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Will lower mortgage rates save California’s housing market?

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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.

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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.

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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.

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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.

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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.

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Jonathan Lansner is the business columnist for the Southern California News Group. He can be reached at jlansner@scng.com



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California

Steve Hilton on His Surprisingly Strong Bid for California Governor

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Steve Hilton on His Surprisingly Strong Bid for California Governor


It’s been quite the unexpected slog through a field of candidates so numerous that all of their names don’t even fit on a single page of the ballot. Democrats in California have held the governor’s mansion, state House, and state Senate for almost two decades and unrest about that trifecta out West is real. The traditional political alliances are frayed, at best, with socialists backing a billionaire and Trump supporting an immigrant. A sex scandal tanked the hopes of a leading candidate, Rep. Eric Swalwell, and Trump’s endorsement of Hilton all but sidelined tough-on-crime Riverside Sheriff Chad Bianco. It’s why Hilton, who moved to California in 2012, is in the mix in a race that is set to test assumptions about party loyalty, candidate partisanship, and money’s power. And it carries massive consequences about who will be the de facto CEO of the fourth-largest economy on the planet, between Germany and Japan, and a major player on the national political stage. This is not some backwater local election.



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California just handed oil companies billions in free pollution permits

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California just handed oil companies billions in free pollution permits


By Alejandro Lazo, CalMatters

This story was originally published by CalMatters. Sign up for their newsletters.

California air regulators on Friday approved a contentious overhaul of the state’s carbon market, creating a program that could steer billions of dollars in free pollution permits to oil refineries and other major polluters over the objections of environmental groups, key lawmakers and three of the board’s own members.

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Ten members of the California Air Resources Board voted to adopt the changes to its cap-and-invest program after two days of lengthy hearings, including a full day dedicated to hundreds of public comments.

The overhaul followed intensive lobbying by the oil industry as well as pressure from Gov. Gavin Newsom’s administration to help keep refineries operating in the state amid rising gas prices.

The approval sets up a potential budget fight in Sacramento. The Legislative Analyst’s Office projects that quarterly auction revenue for state climate programs will drop from roughly $4 billion a year to about $2 billion under the new overhaul.

Such a shortfall would effectively zero out programs lawmakers spent last year fighting to fund: affordable housing, public transit, drinking water in low-income communities and pollution monitoring in California’s most polluted neighborhoods.

The governor’s office praised the measure as a compromise that balanced economic uncertainty with the state’s climate goals. Refinery closures and the Iran-Israel war have driven average California gas prices above $6 a gallon. 

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Newsom, in a statement, used the moment to draw a contrast with President Donald Trump.

“While Trump sows ongoing chaos and uncertainty, California is staying focused by protecting our economy, safeguarding public health, and doubling down on the clean energy future all Californians deserve,” he said. 

Environmentalists warned the changes to the program amount to a giveaway to the fossil fuel industry that weakens California’s only program setting a firm cap on greenhouse gas emissions.

Katelyn Roedner Sutter, California senior director for the Environmental Defense Fund, called the decision “deeply misguided” for prioritizing polluters over communities.

“Newsom’s air regulators are handing billions to oil executives at the expense of our climate, health, and affordability for working families in a rushed process that has shortchanged meaningful public participation,” said Bahram Fazeli, policy director at Communities for a Better Environment. 

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How the program works — and what changes

California’s 13-year-old carbon market forces major polluters to buy permits while the state lowers the overall cap each year. Friday’s vote will reduce those permits – and creates a new subsidy program carved out of the market.

The program, which may still see changes, could make available a new pool of free pollution permits available to industry valued at as much as $4 billion. Companies that pledge to invest in clean energy and efficiency may qualify for the permits in exchange for investments in clean energy. 

The pool will be capped at 118.3 million permits — the same number the air board has said must come off the market for California to hit its 2030 climate target. Environmentalists say the proposal risks wiping out those reductions. 

Half are reserved for the fossil fuel sector. A recent Berkeley analysis, by the chair of an independent committee that oversees the carbon market, found refineries could end up with more free permits than they need to cover their emissions.

The air board has defended the design. Officials say the credits will go only to companies undertaking decarbonization projects, will be limited and temporary and can be clawed back if companies misuse them. The plan, they say, is meant to keep California refineries operating at a time of mounting closures and global market pressure. According to air regulators, the amended program will spur clean-energy investment as Trump cuts federal support.

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This article was originally published on CalMatters and was republished under the Creative Commons Attribution-NonCommercial-NoDerivatives license.



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Man charged with murder, kidnapping their 5-year-old child before fleeing to Mexico

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Man charged with murder, kidnapping their 5-year-old child before fleeing to Mexico


A 40-year-old Los Angeles man was charged with murder after allegedly killing his girlfriend and kidnapping their young child before fleeing to Mexico, according to authorities.

Ruben Fregosojuarez has been charged one count of murder and one misdemeanor count of child abuse under circumstance or conditions other than great bodily injury or death, according to a Los Angeles County District Attorney’s Office news release. Authorities first identified him as Ruben Fregoso but Los Angeles County prosecutors listed him as Ruben Fregosojuarez.

On Monday around 12:39 p.m., the Los Angeles Police Department conducted a welfare check in the 2600 block of South Alsace Avenue in West Adams, police said in a news release.

Officers found a woman dead inside the home “as a result of violence” and the woman’s daughter missing, police said. On Monday night, the California Highway Patrol issued an Amber Alert for the child, Daleza.

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Photos obtained by NBC4 appear to show Fregosojuarez in a parking garage in San Ysidro with the girl on Sunday. The California Highway Patrol has listed her age as 4 years old but Los Angeles police say the girl is 5. She is also described as the suspect’s daughter.

The alert said that the girl was last seen with Fregosojuarez, who allegedly abducted her in a 2019 Land Rover Discovery, on Sunday at about 4 a.m.

The CHP posted in an update that the vehicle was found but that the child and man were still missing. The girl is described as 3 feet tall, 45 pounds, and having black hair and brown eyes.



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