California
Will lower mortgage rates save California’s housing market?
Will lower mortgage rates convince California house hunters to stop balking at unaffordable homes on the market?
What’s next for interest rates is a heated, national debate.
The Federal Reserve is taking a cautious approach to further cuts in the rates it controls, fearing ongoing trade wars could reignite problematic inflation. Fed critics, most notably President Donald Trump, think rates are too high and the Fed should be aggressively cutting.
Political theater aside, what might lower rates mean for California’s housing market? And remember, Fed cuts don’t always lower what mortgage borrowers pay.
Let me remind you, and not for the first time, that a historical perspective suggests that cheaper money is not a perfect cure. You see, bargain financing has a bad habit of arriving when the economy is in disarray.
To see what’s up – or down – with the market, my trusty spreadsheet looked at statewide homebuying data from the California Association of Realtors, the average 30-year mortgage rate from Freddie Mac, and government job statistics.
These economic indicators were divided into three groups dating back to 1990 to gives us a view into how homebuying performed in 12-month periods – when rates fell the most vs. when financing costs increased significantly.
During these 36 years, rates averaged a drop to 5.5% from 6.5% in their gaudiest declines. Within the largest significant rate increases, mortgages averaged a jump to 6.2% from 5.2%.
Rate changes
When rates drop, house hunters get busy.
The number of single-family homes sold averaged a 5% one-year gain during the biggest rate cuts since 1990. However, sales decreased by an average of 6% when rates rose sharply.
But there’s a catch: Sales declined in 34% of these 12-month periods when rates tumbled.
And look out for cooler appreciation.
The statewide median home price rose an average of 4% in the years when rates tumbled since 1990, but it increased at a 7% annual pace when rates jumped.
Plus, prices dipped 20% of the time when rates fell sharply.
Cheaper money can also alter the number of options house hunters have to choose from.
Inventory, as measured by days on market, fell by an average of 11% when rates tumbled in 36 years, but rose 12% with rate jumps. Elevated buying may have gobbled up supply.
And buyers’ timing can change.
Days on market sped up by four days on average with declining rates since 1990, but selling times increased by four days when rates jumped.
Affordability matters. Estimated house payments fell 5% on average with declining rates but increased by 18% when rates rose.
Tricky juggle
Do not forget real estate’s three keys: “Jobs. Jobs. Jobs.”
When mortgage rates took their deepest dives during the past 36 years, the number of California workers fell by 0.4% on average, as California unemployment rose to 8.2% from 6.8%.
Buying a California home requires a solid paycheck.
Consider how employers statewide hired when rates soared since 1990. Jobs grew at a rate of 2.4% annually, as unemployment dropped to 5.8% from 6.5%. Those extra paychecks create potential house buyers.
So it’s a tricky juggle between real estate’s thirst for cheaper money and its need for a healthy job market.
Jonathan Lansner is the business columnist for the Southern California News Group. He can be reached at jlansner@scng.com
California
Two GOP candidates for California governor participate in Bakersfield forum
BAKERSFIELD, Calif. (KBAK/KBFX) — Two Republican candidates seeking California’s top office were back on the campaign trail and made a stop in Bakersfield on Saturday.
The California Young Republicans and Kern County Young Republicans co-hosted a forum featuring Chad Bianco and Steve Hilton. The event follows two gubernatorial debates last month in which both candidates appeared alongside several Democrats.
The forum happened on Saturday afternoon at the Liberty Center on California Ave.
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The forum came as mail voting is underway ahead of California’s June 2 primary, where the top two vote-getters will advance to the November general election regardless of party.
California
Teen dies after losing control of electric motorcycle in Garden Grove
A 13-year-old boy riding an electric motorcycle in Garden Grove died after veering into the center median, flying into the air and then slamming onto the roadway, authorities said.
The crash took place shortly before 10 p.m. Thursday in the area of Magnolia Street and Larson Avenue, according to the Garden Grove Police Department. The Police Department received word of the incident via a call from Life360, a family safety and location-sharing app with emergency assistance features.
The Santa Ana teen was critically wounded in the crash, police said. He was loaded into an ambulance and taken to a hospital, where he was later pronounced dead.
