-December 7,2023-
10-year note drop to 4 percent should mean mortgage rates should see 6.6 percent
As of December 6, Wall Street is cheering up Main Street with a decline in the 10-year note of around 20% from 5 percent in mid October to near 4 percent today. Who cares? Kings County residents will care when they see their cost of living go down. Today interest rates, gas prices and grocery prices are all heading south.
Mortgage rates were close to 8% only weeks ago but now some lenders are offering rates below 7%
Redfin Chief Economist Daryl Fairweather says the housing market may have some relief on the horizon. “In the most likely scenario, we expect rates to come down to around 6.5-6% by the end of the year, which isn’t a huge relief but it’s enough to make hundreds of dollars of a difference for a potential homebuyer,” Fairweather says.
With inflation largely under control, the Federal Reserve will likely cut rates two or three times starting in the summer, which is why mortgage rates will decline as the year goes on, says Redfin.
Fuel costs down too
Fuel costs including gas and diesel are down with wholesale gasoline prices at a year long low. WTI oil prices at our deadline are down to $69 per barrel from a high of $ 91 in late September with US oil production at record levels but demand falling.This is happening despite Mideast turmoil. Reports say US crude exports raised worries about increased global supply and as traders continued to doubt the impact of OPEC cuts.
Kings county average gas prices are $4.47 gallon says AAA – 50 cents lower than year ago and a high $6.26 in the summer of 2022. Several local stations are selling well below four dollars a gallon with the lowest at $3.75. Diesel is selling for $5.74 compared to $6.95 in summer of 2022. The Energy Information Administration (EIA) predicts a 1% decline in US gasoline consumption by 2024, reaching the lowest per capita level in two decades.Additionally, new data from the Energy Information Administration showed total domestic gasoline stocks increased by 5.421 million bbl last week, the most since late September and surpassing expectations of 1.027 million.
Food inflation
USDA reports that food inflation is projected to slow to about 3% in 2024, compared to 5.8% in 2023. 2024 grocery food prices will increase by 1.6% but Restaurant food prices are predicted to increase by 4.3%.
Deflation?
WSJ reports this week that after a historic run-up in inflation, Americans are now starting to see something they haven’t in three years: deflation. However “ deflation – falling prices- is largely confined to appliances, furniture, used cars and other goods.”
Connect to Las Vegas?
Rail funding: The US Department of Transportation has awarded the California High-Speed Rail Authority nearly $3.1 billion in grant funding this week for continued progress on the country’s first electrified 220-mph high-speed rail system through Kings County, made possible by President Biden’s Infrastructure Investment and Jobs Act.
The money will:
-Fund six electric trains for testing and use
-Fund design of train facilities
-Fund design and construction of the Fresno station
-Fund final design and early works, including right-of-way acquisition and utility relocation on the extensions to Merced to Bakersfield.
This week Biden also funded $3 billion for a private high-speed train project that would connect Los Angeles to Las Vegas. Brightline West aims to start construction in the upcoming year, with the goal of having trains between Las Vegas and Rancho Cucamonga running by summer 2028 just in time for the Olympics.
This 218-mile, all-electric high-speed rail service in SoCal will include additional stations in Apple Valley, Hesperia, and Rancho Cucamonga connecting on to Union Station in Downtown LA.
Significantly, the California Speed Rail system would in the future connect to the Las Vegas train line along the 54-mile High Desert Corridor line from Palmdale to Apple Valley. California high-speed rail will have a station in Palmdale. This would allow visitors from the San Joaquin Valley and the Bay Area to travel by high speed train to Las Vegas in a matter of hours. This planned connection will depend on funding for the Palmdale to Apple Valley line.
Water to be extended to Highway 5 development
This week Kings County LAFCO approved a plan to extend water service outside Kettleman City CSD’s jurisdictional boundaries to serve the highway commercial development of Jackson Ranch, some 4 miles south on I-5. Infrastructure at the big development is under construction.
The Jackson Ranch Specific Plan development currently does not have a surface water treatment plant to treat the water for safe drinking. The Kettleman City CSD already treats surface waters from the California Aqueduct and is the closest water purveyor. With the extension of service approved by LAFCo the Kettleman City CSD will provide the Jackson Ranch Specific Plan area with a consistent supply of water for health and safety purposes.
At full buildout of the Jackson Ranch development it is anticipated that the total water demand for the entire development will be 60 Acre Feet of water per year . The water supply assessment for the Jackson Ranch project concludes that there is a sufficient water capacity to provide water not just to this project but also to provide potentially additional water to be available to the Kettleman City Community Service District during years of drought, says a staff report.
An agreement is in place ensures that the Jackson Ranch developer will provide the Kettleman City Community Service District with sufficient water allocations from the California Aqueduct to meet all of the needs of the Jackson Ranch development and that the Jackson Ranch developer will also provide sufficient funds to pay for the treatment of water and conveyance of the water to the Jackson Ranch Specific Plan area so that the Kettleman City Community Service District is kept whole.
McCarthy won’t run again
News that Kevin McCarthy will not run for a new term in Congress will not will not likely result in an opportunity for Democrats to gain a seat in the Bakersfield area since the congressional district carved out by the legislature has a strong Republican majority.