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California 2024 Real Estate Forecast

2024 CALIFORNIA HOUSING MARKET FORECAST

The California Housing Market Forecast for 2024, released on September 20, 2023, anticipates a resurgence in the state’s real estate sector, attributing it to a decline in mortgage rates. Predictions indicate a noteworthy recovery, with anticipated single-family home sales reaching 327,100 units, reflecting a substantial 22.9% increase from the projected 2023 figure of 266,200. However, this 2023 estimate is notably 22.2% lower than the 342,000 homes sold in 2022.

The forecast also envisions a 6.2% rise in California’s median home price, reaching $860,300 in 2024. This follows a projected 1.5% dip to $810,000 in 2023 from the 2022 figure of $822,300. Ongoing housing shortages and a fiercely competitive market are expected to maintain upward pressure on home prices throughout the upcoming year.

The key driver for the market’s resurgence in 2024 is the anticipated decline in mortgage interest rates from 6.7% in 2023 to 6.0% in 2024. This shift is expected to create a more favorable environment for both buyers and sellers, reigniting their motivation to engage in the market.

First-time buyers, previously challenged by a competitive market, are expected to pursue their homeownership goals in the coming year. Repeat buyers, overcoming the “lock-in effect,” are also anticipated to reenter the market as mortgage rates begin to decrease.

The forecast is contingent on a baseline scenario, assuming slower economic growth and cooling inflation in 2024. The U.S. GDP is projected to increase by 0.7% in 2024, following a predicted uptick of 1.7% in 2023. California’s nonfarm job growth rate for 2024 is estimated at 0.5%, up from a projected increase of 1.4% in 2023.

Consequently, the state’s unemployment rate is expected to rise to 5.0% in 2024, up from the projected 4.6% in 2023. Inflation is anticipated to gradually decline, with the CPI registering 2.6% in 2024, a decrease from 3.9% in 2023.

It’s crucial to note that this forecast is subject to uncertainty and risks, including the ongoing COVID-19 pandemic, geopolitical tensions, natural disasters, and policy changes. The forecast accommodates alternative scenarios, considering various assumptions and outcomes related to these factors.

In conclusion, despite challenges such as rising mortgage rates and limited inventory, the California housing market exhibits resilience. Striking a balance between supply and demand is vital, with regional variations expected based on local factors. For those navigating the California real estate landscape this year and beyond, staying well-informed and prepared for potential changes is paramount.