Remember, there is a large but low-profile flock of folks with money who like to profit in a very old-fashioned way – savings accounts.

For almost two years, these investors enjoyed the highest rates on these zero-risk bets since the turn of the century. But now it seems the “bull market” for no-brainer savings may be coming to an end.

So for fans of these less-than-sexy investments, it may be time to get busy locking in some longer-term deals with certificates of deposit. And I wish I could end this column right here and tell you to simply go to your neighborhood banking institution and load up on attractive CD rates.

But unfortunately, finding decent deals is not very simple. So let me walk you through the CD maze.

First a history lesson

Before the Fed’s war on inflation began in 2022 with rising rates, the post-Great Recession era was painful for savers. Yields crumbled to near zilch as the Fed used cheap money to ease the financial woes. Then they repeated the tactic to soothe the pandemic’s business challenges.

Think about rates on 1-year Treasury bills – a benchmark for typical savings rates. In the last 38 years of the 20th century, 1-year yields averaged almost 7%. But they paid barely 1% on average since the global financial crisis erupted in 2008 – until 2023.

So last year’s 5% rates – the highest 1-year yields since 2000 – made savers euphoric.

What’s your stash?

First, figure out how much money you can put away for a year or more. This sum can be split into buckets by years, and you can match any savings needs to the maturity length of the CD.

Please be realistic with your liquidity needs. Most banks and credit unions – but not all – charge significant fees if you have to exit your CD early.

Where to look

If you contact your bank or credit union, it’s unlikely they have the most exciting rates.

Get online. A simple search will offer you numerous lists detailing “best” CD rates. Sadly, you’ll have to wade through a half-dozen personal finance websites to find a CD or two that stands above the pack.

Be aware that many CD rankings promote partner institutions. So highlighted rates may not be the best available. Still, institutions paying for this kind of marketing often offer decent deals.

Online friendly?

You’ll increase your odds for a worthy rate if you are willing to bank remotely.

Still, my quick survey of recent high-rate CDs found several offerings from institutions with California branches for anyone who still needs to do face-to-face business.

Another geography factor is that certain must-have rates come with geographic or other limits.

There are banks that only do business in certain states. And many credit unions have odd membership requirements, where you live being one of them.

The caveats

There also are some too-good-to-be-true offers.

First, make sure you’re getting a certificate of deposit from a federally insured institution. Some “best rate” list are sprinkled with annuities – an insurance company product that looks and feels a lot like a CD.

Also, make sure an attractive account has a fixed rate. Some institutions sell variable-rate CDs with yields that will certainly change as rates go down as forecast in the coming years.

Don’t forget to check what size deposit qualifies for a high rate.

Some deals come with high-balance requirements. And believe it or not, some “wow!” rates are good only for modest amounts. Savings above the maximums often get paid mere pennies.

But there’s a but …

Allow me to note two twists on CDs worth considering — if your head isn’t already spinning from all the details required to get what is supposedly a boring investment.

No-penalty CDs: Fixed rates for an extended term with two catches: Savers can withdraw money from the account early without penalty, but rates run slightly below similar offerings that come with early withdrawal penalties.

Still, they provide comfort to the saver who is anxious about tying up money for an extended period.

Brokered CDs: These are bought on financial markets – just like stocks and bonds. Curiously, some of the giant banks that offer next to nothing on their branch CDs will be very competitive in the broker CD world.

The “but” is that these can be confusing to acquire.

For the do-it-yourself investor, online brokerage accounts don’t make it easy to find or buy these CDs.

And if you go to a financial adviser with your stash of cash, you’ll likely get a pitch about other investments – most containing some level of risk – that you may not want to listen to.

Bottom line

Locking in two to five years of near-5% yields doesn’t make for “financial genius” bragging rights.

But CDs are great for earning extra money on your spare cash – or folks who need to know economic gyrations or political hijinx won’t dent their nest egg.

And today’s CD rates look like a bargain that will evaporate soon.

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

Remember, there is a large but low-profile flock of folks with money who like to profit in a very old-fashioned way – savings accounts.

For almost two years, these investors enjoyed the highest rates on these zero-risk bets since the turn of the century. But now it seems the “bull market” for no-brainer savings may be coming to an end.

So for fans of these less-than-sexy investments, it may be time to get busy locking in some longer-term deals with certificates of deposit. And I wish I could end this column right here and tell you to simply go to your neighborhood banking institution and load up on attractive CD rates.

