California homes continued to sell at eye-popping prices last month. The median home sale price rose 4.5% year-over-year from $752,300 to $786,300 in September. The number of homes sold decreased by 5,357 homes to 21,603.
Interest rates are at 8.5%, but is California still a seller’s market? Let’s look at the facts.
Los Angeles homes sold for a median sale price of $988,000 in September, up 2.11% year-over-year. Homes in San Diego sold for a median sale price of $894,250, a 6.4% increase year-over-year. In fact, there were no markets in California where prices declined year-over-year.
Interest rates are at record highs, with few home buyers. But the inventory is so low that 46.7% of homes sold above the list price!
- If you are a home buyer: You can avoid bidding wars and avail seller concessions if you buy a home now. The 8.5% interest rate and mortgage payments are significant, but rates are unlikely to drop in the next few months. If they do, you can refi.
- If you are a home seller: You can lock in California’s high home prices. Homes listed on MLS sell faster and for 17.5% more than off-MLS homes. That could be thousands of dollars in additional proceeds if you sell via Houzeo.
The current California real estate market statistics don’t reflect the national trend of high demand and low supply.Home sales and property prices in California increased despite 2023’s slow market.
So, How is the Real Estate Market in California?
Swell! Home values in California rose by 38.17% in the last 5 years. Home sales decreased by 10.1% in September 2023 YoY and the mortgage rate climbed to 7.84%! So, California’s housing market remainsresilientand in demand.
Even if mortgage rates continue to increase alarmingly, home sales will not falter. So, if you want to sell a California property, now is the right time to list it on MLS.
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California Real Estate Market Statistics
- Average Home Prices: The average median home price in California is $786,300, up by 4.5% YoY. In 2024, experts predict the median sale price will increase due to the tight inventory. Currently, the sale-to-list price ratio is at 100.7%, with a decline of 1.4 pt YoY compared to September 2022.
- Home Sales: As per September 2023 data, home sales decreased by 19.9% YoY! In September 2023, 21,603 homes were sold, down from 26,960 in September 2022.
- Average Rent Prices: Rental costs vary statewide. An average tenant in Los Angeles pays $2,742, while the one living in San Diego pays $3,016.
- Median Days on Market: The median days on the market for homes for sale was 28 days, down by 8 days YoY.
- Pending Sales: The number of homes for sale grew by 28.8% YoY compared to 2022. Currently, there are 79,018 homes for sale in California.
- Months of Supply: The average months of supply is 2 months. California’s inventory isn’t as squeezed as the national housing market.
California Housing Market Predictions 2024
Californians have survived the shockwaves of skyrocketing mortgage rates and rising home prices of 2023. Here’s what we predict for California’s housing market:
- Home Sellers Will Return to the Market in 2024: Sellers who chose the sidelines in 2023 will come back. Especially those who can’t avoid new jobs or want to move to a cheap place. Whitney, the analyst who predicted the 2008 financial crisis accurately, has forecasted that baby boomers looking to downsize will also add up to 30 million housing units. Yowaza!
- Mortgage Interest Rates Will Stabilize by the 2nd Half of 2024: Mortgage rates hit 7.79% in October 2023, the highest level in 23 years. However, the rate dropped to 7.35% in November due to the softening labor market and slowing economy. Even the annual inflation rate went from 3.7% to 3.2%. We think the rates will remain above 6%, but they will stabilize in the second half.
- The Number of Home Buyers Will Rise: The historically high interest rates averted buyers in 2023. But mortgage demand rose after the interest rates lowered to 7.35% in November. The easing inflation and stabilizing rates will bring back house hunters.
- Home Prices Will Continue to Rise: Home prices rose steadily in the top metros across CA YoY, reaching $786K in September 2023. Experts predict home prices will continue to rise until the low supply-high demand dynamic changes.
