Tips for Buying Your First Home in California in 2024

Do you plan to buy your first home in California sometime during 2024? Wondering what the real estate market will be like next year, and how it might affect you? You’ve come to the right place!

Below, we have provided a real estate market update and outlook for 2024. This information will bring you up to speed on current market conditions, while improving your chance for success when buying your first home.

Tips for Buying Your First Home in 2024

The real estate market in California has changed a lot over the past few years, and it now appears to be settling into a kind of “new normal.”

Home prices dipped briefly, as part of a nationwide post-pandemic real estate slowdown. But now they’re on the rise again. Inventory levels, meanwhile, have declined over the past few months.

Here are some of the conditions you might encounter when buying your first home in California in 2024, and how to prepare for them.

1. Be prepared for inventory shortages.

Real estate inventory levels in California have declined over the past year. That same trend has affected many housing markets across the country, and it has made things more challenging for home buyers.

Depending on where you live, you might encounter a low-inventory situation when buying your first home in 2024. So that’s something to prepared for.

According to a November 2023 housing market update from the California Association of Realtors (C.A.R.):

Housing supply in California continued to shrink from a year ago in October as mortgage rates remained elevated. The statewide unsold inventory index (UII), which measures the number of months needed to sell the supply of homes on the market at the current sales rate, was 2.7 months in October 2023 and 3.1 months last October.

This doesn’t mean you’ll be unable to find a home to purchase in 2024. It just means you’ll have to enter the real estate market with the right mindset, especially when it comes to house hunting and making an offer.

So let’s talk about those things next…

2. Allow sufficient time for house hunting.

When housing market inventory levels run low, as they are now, the house hunting process can take longer as a result. This is something you should expect if you’re planning to buy a home in California sometime during 2024.

The level of competition can vary depending on where you are on the pricing spectrum. In the more affordable pricing tiers (where many first-time buyers tend to shop), there’s often more competition.

Regardless of your budget, you’ll want to allow plenty of time for house hunting in order to find the right property.

It’s also wise to conduct some local real estate market research before you start shopping for a home. This will give you some insight into the types of homes you can afford within your price range, and how much they are selling for currently.

3. Make your first offer as strong as possible.

Once you have found a home that meets your needs and falls within your budget, you can make an offer to purchase it.

This is a critical step that needs to be handled with care. If you offer too little, the seller might reject your offer and choose one from a competing buyer. If you offer too much, you could end up overpaying for the property.

This is where that market research comes back into the picture. Your real estate agent can help you determine a reasonable offer, based on recent sales data for similar properties. Ultimately, however, this decision rests with you.

If you’re buying your first home in California 2024, you’ll want to make your initial offer as strong as possible. This means offering a reasonable amount based on comparable sales, and supporting your offer with such data.

Exercise caution when it comes to adding contingencies to your offer. As we’ve explained in a previous article, real estate contingencies give you an added layer of protection when buying a home.

But they can also make your offer less attractive to the seller.

Home buyer contingencies tend to be more frequently used in a slower market, where buyers have more negotiating leverage. But in a more competitive market with limited inventory, such contingencies can bring more risk for the buyer.

So talk it over with your real estate agent and come up with a reasonable strategy before you start house hunting.

4. Watch out for rising home prices in 2024.

Home prices in California declined during the second half of last year and into the first few months of 2023. But that trend now appears to be reversing. The statewide median home price has risen for the past five months in a row.

To quote the C.A.R. report mentioned earlier:

Home prices rose again from the year-ago level for the fourth straight month, as the statewide median price recorded its largest year-over-year gain in 17 months.

The statewide median home price was around $840,000 as of October 2023, according to C.A.R. data. It’s over $1 million in parts of Southern California and here in the San Francisco Bay Area.

Housing market analysts expect house values to continue climbing in 2024, perhaps throughout the entire year. In a forecast issued back in September, C.A.R. researchers predicted that the median home price for California would increase by around 6% in 2024.

Because of this, first-time buyers in California might want to act sooner rather than later, to avoid higher housing costs down the road.

No one can predict the future housing market or home price trends with complete accuracy. But with the current supply and demand situation across the state, it seems likely that prices will continue climbing for the foreseeable future.

Have mortgage questions? We’ve been helping first-time buyers in California for nearly 20 years. If you’re planning to buy a home in 2024 and need mortgage financing to make it happen, please contact our staff!