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The California housing market experienced a slowdown in November due to high borrowing costs and a sluggish economy. According to the California Association of Realtors (C.A.R.), home prices dipped by 2.2% and sales declined by 7.4% compared to October. However, there is hope on the horizon as mortgage rates are expected to drop and the Federal Reserve plans to cut rates even further in 2024.
Realtor Sentiment: Navigating Uncertain Times
Realtors in California are feeling the impact of fewer properties entering the sales pipeline. They believe that sales will continue to decline, but prices will rise. Despite the challenges, real estate agents, homeowners, and homebuyers eagerly anticipate 2024, hoping for lower mortgage rates and increased opportunities in the market.
2024 Market Forecast: A Promising Outlook
C.A.R. is optimistic about its 2024 housing market forecast, citing falling mortgage rates, rising prices, economic expansion, and strong demand for homes. Home prices are predicted to rise by 6.2% to a median price of $680,300 next year. While housing affordability may remain flat, California continues to be an attractive destination for homebuyers.
November's Sales Activities: A Mixed Bag
Home sales declined across all major regions in California in November. The Central Valley region experienced the steepest drop (-14.4%), followed by the Central Coast (-10.4%). The Central Coast also witnessed a 9% decrease in single-family home sales, while the inland region saw a 1.1% increase in prices.
Statewide, the sales-to-list price ratio remained at 100%, and homes sold 8 days faster compared to the previous month. However, year-over-year house sales declined by 5.8%, indicating a less favorable market for buyers. Despite price drops in some counties, such as Napa (-19.75%) and San Mateo (-14%), sales did not pick up significantly. Southern California had different statistics, with Orange County homes selling for 2% more than in October and a year-over-year increase of 18.2%. In San Diego, prices rose by 1.7% in November, although sales were down by 16.9%.
California Condo Sales November: Stability Amidst Change
In November, California condo prices remained steady, while sellers received 8.2% more than they did a year ago. However, sales declined by 13.2% compared to October. The number of unsold condos and townhouses increased slightly.
Mortgage Rates and Payments: A Balancing Act
Although mortgage rates are declining, home prices continue to rise. Mortgage payment growth has increased by 13.1% compared to last year, while price growth has reached 6.2%.
Home Prices for California Counties: A Mixed Bag
Home prices in the Far North and Bay Area regions rose, while prices declined in all other regions of California.
Roller Coaster Home Price Ride Continues
Several counties experienced unpredictable trends in home prices. Napa County, after a 15.4% price surge in October, saw a significant drop of 19.7% last month. Santa Barbara also fell by 34.3% in November, following a 33% rise in October. San Mateo experienced a 14.3% decrease in home prices, while Monterey witnessed a 15.9% fall after a 19% rise the previous month. In San Francisco, prices fell by 7% after a 4.4% increase in October. However, sales in SF only declined by 3% after a significant drop of 39% in October. Southern California, which has the most significant impact on the state's average prices, experienced overall price increases compared to the previous year but a slight decline in recent months.
RedFin Report California: Consistent Findings
Redfin's house sales price numbers align closely with those of C.A.R.
Zillow Report for California in October: Promising Numbers
Zillow reports a rise in single-family home prices in California, with a median list price of $732,900 in October compared to a median sales price of $698,333 in September. Over 50% of homes sold above the list price, indicating a competitive market. Zillow currently has approximately 24,636 California home listings on its network.
Will California Home Prices Fall in 2024?
Despite the current decline in the buyer market, many prospective buyers with financial resources are waiting for mortgage rates to decrease further. Although rent prices are falling, and may continue to do so in 2024, higher prices could resurface as the economy recovers from a temporary downturn. However, economists have mixed opinions on the economic outlook. Lower energy prices and the return of manufacturing to the U.S. create a positive forecast for 2024 and beyond.
Forecasted for This Year: Challenging Times Ahead
The debt ceiling crisis and potential upward pressure on interest rates could deflate optimistic projections for sales. However, price increases are expected due to severe housing shortages. C.A.R. Vice President and Chief Economist Jordan Levine predicts a downward adjustment in home prices for 2023.
California Housing Market Forecast: A Balancing Act
C.A.R.'s baseline scenario for 2024 predicts a 22.9% increase in existing single-family home sales, reaching 327,100 units. The median home price is forecasted to rise by 6.2% to $860,300. Housing shortages and a competitive market will continue to drive prices upward.
The Rental Market: A Different Story
While the home resale market faces challenges, the rental market offers a different opportunity for investors. Rental property managers who utilize next-generation property management software are likely to generate the most profitability in 2023.
Californians' Desire to Move
California has the highest percentage of people looking to buy homes outside of the state. Florida, Texas, Arizona, Maryland, and South Carolina are the top states that attract California homebuyers. However, low, locked-in mortgage rates and relocation challenges deter some homeowners from selling their properties.
California Rent Prices: Market Insights
Eleven California cities rank among the most expensive for renters in the top 70 cities in the US. San Francisco, San Jose, Los Angeles, and San Diego are some of the cities with high rent prices. However, rent prices have decreased in various cities across the state compared to previous months.
Is it a Good Time to Buy a Home in California?
According to C.A.R.'s monthly Consumer Housing Sentiment Index, more consumers believe it is a good time to sell rather than buy a home. This sentiment is reflected in the current rental market, where rent prices continue to fall. However, with high demand, low mortgage rates, and low inventory, home prices are likely to increase, making it an attractive time for sellers.
Will California's Home Prices Continue to Rise?
Many factors contribute to the positive sales statistics in California, including a desire for suburban and rural living, record-low mortgage rates, increased space requirements, and affluent buyers ready to purchase homes. Low inventory levels in cities such as Los Angeles, San Francisco, San Jose, and San Diego further contribute to rising prices.
California Realtor's Survey: A Glimpse into Market Sentiment
The latest survey of Realtors reveals a growing sense of optimism among industry professionals. However, potential buyers remain hesitant to make real estate investments.
Wrap Up
The California housing market is experiencing fluctuations, with sales declining and prices stabilizing in certain regions. Despite the challenges, there is hope for a brighter future as mortgage rates are expected to decrease further. The rental market offers opportunities for investors, while home prices continue to rise due to strong demand and limited inventory.
