C A.R. releases its 2024 California Housing Market Forecast

Table Of Content

• Big-picture housing market update
• What will the market be like for home sellers?
• A Huge Number of Homeowners Have Mortgage Rates Too Good to Give Up
• U.S. Economic, Housing and Mortgage Market Outlook – February 2024
• Mortgage rates ballooned beyond 8% for the first time in over 20 years
• U.S. Economic, Housing and Mortgage Market Outlook – March 2024

That same month, they also posted their biggest increase since 2021 as mortgage rates fell to under 7.4%, well below the high of 8%. Stockton is another inland city that may not seem like a hot destination but that has nevertheless seen an influx of bargain hunters when it comes to the cost of living. According to Norada Real Estate Investments, Stockton also suffers from a severe housing shortage, helping to push prices higher than expected.

Big-picture housing market update

Multifamily real estate is one of the best asset classes for hedging inflation. Affordable rental housing is essential to improving overall affordability and household stability in ... Even though growth slowed, the average rent price for all months through November in 2023 rose $10 to $1,992, the highest in history. This only worsened the affordability crisis across the country, especially for lower income families. Rent growth has outpaced wages for decades, but the most recent data states that the average renter now spends 30% of their income or more on rent. It started with a continuation of negative trends from the end of 2022 and turned into the least affordable year for home buying on record.

What will the market be like for home sellers?

His insights and advice have been published in numerous blogs beyond FlipSplit, and he keeps a close eye on market trends and statistics, which are updated weekly on his social media pages. Outside work, you can find him participating and serving at church, cycling, mountain biking, surfing around Orange County and beyond, and enjoying time with his wife and two daughters. If you’re looking to put your home on the market, knowing what’s going on both nationally and locally with real estate trends can help you make the best deal at the right time.

A Huge Number of Homeowners Have Mortgage Rates Too Good to Give Up

Those developments over the past month appeared to be the major catalyst for Freddie Mac’s big downgrade in its housing market outlook. With the economic landscape holding steady, the main difference over the past month is in the rates outlook and when the Federal Reserve may start easing. While some factors would have pointed to a population suddenly lacking the means or mobility to buy a new home, they were outweighed by other changes that created a seller’s market, with more buyers than homes available. The officials called for the state to plan for more than 2.5 million homes over an eight-year cycle. To help get us there, legislators enacted more flexible zoning rules to make it easier to build multifamily housing and for single-family home owners to add ADUs to their property. The most recent inflation data reflects a rate of 3.7 percent, according to the Consumer Price Index.

U.S. Economic, Housing and Mortgage Market Outlook – February 2024

Over the course of the quarter, a total of 3,434 homes were the subject of a foreclosure filing. Los Angeles was the largest contributor of new foreclosure filings (1,102 foreclosure starts in Q3). After increasing to a 20-year high of 7.08% in early November, mortgage rates have been on a downward path in recent weeks — a trend that is likely to continue in 2023.

Housing Market Predictions 2023: A Post-Pandemic Sales Slump Will Push Home Prices Down For the First Time in a Decade

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As a renter, I voted for Bass in the hope that she would be able to navigate the city’s complex housing approval system and streamline construction for subsidized and market-rate housing. Instead, her most ambitious housing-related reform, Executive Directive 1, has had mixed results. Like San Jose, Los Angeles is a city that seemingly always has premium-priced homes.

Rapidly falling rates could create a surge of demand that wipes away any inventory gains, causing home prices to rebound. It’s clear that homeownership remains a priority and we expect buyers will make significant efforts to prepare themselves financially. According to our 2022 First-Time Homebuyer Study, 58% of consumers said that they are likely to purchase in the next 12 months and 70% still see homeownership as an important step to building wealth. Forty-four percent of survey respondents indicated they are confident that they will be financially ready to purchase in the coming year, up 12% year-over-year. As an example, we found that two-in-five future homeowners plan to move in with family to help save money, up from one-in-five last year.

C.A.R. conducts survey research with members and consumers on a regular basis to get a better understanding of the housing market and the real estate industry. The C.A.R. Real Estate Mediation Center for Consumers has mediators available to assist buyers and sellers (as well as other parties to real estate transactions) in resolving their disputes. The forecasted top growth markets come in 44th to 98th among US metros when ranking by number of households. Louisville is the largest top market with roughly 518,000 households and Chattanooga is the smallest with 233,000 households. On average, these mid-sized metros employ a higher proportion of workers in manufacturing, government and education/healthcare jobs relative to the 100 largest US metros. These metros had a relatively low proportion of professional services employment, information technology and leisure/hospitality.