But unfortunately, finding decent deals is not very simple. So let me walk you through the CD maze.

First a history lesson

Before the Fed’s war on inflation began in 2022 with rising rates, the post-Great Recession era was painful for savers. Yields crumbled to near zilch as the Fed used cheap money to ease the financial woes. Then they repeated the tactic to soothe the pandemic’s business challenges.

Think about rates on 1-year Treasury bills – a benchmark for typical savings rates. In the last 38 years of the 20th century, 1-year yields averaged almost 7%. But they paid barely 1% on average since the global financial crisis erupted in 2008 – until 2023.

So last year’s 5% rates – the highest 1-year yields since 2000 – made savers euphoric.

What’s your stash?

First, figure out how much money you can put away for a year or more. This sum can be split into buckets by years, and you can match any savings needs to the maturity length of the CD.

Please be realistic with your liquidity needs. Most banks and credit unions – but not all – charge significant fees if you have to exit your CD early.

Where to look

If you contact your bank or credit union, it’s unlikely they have the most exciting rates.

Get online. A simple search will offer you numerous lists detailing “best” CD rates. Sadly, you’ll have to wade through a half-dozen personal finance websites to find a CD or two that stands above the pack.

Be aware that many CD rankings promote partner institutions. So highlighted rates may not be the best available. Still, institutions paying for this kind of marketing often offer decent deals.

Online friendly?

You’ll increase your odds for a worthy rate if you are willing to bank remotely.

Still, my quick survey of recent high-rate CDs found several offerings from institutions with California branches for anyone who still needs to do face-to-face business.

Another geography factor is that certain must-have rates come with geographic or other limits.

There are banks that only do business in certain states. And many credit unions have odd membership requirements, where you live being one of them.

The caveats

There also are some too-good-to-be-true offers.

First, make sure you’re getting a certificate of deposit from a federally insured institution. Some “best rate” list are sprinkled with annuities – an insurance company product that looks and feels a lot like a CD.

Also, make sure an attractive account has a fixed rate. Some institutions sell variable-rate CDs with yields that will certainly change as rates go down as forecast in the coming years.

Don’t forget to check what size deposit qualifies for a high rate.

Some deals come with high-balance requirements. And believe it or not, some “wow!” rates are good only for modest amounts. Savings above the maximums often get paid mere pennies.

But there’s a but …

Allow me to note two twists on CDs worth considering — if your head isn’t already spinning from all the details required to get what is supposedly a boring investment.

No-penalty CDs: Fixed rates for an extended term with two catches: Savers can withdraw money from the account early without penalty, but rates run slightly below similar offerings that come with early withdrawal penalties.

Still, they provide comfort to the saver who is anxious about tying up money for an extended period.

Brokered CDs: These are bought on financial markets – just like stocks and bonds. Curiously, some of the giant banks that offer next to nothing on their branch CDs will be very competitive in the broker CD world.

The “but” is that these can be confusing to acquire.

For the do-it-yourself investor, online brokerage accounts don’t make it easy to find or buy these CDs.

And if you go to a financial adviser with your stash of cash, you’ll likely get a pitch about other investments – most containing some level of risk – that you may not want to listen to.

Bottom line

Locking in two to five years of near-5% yields doesn’t make for “financial genius” bragging rights.

But CDs are great for earning extra money on your spare cash – or folks who need to know economic gyrations or political hijinx won’t dent their nest egg.

And today’s CD rates look like a bargain that will evaporate soon.

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

Here’s one solid assumption for mortgage rates for 2024 – they’ll act like a yo-yo. Again.

To see the extremes that home loans go through, my trusty spreadsheet looked at swings in Freddie Mac’s weekly 30-year average fixed rate going back to 1972.

And over the past half-century, the average year’s highest rate was 8.4% vs. a 7% low. That translates to a typical 12-month period having a 1.4 percentage-point swing between the top and bottom mortgage rate.

Yes, rate volatility is fairly normal.

Three odd years

But the size of rate gyrations during the past three years has not been normal.

Remember, the Fed aggressively used interest rates to first stimulate a coronavirus-chilled economy, only to then hike rates to fight an overheated business climate.

Well, 2023 was sort of mainstream with rates running from a 7.8% high to a 6.1% low. That’s a slightly above-average 1.7-point spread, top to bottom.