- New Home Constructions Sales Will Increase: 12.3% of homes purchased in September were new homes, the highest since 2022. Home builders offered $30,000 worth of concessions to attract buyers in 2023. We think builders and sellers will compete for buyers in 2024.
- iBuyers Will Continue to Make Lowball Offers: iBuyers offered 104.1% of market value in 2021. They offered 86% in 2022 and around 70% in 2023. Opendoor and Offerpad have lost billions of dollars in 2023. As they struggle to survive, they will make lowball offers.
Bonus Prediction: Buyer Broker Commissions Will Be Negotiable!
In a shocking turn of events, the jury in Missouri awarded more than $5 billion in damages to the Sitzer-Burnett plaintiffs. This motivated nationwide home sellers to file grievances against NAR’s Cooperative Compensation Rule.
NAR’s Cooperative Compensation Rule or Participation Rule states that listing brokers must offer competitive compensation to buyer agents if they want to list properties on an NAR-affiliated MLS.
Sitzer/Burnett v. NAR
The Bombshell Lawsuit that Could End Buyer Agent Commissions
Lawsuits like Moehrl, Gibson, Batton, Nosalek, and Batton 2 challenge the Participation Rule. They accuse NAR and other top real estate companies of colluding and conspiring to keep agent commissions high.
If the jury also finds the defendants guilty in these cases, buyer agent compensation may change. Buyer agents may become obsolete by 2025! Phew.
While buyer agents are unlikely to be obsolete in 2024, they may be open to negotiating commissions. That’s probably how they will still have some skin in the game.
When Will the Housing Market Crash in California?
A housing market crash in California is unlikely.
California’s thrilling theme parks, diverse and delicious cuisine, and stunning coastline will continue to attract buyers. The Golden State is already the second-largest state in the U.S., with around 125,000 movers in 2022.
Irvine was the fastest-growing city in 2023. House hunters want a place in Southwest California; the most common neighborhood is the Miami-Fort Lauderdale-Pompano Beach area.
California’s job market is also strong. The unemployment rate is at 4.7%. In fact, California’s private sector employment grew by 4.1% in August 2023, faster than the national average of around 2.0%. And California’s friendly tax policies are a cherry on the top.
The average cost of living in California is $53,082. The median household income is $73,000. Living on the coasts of California is relatively affordable. So it is unlikely that California’s housing market would crash anytime soon.
2024: Is it a Buyer’s or Seller’s Market?
2024 will be a terrific market for sellers. (And buyers, too!)
Home prices in California are rising and will continue to rise till the supply-demand dynamic changes. The number of houses for sale in CA was 79,018 in September 2023. This is close to the 80K homes in the summer of 2023, a period that is regarded as the best time to sell a house in California.
In November, the mortgage rate plummeted from a two-decade-high rate of 8% to 7.35%, adding more new listings on the market. This shows that those who refused to sell due to mortgage rate lock are finally acclimatizing to 7% rates. Come Spring 2024, more homeowners will follow suit and list properties on California MLS.
The increase in new home listings in California has also brought back home shoppers who were hugging the sidelines. In fact, the recent uptick in mortgage applications shows that buyers are returning.
House hunters who could not find affordable homes in 2023 will also start shopping in 2024. The demand for California houses will increase – and that’s why sellers may be able to dominate the market.
However, new builds will compete for attention from buyers. Home builders have persuaded buyers to buy new construction homes with mortgage buydowns worth $30K in 2023! Builders will continue offering concessions in 2024, and home sellers may have to wage wars against them.
Listings of new constructions, baby boomers looking to downsize, and desperate home sellers will flood the market in 2024. The properties for sale in California will increase. So, whether you are looking for a condo in Los Angeles or a single-family primary home in San Diego, you will find your dream home next spring.