The boy was traveling at around 35 mph on a black E Ride Pro electric motorcycle when he struck the median and lost control of the vehicle, according to authorities. Electric motorcycles are primarily designed for off-road riding and are not legal to use on California roadways.
The teen’s death is the latest in a spate of serious collisions involving electric motorcycles and dirt bikes — some of which have led to serious injuries, death or charges for parents who allegedly allowed their minors to illegally ride the speedy devices.
An Orange County mother was charged with involuntary manslaughter last week after authorities said an 81-year-old Vietnam veteran died from injuries he suffered when her 14-year-old son slammed into him while riding an e-motorcycle, then fled the scene.
In April, a Yorba Linda father was charged with felony child endangerment after authorities alleged his son ran a red light and was hit by a car while riding a modified e-motorcycle capable of reaching up to 60 mph.
Last week, a 19-year-old riding an e-motorcycle was arrested on suspicion of felony evading police and felony reckless driving. He was accused of leading sheriff’s deputies on a speedy chase through a residential area of Oceanside, blowing past multiple red lights and knocking a deputy off a motorcycle.
Electric bikes, motorcycles and dirt bikes have surged in popularity in recent years and are especially popular among teens. However, while e-bikes generally top out at 28 mph and are legal to ride on the street, many e-motorcycles can go twice as fast and are generally not street legal.
Anyone who witnessed Thursday’s crash in Garden Grove or has a video of the incident is asked to contact Investigator Lang via phone at (714) 741-5823 or email at mlang@ggcity.org.
California
California to give newborns free diapers. What it means for families
Top moments from CNN California governor debate recap
Breaking down key takeaways, highlights, and analysis from the CNN California governor debate, including standout moments and candidate contrasts.
Gov. Gavin Newsom announced that newborn babies in California will start receiving free diapers as part of a new “first-in-the-nation” initiative to support families across the state with the rising cost of living.
Newsom, along with state leaders, met in San Francisco on Friday, May 8 to unveil California’s new partnership with Baby2Baby, a national nonprofit that provides diapers to children in need, and to explain how this new program will provide families with 400 “high-quality” diapers before they leave the hospital.
Over the last six years, families have seen the average cost of diapers increase by 45% or “thousands plus dollars a year,” which has made raising a family unattainable for some, Newsom said during the press conference.
“Every baby born in California deserves a healthy start in life — and that means making sure parents have the basics they need from day one,” Newsom said. “One out of four families skip meals in order to pay for diapers.”
“The biggest problem defined universally, in our cities, our state and our nation, is the issue of affordability. This is what affordability looks like; it’s not a slogan, it’s a box. A box of diapers,” Newsom added.
This new effort will be known as Golden State Start, as California uses its bulk purchasing power to obtain 40 million high-quality diapers in hopes of easing financial strain for families and supporting infant health by helping parents maintain an adequate supply of clean diapers.
“The first days at home with a newborn should be focused on the love, connection, and joy of an expanded family, not stress about affording diapers,” said Kim Johnson, secretary of the California Health and Human Services Agency. “This program helps ensure families can begin that journey with greater stability and peace of mind.”
The program is expected to start at the beginning of this summer in participating California hospitals. The list of participating hospitals was not released at the time of publication, but Newsom noted that the state was in talks with at least 60 hospitals across California.
During the first year of the program, CalRx and Baby2Baby noted that they would prioritize hospitals that serve large numbers of Medi-Cal patients to ensure low-income families benefit early from the program. The state plans to scale the program to additional hospitals and birthing centers over time.
Newsom noted that this program is expected to grow: In 2027, the state is set to purchase 80 million diapers from manufacturers, with the goal of eventually purchasing up to 160 million.
“California families deserve to feel supported during one of life’s more exciting, yet vulnerable transitions,” Jennifer Siebel Newsom, the first partner, said in a press release. “Golden State Start will deliver immediate relief, allowing parents to focus on what matters most — caring for their newborn. Together with Baby2Baby, we can ease the financial burden on California parents while supporting healthier outcomes for babies and their mothers.”
Noe Padilla is a Northern California Reporter for USA Today. Contact him at npadilla@usatodayco.com, follow him on X @1NoePadilla or on Bluesky @noepadilla.bsky.social. Sign up for the TODAY Californian newsletter or follow us on Facebook at TODAY Californian.
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