021 to 2023 – the bond market and/or the Fed may play Grinch, pushing up interest rates, and spoiling the economic party.
Contrast that pattern to how the economy performs when loan rates decline during the past half century: California joblessness was increasing by 0.3 percentage points. So fewer jobs, less demand for all sorts of goods and services – and a Fed more willing to help.
Bottom line
Don’t overthink housing’s sometimes myopic data. It’s really about real estate’s three pillars: “Jobs. Jobs. Jobs.”
In the past 47 years, when jobs are scarce and unemployment rises in a year, California home prices average 2% gains. When unemployment drops, prices rise 9%.
Please note that California joblessness has been above 5% for 10 months, after reaching an all-time low of 3.8% in August 2022.
You see, successful house hunting requires not only a paycheck – but confidence that you’ll remain employed. And cheaper mortgages frequently come with a weaker business climate and depressed consumer confidence.
That can make California house hunters think twice about paying top dollar for housing. It’s a key reason why you see weaker pricing when rates are down.
Of course, every cycle is different. Maybe the odd post-pandemic real estate market will act unlike the statistical norms shown by this math.
Ponder history’s extremes. Prices jumped 29% with lower rates in the year ended in September 2004. But cheaper mortgages did not prevent a 23% drop in the 12 months ended September 2008.
So summer 2024 might be a “buy now” moment with tumbling rates helping to push California home prices skyward. But the true catalyst would be an economy that nails an Olympic-quality soft landing with few job losses.
My spreadsheet also tells me that since 1977 when mortgages got cheaper in a year, California home prices rose 67% of the time. Not bad odds.
But when rates were rising, price gains came 85% of the time.
Postscript
The economic fallout of cheaper mortgages has modestly varied in the past half century, depending on the size of the rate drops. Ponder these California examples of one-year dips …
Rates down half-percentage-point or more: Home prices rose 3.6% in 12 months on average in these situations. Again, a weak economy, as California’s unemployment rate averaged a 0.9-point increase in a year.
Off three-quarters-point or more: Prices up 2.5%. Unemployment up 1.1 points.
Off 1 point or more: Prices rise 4.2%. Unemployment up 0.6 points.
Jonathan Lansner is the business columnist for the Southern California News Group. He can be reached at jlansner@scng.com
Originally Published:
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As the nation prepares for its 250th Independence Day celebration, a decades-long California Fourth of July fireworks tradition that has raised millions for local children’s programs is going dark this year after the California Coastal Commission rejected a final effort to keep it alive, citing environmental concerns to protect the bay.
“We’ve raised over the past 14 years $2 million for kids programs here in Long Beach,” event organizer John Morris told Fox News Digital, adding the July 3 event is fully funded by the local community.
“This community pays for everything — everything. City fees, and the city doesn’t give us a break. We pay $20,000 to the city for police and fire, which I’m fine with, because there’s 100,000 people enjoying the fireworks,” said Morris, a Long Beach resident and business owner.
Morris, who owns the Boathouse on the Bay restaurant, had planned a scaled-up fireworks display this year to mark America’s 250th Independence Day.
CALIFORNIA BEACH TOWN BANS THE USE OF BALLOONS
Long Beach residents have enjoyed the fireworks organized by John Morris for over a decade. (Scott Varley/MediaNews Group/Torrance Daily Breeze via Getty Images)
In January, Coastal Commission staff rejected the proposal, and last week commissioners unanimously upheld that decision despite an appeal backed by local, state and federal officials.
Regulators warned Morris last year that 2025 would likely be the final year for fireworks at the event, as they continue pushing organizers to switch to drone shows they say are more environmentally friendly.
The decision stands in contrast to other approvals by the commission, including a permit granted to SeaWorld allowing up to 40 nights of fireworks.
“They get 40 nights in Mission Bay. All I’m asking for is 20 minutes — it doesn’t make any sense,” Morris said.
Morris, 78, also pushed back on the environmental concerns cited by the commission, pointing to years of testing around the event.
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Due to the lack of fireworks, Morris has decided to cancel the July 3rd celebration.
“We’ve had 10 years of environmental studies,” Morris said. “We test the water before and after the fireworks and send a robotic camera into the bay to check for debris — there’s never been any. It’s been spotless.
“We’ve also had eight years of bird reports to make sure we’re not harming wildlife. We’ve never had an issue. We’ve never been written up one time. So what is it really about?”
Joshua Smith, a spokesman for the California Coastal Commission, told Fox News Digital that permits are determined on a case-by-case basis, citing environmental concerns to “protect the bay.”
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Organizer John Morris said environmental studies are regularly conducted to measure the impact of the fireworks show on the bay. (Allen J. Schaben/Los Angeles Times via Getty Images)
Smith said Morris was approved for a permit to hold a drone show in lieu of fireworks. Morris told Fox News Digital such a show would cost about $200,000 — roughly four times more than traditional fireworks.
Smith confirmed that SeaWorld received a permit allowing 40 nights of fireworks. When pressed on the discrepancy, he reiterated that decisions are made individually and declined to provide further details.
Morris said the loss of the fireworks show will be felt across the community, from local businesses to families who have made the event an annual tradition.
LOS ANGELES (AP) — In the wide-open race for California governor, billionaire Tom Steyer is on a spending binge.
The hedge fund manager-turned-liberal activist is using his personal fortune to saturate TV screens and mobile phones with advertising, while his competitors accuse him of trying to use his vast wealth to buy the state’s most powerful job.
