California housing prices are projected to surge by 6.2 percent in the coming year, driven by a cooling inflation rate and a drop in mortgage interest rates, according to the latest report by the California Association of Realtors.
But that’s not all. The association also predicts a whopping 30 percent increase in single-family home sales in 2024, despite the price hikes.
With over 185,000 members, the California Association of Realtors expects a total of 317,100 homes to be sold in 2024, marking a significant 23 percent rise from the previous year. The average home price is also expected to reach a staggering $860,300.
According to Jennifer Branchini, the President of the California Association of Realtors, “2024 will be a better year for the California housing market for both buyers and sellers as mortgage interest rates are expected to decline next year.” She further added, “A more favorable market environment with lower borrowing costs, coupled with an increase in available homes for sale will motivate buyers and sellers to re-enter the market next year.”
The association also anticipates a surge in first-time home buyers who were previously unable to afford the highly competitive market in recent years.
Furthermore, repeat buyers are expected to make a comeback as mortgage rates begin to drop, as stated by the association.
Homes await buyers in the city of Irvine, Calif., on Sept. 21, 2020. (John Fredricks/The Epoch Times)
In addition to the housing market forecast, the association predicts a slower growth rate of 0.7 percent in the national gross domestic product (GDP) for the upcoming year.
While the association expects a 1.7 percent increase in GDP for 2023, the Congressional Budget Office forecasts a real GDP growth rate of only 0.1 percent for this year, after adjusting for inflation.
As inflation declines over the next 18 months, the interest rate on an average 30-year, fixed-rate mortgage is projected to drop from the current 6.7 percent to 6 percent in 2024, according to the association’s report.
National Sales Growth Predicted
In March, a panel of experts at Zillow, a national real estate company, also predicted a steady growth in national home prices starting next year, following a bottoming out in 2023.
According to Zillow’s panel of 117 housing market experts and economists, home prices are expected to decline by 1.6 percent until December 2023 due to higher mortgage rates dampening buyer enthusiasm.
However, starting from next year, the panel foresees a gradual recovery with an average annual price increase of 3.5 percent until 2027. This growth rate matches the stable period from 1987 to 1999, before the housing boom and bust cycle of the 2000s.
“The housing market is resetting,” said Jeff Tucker, senior economist at Zillow. “The sheer number of people in the first-time homebuyers age range and a lack of inventory should limit price declines. A return to more normal growth would be welcome after the rollercoaster ride that home prices have been on lately.”
How can potential buyers take advantage of lower mortgage rates and increased inventory in the 2024 housing market comeback?
Comeback in 2024, taking advantage of the lower mortgage rates and increased inventory. With more options available, buyers will have a better chance of finding their dream homes without facing bidding wars and skyrocketing prices.
On the other hand, sellers will benefit from the higher demand and increased competition among buyers. This could lead to quicker sales and potentially higher offers as buyers strive to secure a property in the face of rising prices.
However, despite the positive outlook for the California housing market in 2024, there are still concerns regarding affordability. The significant increase in home prices could potentially make it even more challenging for first-time buyers to enter the market. Additionally, the supply shortage in certain areas of the state might persist, limiting the options for buyers.
To address these concerns, it is crucial for policymakers and stakeholders to focus on strategies that promote affordable housing and increase supply. This may involve incentivizing developers to build more affordable housing units and implementing policies that protect tenants from excessive rent hikes.
Overall, the projected surge in California housing prices and home sales in 2024 signifies growth and recovery in the market. However, it is essential to ensure that this growth is inclusive and sustainable, allowing both buyers and sellers to benefit from a healthy and balanced real estate sector.
In conclusion, the California housing market is expected to experience a 6.2 percent increase in prices and a 30 percent increase in single-family home sales in 2024. This growth is driven by factors such as a cooling inflation rate and declining mortgage interest rates. While the market outlook is positive, there are concerns about affordability and supply shortages. It is imperative for stakeholders to prioritize strategies that promote affordability and increase housing supply to ensure a sustainable and inclusive market for all.
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