Economic Update — Week Ending January 2, 2026
By Tina Lucarelli - Local Realtor, Westlake Village, CA 91361
As we close out the first week of 2026, major economic indicators reveal a cautiously optimistic backdrop for the U.S. economy, with important implications for the national housing market and specific effects on local markets, such as Westlake Village, Thousand Oaks, and Santa Monica.
🔹 National Economic Overview
📈 Market and Bond Activity
U.S. financial markets kicked off 2026 with mixed signals. Major equity indices such as the S&P 500 and Dow Jones finished slightly higher, while the Nasdaq lagged, reflecting rotation within sectors and cautious sentiment from investors. Treasury yields — a key barometer for borrowing costs — climbed modestly with the 10-year U.S. Treasury yield around 4.19% as of January 2, 2026. Higher yields often reflect expectations of moderate economic growth and slightly tighter credit conditions.
📉 Mortgage Rates Near Multi-Month Lows
Mortgage rates have been one of the most talked-about themes as we head into the new year. According to weekly data surveys, the 30-year fixed mortgage rate has drifted to approximately 6.15%, marking its lowest level in about a year. Rates for 15-year fixed loans also eased.
Importantly, these rates remain above historical lows but have declined from peaks seen over the past few years, offering slightly improved affordability. Many forecasts expect mortgage rates to hover near 6% through 2026, albeit with potential volatility.
This decline is being supported by expectations of continued — albeit slower — Federal Reserve rate cuts compared with 2025, as policymakers evaluate inflation and labor market dynamics.
🏡 Housing Market Impact
📍 Westlake Village
Westlake Village remains one of the stronger local markets in Southern California. Recent data shows homes in the area with a median sale price near $2.0M, with prices up year-over-year.
This affluent market continues to attract buyers seeking quality of life, proximity to beaches, and strong schools. While buyers benefit from slightly lower mortgage costs, inventory constraints and sustained demand are keeping prices elevated.
📍 Thousand Oaks
In Thousand Oaks, home prices have also climbed — with the median selling around $1.1M, up over 4% compared to a year ago.
Buyers here are seeing a relatively balanced market compared with ultra-premium coastal areas: activity is stable, and time on market has increased modestly — suggesting that buyers may find modest negotiation flexibility, especially if mortgage cost concerns weigh on demand.
📍 Santa Monica
Santa Monica continues to operate at a high price point dictated by coastal demand and limited supply. While local price indices vary by source, coastal markets typically outpace inland areas in both value and volatility.
Across these Southern California markets, the broader state housing shortage — continuing to lag demand by millions of units — remains a structural support for home prices.
Lower mortgage rates may ease monthly payment pressure for some buyers, but strong price levels and inventory constraints mean affordability will remain a central challenge.
📈 What’s Ahead
Mortgage rates: Modest declines may continue if bond yields stabilize or recede, but significant drops below ~6% will likely require clearer signs of slowing inflation or economic headwinds.
Bond yields: The 10-year Treasury yield is a key driver of long-term borrowing costs; its movement around the 4.1–4.3% range suggests markets are balancing growth prospects with inflation expectations.
Home prices: Local housing markets — especially in Westlake Village, Thousand Oaks, and Santa Monica — are expected to stay firm in 2026, with mild to moderate price appreciation, supported by demand and constrained supply.
📌 Final Thoughts
As economic growth continues modestly and borrowing costs show signs of relative relief, buyers and sellers should approach the market with a data-driven strategy. Local nuances matter: while coastal and premium markets hold strong pricing, inland and suburban communities could offer slightly more balance or negotiating opportunities.
💡 Curious how these economic trends translate into action for your real estate goals? Whether you’re buying, selling, or planning for investment in 2026, let’s connect — I’d be happy to help you navigate today’s market with clarity and confidence.
Tina Lucarelli - Local Realtor - The ONE Luxury Properties, Inc. - DRE 02102354 - (310) 738-8089
