June 2023 Market Insight

Inflation, the Fed, interest rates, stock markets, venture capital, all-cash buyers...

The general index (chart 1) saw a significant decline to its lowest reading in 2 years (though 4.1% is still considered a relatively high inflation reading). The "core" inflation index (chart 2)  ticked down slightly and has seen only modest change since December. Both are well down from summer 2022 peaks.

As of June 14, the Fed decided to hold rates steady after 10 consecutive increases since March 2022, but according to the WSJ, it "signaled they are leaning toward raising them next month if the economy and inflation don't cool more."
Interest rates have been generally stable since debt-default fears subsided, but running relatively high at just under 7% (as of 6/13/23). Today's daily average rate was basically unchanged from yesterday, but we may see more reaction to the Fed's decision tomorrow.

Stock markets have seen substantial recoveries in 2023 - especially the Nasdaq - though they are still well down from peaks in late 2021. The next chart illustrates changes since 2023 began, while the 2 charts after look at long-term trends. Affluent buyers are usually most sensitive to major changes in financial markets, as they typically see the biggest impacts on household wealth. And the Nasdaq, of course, is focused on high-tech companies. So far today, stock markets are basically flat from yesterday, as they try to digest the latest news from the Fed.

Venture Capital Investment in the Bay Area:  Though VC investment plunged in 2022, the Bay Area still receives the most of any region in the country.

From NAR regarding all-cash purchasing: "Since October 2022, the share of buyers purchasing their home without a mortgage has been more than one-quarter of the market." Their chart is below. Link to 4/2023 full NAR article.
And according to a 6/2023 Mansion Global article, based on a Redfin report - presumably based on Redfin sales only - a third of buyers in April 2023 purchased all-cash. Note that a higher percentage doesn't signify more all-cash buyers than last year, but a bigger slice of a smaller pie of sales.

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Compass is a real estate broker licensed by the State of California operating under multiple entities. License Numbers 01991628, 1527235, 1527365, 1356742, 1443761, 1997075, 1935359, 1961027, 1842987, 1869607, 1866771, 1527205, 1079009, 1272467. All material is intended for informational purposes only and is compiled from sources deemed reliable but is subject to errors, omissions, changes in price, condition, sale, or withdrawal without notice. No statement is made as to the accuracy of any description or measurements (including square footage). This is not intended to solicit property already listed. No financial or legal advice provided. Equal Housing Opportunity. Photos may be virtually staged or digitally enhanced and may not reflect actual property conditions.