U.S. Economic, Housing and Mortgage Market Outlook – March 2024

As a result, sellers can expect more competition from other for-sale listings, longer sale timelines, and more negotiation with buyers. Overall, despite the sanguine sentiment, the economy continued to grow rapidly in 2023 due to strong consumer spending and the tight labor market. The rapid rise in mortgage rates caused home sales to significantly decline and as a result home price growth slowed. However, while demand fell, supply did not increase much at all due to the lock-in effect and by mid-2023 home prices were growing rapidly again due to the structural deficit in supply. The housing market remained frozen in 2023 due to lack of supply and high mortgage rates adding to affordability pressures. In 2020 and 2021, mortgage rates fell significantly hitting a historic low of 2.65% in January 2021 prompting many existing homeowners to refinance into these lower rates.

Surprisingly, the risk of natural disasters didn’t push home prices down in many at-risk metros. Data includes the 2023 average aggregated median rent prices for each of the 50 largest core-based statistical areas (CBSAs) compared to 2022 data from the same period. The U.S. median sale price peaked at $425,000 in June, just below last year’s record high of $433,000.

We expect the share of Americans relocating from one metro to another will slow to about 20% in 2023, down from 24% this year. Some Gen Zers will still prioritize job hubs like New York and Boston because their employers call them to the office, or because they prefer working alongside experienced colleagues and/or prefer big-city amenities. Builders will continue to pull back on constructing new homes next year, with year-over-year declines of roughly 25% in building permits and housing starts continuing into 2023. House hunters may need a higher credit score or lower debt-to-income ratio to qualify for a mortgage as lenders tighten credit standards due to rising unemployment. That said, those who do qualify may pay less in closing costs as lenders offer fewer products–which allows them to lower fees–to attract customers during the slowdown. Another pivotal factor for home prices in cheaper counties and rural areas is the increased popularity of remote work.

Instead of giving up the low payment on their previous homes, they’re keeping them and converting them into single-family rentals. With a tenant’s rent covering the mortgage while the owner’s equity continues to grow, this can be a win-win for the seller. For home buyers, though, these are more potentially affordable homes that won’t go on the market. Of the exit strategies investors are considering, none currently hold more potential than rental properties because of the unique correlation between rental rates and demand. With a price-to-rent ratio of 29.25, it is considered cheaper to rent in LA than to own. Even those who can afford to buy will be relegated to renters due to the lack of available inventory.

Denver Housing Market 2024 – Forbes Advisor - Real Estate - Forbes

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While it won’t be easy, homebuyers can tackle the 2023 housing market by being prepared. Look for experiences that seamlessly integrate affordability into the home search, like Realtor.com’s Buying Power Tool, to keep your journey focused. While time on market is expected to slow amid fewer home sales in the year ahead, well-priced homes in highly desirable markets may still sell quickly.

Divounguy also notes that several factors, including Millennials entering their prime home-buying years, wage growth and financial wealth are tailwinds that will sustain housing demand in 2024. At the same time, new single-family building permits ticked up 1% in February—the 13th consecutive monthly increase—according to the latest data from the U.S. A reading of 50 or above means more builders see good conditions ahead for new construction.

HAF plays an active role in addressing the ongoing housing affordability challenges facing California. The midwestern metros of Grand Rapids and Toledo lead the list in proportion of manufacturing jobs with 20.0% and 15.6% of total employment, respectively. Only El Paso bucks this trend with 5.3% of its workforce in manufacturing, lagging the average for the top 100 metros (7.5%). Instead, El Paso leads the list in proportion of government employment with 21.4% of its workforce. Similarly, Columbia, SC (home of Fort Jackson) and Augusta, GA (home of Fort Gordon) government employees make up 19.3% and 18.3% of the workforce, respectively. Gen Zers are entering into a workforce with more remote-work opportunities than ever before, which means they’ll have more flexibility in where they’ll choose to start their careers than older generations.

2022 and 2023 will likely be remembered as the years where the housing market sowed the seeds for future pent-up demand as would-be home buyers continue to get forced into the rental market due to affordability pressures. In the absence of new supply added to the housing stock, the release of this pent-up demand could come as soon as 2024. “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. “Buyers will have more financial flexibility to purchase homes at higher prices, which could generate increased housing demand and result in more upward pressure on home prices. In addition to having seen smaller sales and price jumps amid the frenzy of the pandemic home buying spree, the 2023 Top Housing Markets are somewhat insulated from the shock of rising mortgage rates for three reasons.