Housing Market Update
We have some exciting news for homebuyers and sellers in California! According to a recent forecast by the California Association of Realtors (C.A.R.), the median home price in California is expected to rise by 6.2 percent in 2024, reaching $860,300. This follows a projected dip of 1.5 percent to $810,000 in 2023 from $822,300 in 2022. One of the factors contributing to this upward trend in home prices is the persistent housing shortage in our state.
With a competitive housing market, buyers are facing increased pressure, which in turn drives prices higher. However, there's hope on the horizon! C.A.R. President, Jennifer Branchini, a Bay Area Realtor, anticipates a more favorable market environment in 2024. Mortgage interest rates are expected to decline, making it an opportune time for both buyers and sellers. Lower borrowing costs, coupled with an increase in available homes for sale, will motivate buyers and sellers to reenter the market next year. First-time buyers, who may have been squeezed out in the past couple of years, will have another shot at realizing their American dream. Additionally, repeat buyers, who may have been hesitant due to high mortgage rates, will be encouraged to return to the market with the downward trend in rates.
Looking at the broader economic outlook, C.A.R.'s 2024 forecast predicts a modest growth of the U.S. gross domestic product (GDP) by 0.7 percent, following an uptick of 1.7 percent in 2023. California's nonfarm job growth rate is projected to increase by 0.5 percent in 2024, up from a projected increase of 1.4 percent in 2023. However, with this growth, the state's unemployment rate is expected to increase to 5.0 percent in 2024, up from the projected rate of 4.6 percent in 2023. Inflation is predicted to gradually decline over the next 18 months, with Consumer Price Index (CPI) registering at 2.6 percent in 2024, down from 3.9 percent in 2023. As a result, the average 30-year, fixed mortgage interest rate is also expected to decline, reaching 6.0 percent in 2024. While still slightly elevated compared to pre-pandemic levels, this rate is lower than the long-run average of nearly 8 percent over the past 50 years.
Overall, the housing market in California presents an encouraging outlook for buyers and sellers in 2024. With a forecasted rise in home prices and declining mortgage interest rates, many aspiring homeowners will have the opportunity to achieve their dreams of owning a home. Keep an eye on the market as we move forward and take advantage of the favorable conditions. If you have any real estate related questions or would like to start your search today please feel free to contact me.