Steyer’s ads — in which he promises to bring down household costs or rails against federal immigration raids — appear inescapable at times in heavily Democratic Los Angeles, the state’s largest media market. Data compiled by advertising tracker AdImpact show Steyer has spent or booked over $115 million in ads for broadcast TV, cable and radio — nearly 30 times the amount of his nearest Democratic rival.
If he makes it through the June 2 primary election, Steyer could easily eclipse the 2010 record set by Republican Meg Whitman, who spent $178.5 million in a losing bid for governor, much of it her own money. At the time, it was the costliest campaign for statewide office in the nation’s history.
Even when ad buys from all his major competitors are combined, along with ad purchases by independent committees supporting candidates, Steyer is outspending the field by tens of millions of dollars.
“Billionaire money is flooding our state in an attempt to buy this election,” former U.S. Rep. Katie Porter, one of Steyer’s chief rivals, warned her supporters this month.
Mail-in ballots are set to go out to voters next month. Steyer is among a crowd of candidates hoping to seize a spotlight after former Democratic U.S. Rep. Eric Swalwell’s dramatic departure from the race following sexual assault allegations that he denies.
But while Steyer has ticked up in polling amid his spending splurge, he has not broken away from the field, leaving some wondering if he’s getting value for his dollars.
“If your first round of ads doesn’t move you dramatically (in the polls), the third, fourth, fifth, six, seventh and eighth rounds won’t either,” said veteran Democratic strategist Bill Carrick, who for years advised the late Democratic U.S. Sen. Dianne Feinstein. “There is something inherently holding Steyer back.”
In recent prior campaigns for governor, at this stage a leading candidate was taking control of the race. This year, voters appear to be shrugging at a contest that lacks a star candidate among seven leading Democrats and two Republicans.
“Somehow the campaign is frozen,” Carrick added.
History shows that money doesn’t always translate into votes.
Billionaire developer Rick Caruso spent over $100 million in 2022 in his bid to become Los Angeles mayor, much of it his own money, but he was handily defeated by Mayor Karen Bass, who spent a fraction of Caruso’s total. Billionaire former New York City Mayor Michael Bloomberg spent more than $1 billion of his own money on his 2020 presidential bid before dropping out. And Steyer’s money was unable to lift him into contention in the 2020 presidential contest, when he dropped out early in the year after a poor finish in the South Carolina primary.
Steyer has never held elected office.
In a 2019 interview with The Associated Press, Steyer was asked what he would say to people who think he’s trying to buy the presidency.
“I don’t think that’s possible,” Steyer said at the time, before adding, “I’m never going to apologize for succeeding in business. That’s America, right?”
His campaign did not respond directly when asked about similar criticism facing his run for governor.
“Tom now stands as the only Democrat with the grassroots energy, institutional backing and resources to advance to the general election,” spokesperson Kevin Liao said in a statement.
The governor’s race was recently reordered by two developments: Swalwell, a leading Democrat, abruptly withdrew from the race then resigned from Congress, following sexual assault allegations. Meanwhile, President Donald Trump endorsed conservative commentator Steve Hilton.
Still, there is no clear leader.
Polling in late March and early April by the nonpartisan Public Policy Institute of California found a cluster of candidates in close competition: Democrats Steyer and Porter, Republicans Hilton and Chad Bianco, and Swalwell. Other candidates were trailing. The polling was conducted before Swalwell withdrew.
Democrats have feared the party’s large number of candidates could lead to them getting shut out of the general election in November. That’s because California has a primary system in which only the top two vote-getters advance to the general election, regardless of party.
Leading Democrats are all claiming to have picked up support since Swalwell’s exit. Steyer nabbed one plum endorsement, when the influential California Teachers Association, which previously backed Swalwell, recommended him.
In his ads, Steyer promises to “abolish” U.S. Immigration and Customs Enforcement, which has been staging raids across California. In another, he laments the state’s punishing cost of housing, “Everybody needs an affordable place to live,” he says.
Rapper was stabbed 16 times by fellow inmate in May 2025 while 10-year sentence in Megan Thee Stallion shooting case
Tory Lanez has filed a $100 million lawsuit against the California Department of Corrections stemming from a May 2025 incident where the rapper was stabbed in prison.
Lanez — born Daystar Peterson and currently serving a 10-year sentence after being found guilty in the Megan Thee Stallion shooting case — also sued the warden and guards at the California Correctional Institute in Tehachapi, where the rapper was stabbed 16 times in an “unprovoked life-threatening attack” by another inmate, the lawsuit states.
Peterson was hospitalized following the May 2025 incident, suffering a collapsed lung among stab wounds to his back, torso, and head.
According to the Associated Press, the lawsuit criticized the Department of Corrections for housing Peterson with fellow inmate and alleged attacker Santino Casio, who was serving a life sentence for second-degree murder. “The choice to house Casio with Peterson was known or should have been a known danger,” the lawsuit said, adding that Tory Lanez’ “high-profile celebrity status” made him a target.
The lawsuit also said that prison guards were slow to respond to the shanking, and didn’t employ flash grenades or other measures to halt Casio’s attack.; Casio was not charged for stabbing Peterson, the Associated Press notes.
Lanez, who following his hospitalization was transferred to San Luis Obispo County’s California Men’s Colony, also alleges in the lawsuit that he never received his possessions from the California Correctional Institute in Tehachapi, including songbooks filled with lyrics to his unreleased music.
Lanez is serving a 10-year prison sentence for shooting Megan Thee Stallion in the foot during a confrontation in the summer of 2020. He was eventually convicted on several firearms charges, including assault with a firearm, in December 2022. In November 2025, his appeal was denied by a three-judge panel, and the 10-year sentence was upheld.
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