California Housing Market Forecast for 2024: A Stronger Year Ahead?

Last week, the California Association of Realtors (C.A.R.) published a housing market forecast for California extending into 2024. This forecast has become something of an annual tradition for the industry group.

Among other things, C.A.R. housing researchers believe that home prices and sales will both increase in 2024. This would mark a turning point from the past year, during which both prices and sales declined across much of California.

Here’s an overview of their outlook and predictions for 2024.

California Real Estate Forecast for 2024

On September 20, researchers from the California Association of Realtors published their “2024 California Housing Market Forecast.” This report offered a series of predictions relating to the real estate scene that are expected to occur over the next year or so.

The industry group expects some significant changes over the next 12 months. For one thing, they expect home prices to rise steadily after declining for much of the past year. They also expect a significant increase in the number of home sales across the state of California.

Here are some specific real estate market predictions contained in this report:

• Existing, single-family home sales are forecast to total 327,100 units in 2024, an increase of around 23% from 2023’s projected pace of 266,200.
• California’s median home price is forecast to climb 6.2% to $860,300 in 2024, following a projected 1.5% decrease to $810,000 in 2023 from 2022’s $822,300.
• Housing affordability is expected to remain flat at 17% next year from a projected 17% in 2023.

In the above context, “housing affordability” is defined as the percentage of households who can afford to purchase a median-priced home.

The Mortgage Rate Variable

Many of the group’s predictions for the California real estate market are based on the assumption that mortgage rates will decline over the next year or so. As you might already know, mortgage rates rose substantially last year and are now hovering above 7%, on average.

C.A.R. researchers believe that mortgage rates will come down a bit in 2024, due to slower economic growth and cooling inflation. This in turn would create a more favorable market environment for both buyers and sellers, possibly leading to an increase in home sales.

According to current C.A.R. president Jennifer Branchini:

2024 will be a better year for the California housing market for both buyers and sellers as mortgage interest rates are expected to decline next year. A more favorable market environment with lower borrowing costs, coupled with an increase in available homes for sale, will motivate buyers and sellers to reenter the market next year.

When this article was published, in late September 2023, the average rate for a 30-year fixed mortgage loan was hovering around 7.19%. That’s based on the nationwide survey conducted by Freddie Mac.

Real Estate Supply Levels Expected to Increase

One of the group’s predictions for the California real estate market in 2024 offered some good news for home buyers. According to the C.A.R. forecast, we could see a 10% – 20% increase in the total number of active real estate listings next year.

But even with that kind of growth, the California real estate market would continue to experience a supply shortage. In 2024, there probably won’t be enough homes on the market to satisfy the demand for buyers. In other words, the status quo will likely prevail.

Still, it’s good to see that C.A.R.’s analysts expect a moderate increase in the total number of listings. This would give California home buyers more options to choose from while increasing the chance of finding a suitable property.

Any increase in inventory would be welcomed at this point.

Some Timely Advice for Home Buyers

In some respects, the fall is a great time of year to buy a home in California. According to a recent report from Realtor.com: “This early-fall period will offer buyers the most favorable moment to buy during the remainder of the year, with more home listings, less competition, and lower prices.”

But not everyone can rush out and buy a home within the next few weeks. A lot of home buyers in California have already decided to make their move in 2024. If you fall into this category, you will find the following tips helpful:

1. Consider making your move sooner rather than later.

The California housing market forecast for 2024 predicted that home prices across the state will rise steadily over the next year or so. If their predictions are accurate, the median home price in California could be 6% higher at the end of 2024 than at the start of that year. So it might make sense to buy a home sooner rather than later to avoid higher housing costs.

2. Expand your search zone as much as possible.

The C.A.R. housing market forecast predicts an increase in supply levels next year. But it probably won’t be enough to shift the market in favor of buyers. In 2024, we will most likely continue to experience a relative shortage where there aren’t enough properties available to meet the demand from buyers.

One way to overcome this obstacle is by expanding your search zone to include as many neighborhoods, communities and cities as possible.

Of course, commuting is a big factor here. Most people benefit by living within a reasonable distance from their work. So there are some obvious geographic limitations when it comes to buying a home.

Just know that you could increase your chance for success by house hunting over a broader area rather than a smaller one. It will give you more properties to choose from and possibly help you save money as well. Home prices and competition can vary significantly from one area to the next.

3. Be prepared for multiple-offer scenarios.

If the California real estate market becomes more competitive in 2024, as predicted, home buyers will want to be prepared for multiple-offers scenarios. This occurs when multiple buyers submit offers on the same property at the same time. And it requires forethought and planning.

Granted, we probably won’t see the kinds of fierce bidding wars that were so common during the pandemic-fueled home buying frenzy. But it does seem possible that the market could be more competitive for buyers next year, when compared to the slowdown of the past 12 months.

As a home buyer, you can prepare for this kind of situation by:

• Having a firm budget in mind
• Working with a market-savvy real estate agent
• Making a strong initial offer backed by sales data
• Knowing when to walk away

Disclaimer: This article contains predictions and forecasts for the California real estate market extending into 2024. Those views were provided by third parties not associated with our company. Housing market predictions are the equivalent of an educated guess.