The housing market, in California is expected to experience a rebound in 2024 due to a decrease in mortgage rates.
- It is projected that the number of existing single family home sales will increase by 22.9 percent reaching a total of 327,100 units in 2024 compared to the estimated pace of 266,200 units in 2023.
- The median home price in California is predicted to rise by 6.2 percent to $860,300 in 2024. This follows a projected decrease of 1.5 percent to $810,000 in 2023 from the price of $822,300 recorded in 2022.
- Housing affordability is expected to remain stable at around 17 percent year maintaining the level as projected for the year 2023.
According to a housing and economic forecast released by the CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.) slower economic growth and decreased inflation will lead to mortgage interest rates in 2024. This favorable market environment is anticipated to stimulate home sales across California year. C.A.R.s “2024 California Housing Market Forecast” envisions an increase of 22.9 percent in existing single family home sales reaching around 327,100 units compared to the estimated figure of around 266,200 units for the year 2023. It’s important to note that this projected figure, for homes sold in 2023 represents a decrease of about 22.2 percent when compared with the pace of 342,000 homes sold during the year.
According to predictions the median home price, in California is expected to increase by 6.2 percent in 2024 reaching $860,300. However there might be a dip of 1.5 percent in 2023 to $810,000 from its value of $822,300 in 2022. The housing market in the state faces challenges due to a shortage of homes and intense competition which will likely contribute to rising prices next year.
Jennifer Branchini, President of C.A.R. a real estate organization based in the Bay Area expressed optimism for the California housing market in 2024. She mentioned that mortgage interest rates are anticipated to decrease year and create a favorable environment for both buyers and sellers. Lower borrowing costs combined with an increase in homes for sale are expected to motivate individuals to enter or reenter the housing market. First time buyers who faced difficulties during years might have chances of achieving their American dream next year. Additionally repeat buyers who previously refrained from entering the market due to factors will likely return as mortgage rates start trending downwards.
C.A.R.s forecast for 2024 also suggests a growth rate of 0.7 percent for the U.S. Domestic product (GDP) following an anticipated increase of 1.7 percent, in 2023.
According to the data Californias job growth rate is predicted to be 0.5 percent, in 2024 which’s slightly lower than the projected increase of 1.4 percent for 2023. Consequently the states unemployment rate is expected to rise from 4.6 percent in 2023 to around 5.0 percent in 2024.
Over the year and a half inflation will gradually decrease, with the Consumer Price Index (CPI) reaching around 2.6% in 2024 compared to 3.9% in 2023. As a result although there will be a decline from the mortgage interest rate of 6.7% in 2023 it is forecasted that it will still remain relatively high at 6.0% in the year ahead. It should be noted that even though this projected average interest rate for a thirty year fixed mortgage will be higher than pandemic levels observed during recent years it will be lower than the long term average of nearly 8% over the past five decades.
Despite an increase of listings by about10 20% housing supply is expected to remain below normal levels throughout the year due to ongoing market conditions and improvements, within the lending environment.
Given that there are expectations of an economic slowdown in20124 it is likely that year we’ll see monetary policy being eased by The Federal Reserve Bank.
According to Jordan Levine, the Senior Vice President and Chief Economist of C.A.R. mortgage rates are expected to decrease throughout 2024. By the end of year it is anticipated that the average 30 year fixed rate mortgage could reach the mid 5% range. This downward trend, in rates may provide buyers with increased flexibility to purchase homes at prices. Consequently there could be a surge in housing demand and potential upward pressure on home prices.
2024 CALIFORNIA HOUSING FORECAST
p = projected
f = forecast
* = % of households who can afford median-priced home
CALIFORNIA ASSOCIATION OF REALTORS® (www.car.org) a leading source of real estate news and information for over 110 years is one of the state trade organizations in the United States. With, than 200,000 members dedicated to promoting professionalism within the real estate industry C.A.R.s headquarters are located in Los Angeles.