Monday Morning Quarterback

Monday Morning Quarterback

(Monday, September 21, 2025)

Hours after the Federal Reserve cut its benchmark interest rate last Wednesday (25 basis points), mortgage rates ticked up 9 basis points. OMG, why did that happen? And will mortgage rates continue to climb from here? Glad you asked. While this trend might seem counter-intuitive, the jump in mortgage rates was relatively small and driven by how financial markets are assessing the central bank’s next move, according to economists. And it wasn’t unprecedented. In fact, I wrote about this exact trend occurring last year, after the Fed’s jumbo 50-basis-point rate cut in September 2024. The Fed announced Wednesday that it would trim its key policy rate by a quarter of a percentage point, bringing it to the range of 4% to 4.25%. Around the time of the announcement, Mortgage Daily News (a website that posts daily updates on rates) crashed — possibly the result of people flocking to the site to see how mortgage rates reacted. Mortgage Daily News later reported that the 30-year rate went up by 9 basis points (0.09%) to 6.22% on Wednesday. On Thursday, it was reported that the 30-year rate had gone up by 15 more basis points, to 6.37%. In contrast, a report by Freddie Mac measuring weekly averages for the 30-year rate found that mortgage rates fell to the lowest level in 12 months on Thursday. Why? Because Freddie Mac’s report gathered information prior to and after the Fed’s decision was announced. Their weekly report doesn’t survey lenders but is based on actual mortgage applications to lenders across the country that are sent to Freddie Mac. Are you confused yet? But why did mortgage rates go up hours after the Fed cut rates? As you know, mortgage rates aren’t tied to the Fed’s interest-rate moves. Instead, they typically fall in advance of a Fed rate cut because bond investors are trying to anticipate where the central bank will go. Mortgage rates are priced off the 10-year Treasury note by adding a spread. Hence, the 10-year Treasury yield is a better gauge of how mortgage rates will move — and the 10-year yield was trending higher last Thursday. Nevertheless, where the 30-year mortgage rate goes from here was not immediately clear to economists. A mid-August forecast by housing-finance giant Fannie Mae expected the 30-year rate to average 6.5% in the fourth quarter of this year and fall to 6.1% by the third quarter of next year. In other investor news, let’s run it up the flagpole…

Zillow and Redfin May Be Steering Homebuyers Into Bad Deals. Log on to real estate sites like Zillow or Redfin, and you’ll discover the era of one-click homebuying has arrived. You can search real estate listings, determine property values, and even buy or sell homes directly on the platforms. But now even the task of securing a mortgage (which used to take weeks of paperwork and phone calls), can be completed on the site just as easily as scrolling through a property’s photo gallery. Nonetheless, experts warn this apparent efficiency is masking a system designed to steer homebuyers to the platforms’ own mortgage lenders, squeezing out competition and discouraging buyers from finding cheaper options. It’s part of massive consolidation and restructuring efforts by Zillow and Redfin’s corporate owners to corner the trillon-dollar mortgage market, which is already driving up housing costs and could heighten the risk of a financial crisis. Regulators have even accused Zillow and Redfin’s parent companies of illegally rewarding real estate agents for directing buyers to their in-house mortgage lenders — something that the top consumer financial watchdog call a “kickback scheme.” Unbeknownst to many consumers, shopping around for a home loan can save homebuyers an average of more than $80,000 over a thirty-year mortgage. In states like California, Hawaii, and Washington, lifetime savings can reach more than $100,000. Consumers who use real estate companies’ in-house lenders may also be forced to pay higher fees and interest charges than those who use alternative options. There is a significant financial incentive for big lenders to limit competition in the space: 80 percent of all homes purchased in the United States are financed with a mortgage, 40 percent of consumers begin their home-buying process by shopping for a mortgage, and 80 percent of those buyers don’t yet have an agent, according to Zillow’s 2024 annual report.

Top 10 Most Vulnerable U.S. Housing Markets in Q2 2025. ATTOM’s newly released Q2 2025 “U.S. Housing Risk Report” analyzes county-level housing markets across the U.S. to identify those most susceptible to downturns in Q2 2025. Based on factors like home affordability, equity levels, foreclosure activity, and unemployment rates, the report reveals that a significant number of both the highest-risk markets are concentrated in the South. The analysis also noted that among the 50 most vulnerable county housing markets in Q2 2025, California led the way with 14 entries, followed by Florida with seven, New Jersey with five, and Louisiana with four. Risk levels were assessed using a combination of key factors, including home affordability, foreclosure rates, the share of seriously underwater mortgages, and local unemployment figures. Here then are the California counties in Housing Risk Report with the most vulnerable housing markets:

#2 – Humboldt County, California

• 7% of income needed to buy
• 8% of properties underwater
• 1 in every 764 properties with foreclosure filings
• 6% June 2025 unemployment rate

#3 – Shasta County, California

• 1% of income needed to buy
• 9% of properties underwater
• 1 in every 586 properties with foreclosure filings
• 5% June 2025 unemployment rate

#4 – Butte County, California

• 8% of income needed to buy
• 9% of properties underwater
• 1 in every 766 properties with foreclosure filings
• 5% June 2025 unemployment rate

#9 – Riverside County, California

• 5% of income needed to buy
• 5% of properties underwater
• 1 in every 755 properties with foreclosure filings
• 0% June 2025 unemployment rate