Still, this was the 11th widest gap in any year during the past half-century.

Yet those fluctuations look tame vs. 2022 when rates ranged from 7.1% to 3.2% as the Fed ended its cheap-money policy. That 3.9-point chasm was the third-largest rate swing in a half-century. Bigger swings were seen in 1980 and 1982, another period when rate hikes were used to battle inflation.

And somehow all this recent mortgage turmoil followed a far calmer 2021 when the Fed used cheap money to prop up the coronavirus-chilled economy.

Rates moved only between 3.2% and the record-low 2.65% in 2021 – a half-point spread that was history’s sixth-smallest gap.

Simply stated, history clearly shows mortgage rates rarely move in a straight line.

Make or break

Do not forget, the ups and downs of rates put huge spins on a borrower’s purchasing power. These fluctuations can make or break many a homebuying deal.

During the past half-century, there’s been an average 15% difference between the monthly mortgage payment tied to a year’s highest mortgage rate compared to the size of the monthly check at the lowest rate.

Last year, there was a 19% swing, history’s ninth-largest gap swing.

And that looks stable vs. a painful 2022 and the largest gyrations of the past half-century – a 55% difference due to the Fed increasing rates aggressively.

All that excitement came after a placid 2021 when purchasing power swung only 7%.

Still, history strongly suggests that mistiming the mortgage market can be an expensive mistake.

Bottom line

I took this rate-swing history and applied it to 2023’s year-end 6.6% average rate to create a forecast range for 2024.

Some simple math suggests the average 30-year mortgage rate will run between 7.3% and 5.9% in 2024. And that’s without doing much thinking about the Fed’s next moves, how the economy might fare, or what’s next for inflation.

By the way, history says a year’s average mortgage rate landed within this forecast formula’s projected range 80% of the time.

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

Buzz: The housing market is apparently getting a boost from significant interest in the lowest-priced residences.

Source: My trusty spreadsheet reviewed First American’s home-price indexes for 30 of the nation’s biggest housing markets, which comes with a curious twist. These yardsticks slice markets into thirds based on price points for single-family homes within each metro area: the cheapest (starter homes), the in-between (mid-tier) and the priciest (luxury).

Topline

The overall price changes in these 30 markets averaged a 2.7% gain for the 12 months ended in August, not bad for a turbulent period for house hunting.

The past year’s biggest gains were an eclectic mix – Detroit (up 6.9%), St. Louis (6.6%), Orange County (6.5%), Baltimore (5.8%), Boston (5.7%), and Miami (5.5%).

Meanwhile, overall pricing was down in three markets with Austin (off 5.1%), Phoenix (off 2%), and Las Vegas (down 1.9%). This collection of cities saw rapid appreciation during the pandemic era.

California’s six markets tracked by First American had a coastal theme brewing among the larger gains. After Orange County came San Diego (up 5.3%), and Los Angeles County (4.2%). Smaller gains were found inland in Sacramento (2.7%), Inland Empire (1.2%), and Oakland (0.7%).

Details

It’s been a wild year. Rising mortgage rates first iced the market, but then house hunters adjusted and pushed prices higher on the few homes that were for sale.

In that whirlwind, a modest gap emerged in the average appreciation by price slice.

Starter home prices rose 4.1% in a year. Tops was Detroit (up 10.3%), followed by New York City-New Jersey (10.1%), Baltimore (9.7%) and St. Louis (9.6%).

Soaring mortgage rates have made homes unaffordable for most homebuyers, putting a focus on more affordable homes and helping to bump up pricing in the lower tier of the market.

Note that four markets showed starter-price declines, led by Austin’s 6.1% slip.

Luxury home prices rose 3.3%. No.1 was Atlanta, up 10.3%.

Top-shelf housing often dances to its own economic beat. That’s because folks with lots of money, the types who buy pricier homes, are often not as affected by broader economic trends that whack the wallets of typical Americans.

Still, four markets had luxury-price drops, led by Austin’s 2.1% slip.

Mid-tier home prices rose 2.2%. Orange County’s 7.6% gain was the highest.

Why such low price appreciation for most metros? Well, there’s not as much appeal here compared with real estate’s bargain basement. Nor is there any high-end sizzle.

And eight markets had depreciation in the market’s middle, led by Austin’s 5.9% dip. Yes, once high-flying Austin had the worst results – last in overall pricing and for all three price slices.

