California Housing Market Poised for Rebound in 2024
The California housing market is set to rebound in 2024, fueled by a decline in mortgage rates and a more favorable economic environment, according to the latest forecast by the CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.).
Key Points:
1. **Sales Surge:** The forecast predicts a significant surge in existing, single-family home sales, with a projected increase of 22.9% in 2024, reaching a total of 327,100 units. This follows a slower pace in 2023, with 266,200 units expected.
2. **Price Movement:** California's median home price is anticipated to climb by 6.2% in 2024, reaching $860,300. This comes after a projected 1.5% decrease in 2023 to $810,000 from 2022’s $822,300.
3. **Housing Affordability:** Despite the market rebound, housing affordability is expected to remain steady at 17%, both in 2023 and 2024.
4. **Market Environment:** Slower economic growth and cooling inflation are expected to bring down mortgage interest rates in 2024, creating a more favorable market environment for buyers and sellers alike.
5. **Optimistic Outlook:** C.A.R. President Jennifer Branchini states, “2024 will be a better year for the California housing market," as lower borrowing costs and increased housing supply motivate buyers and sellers to reenter the market.
6. **Buyer Opportunities:** The decline in mortgage rates is expected to particularly benefit first-time buyers who were previously challenged by a highly competitive market. Repeat buyers are also anticipated to return as mortgage rates trend down.
7. **Economic Landscape:** C.A.R.'s forecast also predicts a modest increase in the U.S. gross domestic product (GDP) and a 0.5% growth in California's nonfarm job sector in 2024. However, the state's unemployment rate is expected to rise to 5.0% in 2024.
8. **Inflation and Mortgage Rates:** Inflation is projected to decline gradually, with the Consumer Price Index (CPI) registering 2.6% in 2024. Although the average 30-year fixed mortgage interest rate is expected to decline from 6.7% in 2023 to 6.0% in 2024, it remains relatively elevated.
9. **Housing Supply:** Despite an anticipated increase in active listings, housing supply in 2024 is expected to remain below the norm due to market conditions and lending environment improvements.
10. **Future Trends:** C.A.R. Senior Vice President and Chief Economist Jordan Levine suggests that as the economy softens in 2024, the Federal Reserve Bank will likely loosen its monetary policy, leading to a further decline in mortgage rates.
In conclusion, the California housing market is poised for a rebound in 2024, offering new opportunities for buyers and sellers. The combination of lower mortgage rates, increased housing supply, and a more favorable economic landscape paints a positive picture for the state's real estate market in the coming year.