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Disclaimer: This article is for informational purposes only. It does not constitute an offer, solicitation of an offer, or any advice or recommendation. Houzeo doesn’t provide any legal or financial advice. The views and opinions expressed herein are those of the author and do not necessarily reflect the views of Houzeo Corp., its affiliates, or its employees. However, the author does not make any representation or warranty, express or implied, as to the information’s accuracy or completeness, nor does the author recommend that the attached information serve as the basis of any investment decision.
Frequently Asked Questions about California Real Estate Market
When will the housing market crash in California?
Not for the next few years. California's housing market will not crash in 2024. Despite 2023's skyrocketing interest payments and soaring home prices, Texans have managed to keep the market afloat.
What are the real estate housing market 2024 predictions for California?
2024 will be a stellar market for Texans. Here's our 2024 forecast for California housing market are: (1) Home sellers will return to the market come Spring 2024. (2) Number of houses for sale will increase (3) Property prices in California will increase marginally (4) Mortgage rates will stabilize in the latter half of 2024 (5) iBuyers will buy homes for lower than their fair market value. (6) Buyer agent commissions will be negotiable!
Are home prices dropping in California?
Nada. The property prices in California were up by 2.8% YoY in September 2023. In October, California's median sale price rose to $403,700, up 3% YoY. Until the scarcity of properties for sale subsides, house prices in CA will keep rising.
Is it a good time to buy a house in California?
Yes! Currently, there are very few buyers in the market compared to the supply of homes in California. The soaring interest rates has kept buyers at bay, so you can avoid bidding wars. As the mortgage rate stabilizes in 2024, more buyers will return, so we'd recommend you to buy a house now. If mortgage payments burn a hole in your pocket, you can always refinance.
» Best Time to Buy a House in California: Find out the best time to buy a California property & plan your finances accordingly.
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Greetings, enthusiasts of the dynamic California real estate market! As someone deeply entrenched in the nuances of real estate trends and data, let me delve into the intricacies of the information provided in the article.
Firstly, the author touches upon the recent performance of the California housing market, highlighting a 4.5% year-over-year increase in the median home sale price, reaching $786,300 in September. A notable decline in the number of homes sold is mentioned, down by 5,357 to 21,603. Despite a seemingly high 8.5% interest rate, the question arises: Is California still a seller's market?
The subsequent section dissects specific city statistics, emphasizing Los Angeles homes' median sale price at $988,000, reflecting a 2.11% year-over-year increase. San Diego follows suit with a 6.4% rise to $894,250. Notably, there's no reported market in California experiencing a decline in prices year-over-year.
The article navigates through the impacts of interest rates, acknowledging the record highs but emphasizing the paradox of a low inventory, resulting in 46.7% of homes selling above the list price. Homebuyers are advised to act now to avoid bidding wars, given the current interest rates, with the suggestion to refinance if rates drop in the future. Sellers are encouraged to capitalize on the high prices, especially through MLS listings, which purportedly lead to faster sales and higher proceeds.
Moving on to the California real estate market statistics, key metrics are presented. The average median home price is at $786,300, up 4.5% year-over-year. Home sales have decreased by 19.9% in September 2023 compared to the previous year, with 21,603 homes sold. Average rent prices, median days on the market, pending sales, and months of supply are also outlined.
The article then ventures into predictions for the California housing market in 2024. Anticipated trends include a return of sellers to the market, stabilization of mortgage interest rates in the second half of the year, an increase in homebuyers, and a continued rise in home prices. The prediction of increased new home construction sales and iBuyers making lowball offers is also noteworthy.
A surprising bonus prediction introduces the possibility of negotiable buyer broker commissions, citing ongoing lawsuits challenging industry rules.
Concluding with a glance at the likelihood of a housing market crash in California, the article asserts that such an event is unlikely due to the state's attractions, robust job market, and favorable tax policies. The forecast for 2024 suggests a market favorable to both buyers and sellers, with rising home prices and increased supply.
For those seeking more specifics, the article provides insights into the current state of the housing market and predictions for the future, advocating for informed decisions by potential buyers and sellers.
