The California Association of Realtors has forecast a significant increase in home sales next year of 22.9% to 327,100 units. And they predict a home price growth of 6.2% in 2024 to $860,300.
They believe the severity of the housing shortage will push prices up. However, mortgage rates might fall a little in 2024, it likely won’t be enough to encourage homeowners to sell.
Homeowners may have to wait until 2025, before rates fall significantly and when that occurs, the California economy will surge and more buyers will be buying. Lofty home prices and high mortgage payments are the key stopping point and that in turn feeds higher rent prices which fuels inflation.
“With the economy expected to soften in 2024, the Federal Reserve Bank will begin loosening its monetary policy next year. Mortgage rates will trend down throughout 2024, and the average 30-year fixed rate mortgage could reach the mid-5% range by the end of next year,” said C.A.R. Senior Vice President and Chief Economist Jordan Levine.
CAR’s data shows strong upward pressure on prices this year with active listings on the decline. High mortgage rates for longer means many homeowners will choose to avoid selling and face much higher mortgage payments, which are increasingly an issue for the inflation-weary.
House Price Growth in California all type. Screenshot courtesy of CAR.
Consistent with that theme, the August home sales report, perhaps surprisingly, reflects CAR’s suggested outlook for 2024. Homeowners are asking high, but now only 44% are receiving that price offer.
Home prices in California rose again in August, the biggest increase in 14 months. Single family home prices rose 3.3% while sales dropped by 5.3% vs July.