Waiting Until 2024 to Buy a House in California Could Cost You

A recent report from the California Association of REALTORS (C.A.R.) confirmed that home prices in California continue to rise in late summer 2023. If this trend continues, which seems likely, those who wait until 2024 to buy a home in California might end up paying a higher price.

CAR: California Home Prices Keep Climbing in 2023

Yesterday, the California Association of Realtors published its latest housing market update. This report offered insight into real estate market trends statewide and also within major metropolitan areas.

Here’s the gist of their report: Home sales in California have declined over the past year, mainly due to higher mortgage rates and tight inventory conditions. But home prices in California continue to climb, with the median sale price hitting a 15-month high in August 2023.

To quote the September 2023 C.A.R. update:

Rising mortgage rates and a continued shortage of homes for sale hampered California home sales for the third straight month in August, while the statewide median home price registered its biggest year-over-year gain in 14 months…

In August 2023 the statewide median home price was $859,800, up 3.3% from July of this year and up 3.0% from August 2022.

Like the rest of the country, California experienced a brief downturn in home prices during 2022. This was part of a post-pandemic real estate market correction, following a long period of skyrocketing prices.

In terms of home values, the California real estate market hit a post-pandemic “bottom” during June and July of this year. Since then, prices have been rising at a steady but more moderate pace.

And if history is any indication, home prices across California will continue to climb for the foreseeable future. This could create a sense of urgency among some buyers, particularly those who have tighter budgets and less money to put toward their housing payments.

Big Gains in San Diego, Santa Clara, and Santa Barbara

The C.A.R. housing market update also contained home-price trends for all of the state’s 58 counties. When measured from August 2022 to August 2023, some of the biggest price gains occurred within the counties of San Diego, Santa Clara and Santa Barbara.

In Santa Clara County (also known as Silicon Valley), the median sale price rose by 12.3% over the past year or so. San Diego County meanwhile posted a 12.8% annual increase, while Santa Barbara topped them both with a year-over-year price gain of 16.4%.

Here in the San Francisco Bay Area region, sale prices rose by around 5% during the 12-month period mentioned above.

Should You Buy a House Now or Wait until 2024?

When reading these types of reports, a lot of buyers will wonder the same thing. Should I buy a home in California now (during the latter part of 2023), or should I wait until 2024 to make a purchase?

You should only buy a home when you are emotionally and financially prepared to do so. So there are a lot of decisions that need to happen on your end, regarding your current financial situation and long-term plans.

But from a market and cost perspective, one could argue that it makes sense to buy a home in California sooner rather than later. If prices continue to climb as they have done in recent months, it could reduce buying power and affordability among home buyers statewide.

According to the C.A.R. report mentioned above, the statewide median sale price for existing single-family homes rose by 3% over the past year. If that pace holds up, a person who buys a home a year from now could end up paying 3% more than someone who buys today. And given the relatively high prices in California, that 3% could add up to a significant difference.

The statewide median sale price was around $860,000 last month. A 3% increase would drive that price up by nearly $26,000.

Granted, we’re veering into speculative territory here. We don’t know for sure what home prices in California will do going forward, and conditions can vary from one local market to the next. The point is, if the current trend of rising prices continues, buyers could encounter higher housing costs in 2024.

Housing Inventory Could Remain Tight in 2024

Low inventory levels continue to challenge home buyers in California, and those conditions will probably follow us into 2024 as well. Buyers can still succeed in this type of market. But it requires patience, planning and persistence.

To quote the C.A.R. report one last time:

Housing supply in California continued to shrink from a year ago in August 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 2.4 in August 2023 and 2.8 in August 2022. The statewide unsold inventory index was down 14.3 percent on a year-over-year basis.

Because of all of these trends, the fall and winter months of 2023 could be a good time to buy a home in California. Some buyers will choose to wait until 2024, once we get past the winter holiday months. But, as mentioned above, they might pay a price for waiting.

Real estate market activity tends to slow down through the fall, and especially into the winter. Weather and holidays are the two biggest reasons for this seasonal slowdown. California home buyers who enter the market during this timeframe could experience less competition and more motivated sellers.

Both of those things could help clear a path to homeownership.

Need a mortgage loan? Bridgepoint Funding can help you get a head start on your home-buying plans. We can review your current financial situation to determine how much you might be able to borrow. Please contact our staff with your financing questions or to get pre-approved.