Navigating the 2024 California Housing Market: What to Expect

A Closer Look at the CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.) Forecast

The California housing market is no stranger to ups and downs, and if you're considering buying or selling a home in the Golden State, you're probably wondering what's in store for 2024. Well, the crystal ball has been gazed into, and the CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.) has released its "2024 California Housing Market Forecast." Let's dive into what this forecast predicts and what it means for you.

A Ray of Hope for Homebuyers:

One of the most exciting aspects of the C.A.R. forecast is the prediction of a rebound in the California housing market. The forecast suggests that 2024 could be a better year for both buyers and sellers. Why? Mortgage interest rates are expected to decline next year, creating a more favorable market environment.

Sales on the Rise:

According to the C.A.R. forecast, existing single-family home sales are projected to increase by a significant 22.9 percent in 2024. That's a jump from the projected 2023 sales figures. This increase in sales is primarily attributed to lower mortgage interest rates, which will motivate buyers and sellers to reenter the market.

Price Points:

While it's good news for sales, what about home prices? The median home price in California is expected to rise by 6.2 percent in 2024, reaching $860,300. However, it's important to note that this follows a projected 1.5 percent dip in 2023. Factors such as a persistent housing shortage and a competitive market are expected to continue driving up home prices.

Affordability Still a Challenge:

Housing affordability has been a concern in California for some time, and the C.A.R. forecast suggests that it's not likely to change significantly in 2024. Housing affordability is expected to remain flat at 17 percent, both in 2024 and the projected 2023 figure. This means that despite the rebound in the housing market, many Californians may still find it challenging to afford a median-priced home.

Economic Factors at Play:

The forecast takes into account various economic factors. Slower economic growth and cooling inflation are expected to contribute to lower mortgage interest rates in 2024, which should benefit buyers. However, it also predicts a modest increase in the U.S. GDP and a mixed job market performance, with nonfarm job growth expected to be modest.

Mortgage Rates and Flexibility:

One of the key takeaways is the expected decline in mortgage rates throughout 2024. The average 30-year fixed mortgage rate could potentially reach the mid-5% range by the end of the year. This is attributed to the Federal Reserve Bank loosening its monetary policy and improving economic conditions. Lower mortgage rates mean buyers may have more financial flexibility to purchase homes at higher prices, which could further increase housing demand.

Supply and Demand Balance:

Despite a projected increase in active listings of 10 percent to 20 percent, housing supply is expected to remain below the norm in 2024. The competitive housing market conditions are likely to persist, putting upward pressure on home prices.

In conclusion, the C.A.R. forecast for the 2024 California housing market offers a ray of hope for both buyers and sellers. Lower mortgage rates are expected to create a more favorable environment, encouraging market activity. However, the persistent housing shortage and competitive market conditions may continue to challenge affordability.

Whether you're planning to buy or sell a home in California in 2024, staying informed about these market trends and economic factors is crucial. As always, working with a knowledgeable real estate professional can help you navigate this dynamic market and make informed decisions. Stay tuned for updates as we move closer to 2024, and remember, the California real estate market is known for its resilience and ability to adapt to changing circumstances.