Everyone loves predictions. We wake up and look at the weather forecast. Then, we consider other experts’ opinions on everything from the stock market to interest rates, automobile colors, and the Academy Awards. No one predicts any of these perfectly, but we still check.
Having an idea of the real estate market in 2024 can give investors, homeowners, and corporations a way to plan near-mid-term expenditures with greater confidence. Surely, handicappers in the Sport of Kings, horse racing, wanted predictions. They might have asked, “What do you think, my friend? Should I bet on Secretariat to win in the third race?”
We are not suggesting that real estate and horse racing are equal. However, it does help to know what the specialists think when approaching each one. Plus, everybody is guessing, and some people are better equipped than others to be correct. Your friend may or may not have the answer, but they may have done some research, which we can offer you here.
The following are updated versions of what we found in our blog, The California Real Estate Market in 2021. We were still in the throes of COVID-19 then. Let’s see what’s changed.
Recent Transactions and Their Implications in Southern California
As of this writing, three properties have recently been sold in Southern California. One sold here in April 2024 for $2.71 Million (it was on the market for one month and sold for $200K over asking). The CREM Group’s listing sold in January of this year at $1.45 Million at $200k (16%) over the list price. This “smaller” home that The CREM Group also listed sold in March 2024 for $650,000, a full 18.4% over the list price.
According to ZILLOW, all three properties sold relatively quickly, including the second one, which was a trust sale. What does that tell us about the rest of 2024?
It’s hard to say for sure, but
it’s pretty safe to be bullish on real estate in California.
Subject to minor variations, the usual real estate industry truisms endure: Location, supply, demand, and interest rates. We’ll take each in turn.
LOCATION, LOCATION, LOCATION: Two homes mentioned above are in ‘two-comma’ neighborhoods. That’s a one, a comma, three zeros, a comma, and three more zeros. The surrounding areas boast homes with grassy lawns, bikeable streets, and ok-to-really good schools. Although the last property (in Compton, California) had walkable and school scores that weren’t too great (and its curb appeal was less than stellar), it sold at a nice premium (18.4%) over the list price. California’s real estate should remain strong as we will see in the next sections.
SUPPLY: BIG homes are in shorter supply post-COVID. The number of people selling large homes has decreased with more people in Working From Home (WFH) mode.
DEMAND: Why were the sales quick? Larger homes in good neighborhoods appeal to families; many still seek that WFH elbow room. Parents need quiet spaces to work while the kids want noisy areas and yards to play in. The smaller (Compton) home above boasted three bedrooms, a den, and a generously sized two-car garage with a large backyard—demand for spacious living to any degree hikes prices these days.
INTEREST RATES: Interest rates reached a 23-year high in October of 2023. Recent rates have lowered, but as it’s an election year, some predictions are…hard to predict. Meanwhile, NBC News reported on March 19, 2024, that the Feds are holding interest rates above 5% as they continue to fight inflation. They mention that housing is one of the culprits in keeping the cost of living high and fueling inflation. It’s a vicious cycle of sorts.
What Will 2024 Bring?
Many people ask us what we think will happen in the California real estate market in 2024. We have three sources that can predict the future, as well as anyone. The California Association of Realtors paints the California picture, while The Home Buying Institute (HBI) and Forbes Magazine lend national perspectives.
THE CALIFORNIA ASSOCIATION OF REALTORS
C.A.R. Releases Its 2024 California Housing Market Forecast
California housing market will rebound in 2024 as mortgage rates ebb.
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- Existing, single-family home sales are forecast to total 327,100 units in 2024, an increase of 22.9 percent from 2023’s projected pace of 266,200.
- California’s median home price is forecast to climb 6.2 percent to $860,300 in 2024, following a projected 1.5 percent decrease to $810,000 in 2023 from 2022’s $822,300.
- Housing affordability is expected to remain flat at 17 percent next year from a projected 17 percent in 2023.
- Existing, single-family home sales are forecast to total 327,100 units in 2024, an increase of 22.9 percent from 2023’s projected pace of 266,200.
SOURCE: California Association of Realtors
THE HOME BUYING INSTITUTE (HBI)
“Here’s the short version. After peaking at 7.79% back in October, the average rate for a 30-year fixed mortgage loan declined steadily to end the year around 6.95%. Several economists and analysts have predicted that rates could continue falling throughout 2024 as well.”
SOURCE: The Home Buying Institute with input from the Mortgage Bankers Association (MBA) and Realtor.com
Note: If interest rates continue to decrease, and inflation continues to be controlled, the trend will be downward for interest rates, and home purchases may trend upward. There are lots of ifs, but the general feeling is positive. On the other hand, International events, pandemics, and climate effects impact people’s predictions daily.
FORBES: “Housing Marketing Predictions for 2024: When Will Home Prices Be Affordable Again?”
The Forbes piece echoes the comments on interest rates. Yes, they’re coming down somewhat, but the supply of single-family homes remains tight, and the first-time homebuyer continues to feel that home ownership is still just beyond their reach. Economists don’t expect (they’re guessing) interest rates to go below 6% until around 2025.
That brings us to another reason that home supply remains tight. Homeowners with those lovely 3% mortgage rates from early 2020 and into early 2021 don’t want to sell their homes!
What Do We Suggest?
As stated, this is an election year. Many changes in direction can occur, causing all manner of unpredictability. So, while we cannot say who is going to “win in the third,” we can say that the best course for buying real estate in California or anywhere is:
- Continue to save money for the down payment on your dream house,
- Work with professionals in real estate who can find the right place at the right price,
- Be ready by putting your “financial house” in order. Pay down your loans in a timely, responsible manner while still putting money aside.
- Consider a probate or trust home as your first residence. They’re usually less expensive, but they often pop up in excellent neighborhoods. It’s a great way to get started.
- Visit The CREM Group often for updates, new blogs, and the latest and greatest in trust and probate home trends.
- Remember that we also represent commercial properties too as well as “regular” (non-probate and trust) properties of all kinds.
Whom Do You Trust?
Trust those of us who have a good handle on the markets. Look for professional teams with a firm footing in their local real estate niche who will be here for the long haul. The CREM Group is one of those.
As long-time probate real estate agents and as attorneys working in and around all kinds of properties in Los Angeles and Orange Counties, The CREM Group has made sure we support our clients so they know the alternatives to buying, selling, or renting probate, trust, and conservatorship homes and commercial properties in California.
As always, contact us by email here if you have any questions about real estate, probate real estate, conservatorship, or trust real estate properties, especially in Los Angeles and Orange Counties in California.
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DISCLAIMER: This content is meant purely for educational purposes. It contains only general information about real estate matters. It is NOT legal advice and should not be treated as such. We recommend consulting a legal or tax professional before acting on any material, opinion, or perspective described herein.
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