Which Cities Have the Most Expensive Rent in the World in 2025? Across major cities worldwide, the cost of rent has climbed sharply in recent years. Record-high housing prices, paired with a wave of remote workers moving into new markets, are reshaping rental dynamics. At the same time, limited supply is tightening conditions even further, compounding challenges for renters in countless regions. And to no one’s surprise, New York has the most expensive rent in the world. Today, it costs on average $4,143 to rent a one-bedroom apartment on average in New York City—rising 22% over the past five years. Even with an exodus of workers during the pandemic, prices remain high given strong demand, rich cultural activity, and the Big Apple’s position as the global epicenter of finance. Boston, meanwhile, ranks second with rent averaging $3,394 per month. High land and materials costs have impeded home building activity, contributing to a low supply of housing stock, further driving up prices. Rounding out the top three is San Francisco, at $3,332, although rental costs have increased just 1% since 2020. Beyond America, Singapore stands as the most expensive, with rent surging 55% over the period to reach $3,167—the fastest growth rate on the list. Similarly, rental costs are up 54% in Dubai, making it the costliest city to rent in the Middle East and ranking eighth overall in 2025. Rounding out the list are: London (5), Zurich (6), our very own Los Angeles (7), Dublin (9) and Amsterdam (10). Are you surprised Los Angeles is not number one?

Brad Pitt Pays $12 Million For A House In The Hollywood Hills. Brad Pitt, the Academy Award-winning actor, has expanded his real estate portfolio with the $12 million purchase of a house in the Hollywood Hills. The sellers were Dave Keuning, a guitarist from the rock band the Killers, and his wife, Emilie Keuning, an interior designer. The couple had listed the property for $14 million. Around the same time, Mr. Pitt reportedly sold another Los Angeles home following a recent burglary there. His newly renovated, Spanish-style home, located in the exclusive Outpost Estates community, sits on a third of an acre and measures roughly 8,385 square feet. It has six bedrooms and eight bathrooms, as well as a free-form outdoor pool. But “no river runs through it.”

Fans Bid Farewell to Beloved California Octopus. A dying octopus in a Southern California aquarium is receiving an outflowing of love and well wishes as she spends her final days pouring her last energy into caring for her eggs — even though they will never hatch. Many on social media have reminisced about seeing the giant Pacific octopus named “Ghost” when they visited the Aquarium of the Pacific in Long Beach. Some shared that they had a tattoo of Ghost or would wear a sweater emblazoned with the beloved cephalopod in her memory. “She is a wonderful octopus and has made an eight-armed impression on all of our hearts,” the aquarium said on Instagram. Ghost laid eggs earlier this week and entered the final phase of her life cycle, known as “senescence.” During this period, the octopus will neglect her own basic needs like eating, instead focusing on protecting her eggs and aerating them to prevent bacteria or other harmful agents from growing on them. Ghost's eggs are unfertilized and will never hatch, however. In the wild, giant Pacific octopuses spend their whole lives alone and only come together for a brief instance to reproduce. Ghost is originally from the waters of British Columbia, Canada, and arrived at the aquarium in May 2024 from a scientific collector. She was only 3 pounds (1.4 kilograms) then but now weighs more than 50 pounds (22.7 kilograms). The average giant Pacific octopus lives for three to five years. Ghost is estimated to be between two and four years old. Ghost was a “super active and very physical octopus” who enjoyed spending time with humans. She was trained to voluntarily crawl into a basket so staff would weigh her and monitor her diet. Sometimes, she would push aside food her caregiver was offering just to interact with them more. “Octopus in particular are incredibly special because of how charismatic and intelligent they seem to be, and we really form tight bonds with these animals,” her caretakers say.

Vendors Expo Returns! Our world-famous "Vendors Expo" returns in 2025, on Thursday night, October 9, 2025. The Vendor Expo opens starting at 6:30 pm. We'll have 30+ of the finest vendors featuring real estate products and services you will want to utilize as a successful investor. Our Vendor Expo will be held at the Iman Cultural Center, 3376 Motor Avenue (between National and Palms), Culver City CA. FREE Admission. Please RSVP at our website, LARealEstateInvestors.com.

6th Annual Los Angeles Real Estate Grand Expo. Join the finest builders, contractors, property managers, landlords, investors, and related real estate professionals, at the largest real estate event in Southern California, featuring 12 national speakers, 70 real estate vendors, food trucks, free workshops, and the ultimate networking. Saturday, November 8, 2025, at the Iman Cultural Center, 3376 Motor Avenue, Culver City, CA. RSVP: www.LAGrandExpo.com. Free admission. Street and valet parking.

This Week. Looking ahead, investors will continue watching for additional information about tariffs and monitor comments from Fed officials for hints about monetary policy later in the year. For economic reports, New Home Sales will be released on Wednesday and Existing Home Sales on Thursday. Personal Income and the PCE price index, the inflation indicator favored by the Fed, will be released on Friday.

Weekly Changes:

10-Year Treasuries: Rose 005 bps

Dow Jones Average: Rose 400 points

NASDAQ: Rose 400 points

Calendar:

Wednesday (9/24): New Homes Sales

Thursday (9/25): Existing Sales

Friday (9/26): Core PCE

For further information, comments, and questions:

Lloyd Segal

President

Los Angeles County Real Estate Investors Association

Lloyd@LARealEstateInvestors.com

www.LARealEstateInvestors.com

310-792-6404