Bottom line

The broad but small price gains are certainly surprising considering it costs 22% more to finance the same loan amount in this period. Remember, 30-year fixed mortgage rates jumped to 7.1% from 5.2% in a year.

But the relative weakness in the market’s pricing center is puzzling, at a minimum.

Maybe this slice of the market is filled with long-time homeowners happy to stay put with a 3.5% mortgage to pay off?

Is this the type of housing that’s no longer popular with investors?

Perhaps the middle is where the must-sell activity is concentrated – deaths, divorces, debt problems, etc.

Or a gloomy thought: could the murky middle be the housing market’s warning signal.

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

It’s human nature to be skittish when news comes that a housing development is proposed for your community.

Change is hard. And, yes, if you’re a property owner, that little real estate valuation machine in your head starts spinning.

So being a tad “NIMBY” – that’s ‘Not In My Backyard” if you didn’t know – is a natural reaction to any development. Meanwhile, a sense of “greater good” – or what’s best for your community outside of your personal desires – may bubble up, too.

More broadly speaking, meeting California’s housing needs also requires deft give-and-take between conflicted  forces – especially the slice of the populace with a knee-jerk “no” to almost any construction plan.

As a public service, I thought we could measure our level of NIMBYism. So I’ve constructed a 12-question survey that looks at common objections to planned housing developments.

It’s a simple exercise. The goal is to gauge your general emotions about, say, say a housing proposal in your town but not right next door. (Those projects can make folks extra sensitive!)

For these 12 possible objections, tell us if they are typically a “major worry” for you compared with a “minor” worry. And keep a tally of the “big worry” answers. (Or go to bit.ly/nimbynumber to take the survey.)

Let’s get busy

1. Bad deal: “Who’d want to live there?” Objectors question the value of the proposed housing based on location, size, style and/or price point. (Note: That’s why “luxury” projects are seemingly easier to approve.)

2. Greenery: “Can’t we turn that land into a park instead?” is a common critique of new housing. And what’s an acceptable level of public spaces is a grand debate. (Note: Many cities now realize that parks are expensive and challenging to operate.)

3. History: The project will alter or end the community’s long-standing ties to part of its heritage. Rehabilitation of old commercial districts frequently runs into such objections. (Note: There’s probably a good reason why the land is available for redevelopment.)

4. Home values: New housing – especially if it’s somewhat “affordable” – can raise concerns about one’s personal real estate investment in the community. (Note: If so, can you then question the “greed” of the developers?)

5. Look: A project seems not to “fit” the feel of the surrounding community. Such upsetting variances can be design, size, density, or price point. (Note: So you like those one-look, bland, and overly planned master-planned communities?)

6. Master plans: A city’s “master plan” shouldn’t change to accommodate new housing. That’s local leaders breaking a “promise” to existing homeowners. (Note: Master plans, zoning, etc. are living documents designed to change over time.)

7. Public services: Water. Electricity. Public safety. Numerous folks worry we’ve spread these basic needs too thin already before adding more inhabitants. (Note: California’s stagnant population suggests new housing is more for current residents, not new ones.)

8. Renters: New rental complexes add folks not invested in the community. And renters tend to have weaker finances than homeowners. (Note: Well, think about the investment the landlord is making in your town.)

9. Retail retreat: Conversions of shopping centers to housing increase anxieties about the loss of consumer options. Or that new housing will further pack local malls. (Note: Much of California is wildly over-retailed by national standards.)

10. Schools: New housing often means more families. And you fear added educational demand will stress local school districts. (Note: An aging California population hints schools are running out of customers. New housing might keep them open.)

11. Traffic: You think of your own congestion nightmares and wonder what roads – local or regional – will handle the driving needs of these new residents. And where will they park? (Note: More housing closer to job opportunities can cut commutes and traffic.)

12. Wildfires: Projects in more remote terrains face questions about the safety of those residents. And if there’s a need for an evacuation, they’ll clog the streets everyone needs for a safe exit. (Note: New communities can serve as firebreaks for older neighborhoods.)

Bottom line

So, to get to your NIMBY standing, count the number of these concepts are “major worries” … then divide by 12.

The resulting score is your “NIMBY share” – and, by the way, I’m 17% NIMBY. My consistent major worries are does the look fit and will the project spreading civic services too thin.

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