The covid-19 pandemic was a great year for homeowners. Prices soared, encouraged by record-low interest rates. This was as true in California compared to any other state, despite having some of the highest average prices in the country even before 2020. According to Zillow, prices peaked at more than $771,000 in July of last year. Staggeringly for buyers, homes have increase by an average price of $210,000 since April 2018.
But a smidge of good news could be coming Californian home-buyers way. The average house price has dropped in the last year, falling 1.7% since April 2022 to stand at $728,134.
Home prices are likely to continue falling. The median cost of existing-homes in the country fell in February for the first time in more than ten years. Prices are expected to fall nationally by 5% with the bulk of the price falls to happen in expensive areas, affecting California greatly.
“We’re estimating about a 5% drop nationally,” says Rick Sharga, executive vice president of market intelligence at ATTOM Data.
A big shake-up could be underway on the Pacific coast. Investment bank Goldman Sachs advised clients in a January letter that four US cities will see a major boom-to-bust comparable to that experienced during the 2008 housing bubble.At that time, across the US home prices tanked around 27% according to the S&P CoreLogic Case-Shiller index leading to the Great Recession.
Two of these cities are in California; strategists from the bank forecast homes inSan Jose and San Diego could lose about 25% of their value.
Instability with the FED and inflation likely to affect housing prices
These price reductions are in part a consequence of the higher interest rates encouraged by the Federal Reserve. Consistent rate increases, with another set for May, make it less encouraging to borrow money, a crucial aspect of home buying unless you are very rich.
Less people are buying houses, or are less willing to pay so much knowing their repayments will be larger. This is echoed in data provided by Zillow which shows more than half of homes in California being sold under their listed prices last year as well as existing-home sales being down 22.6% nationally on a year prior.
FAQs
Lower Median Home Price
Will 2023 be a good year to buy a house in California? ›
California Association of Realtors' latest report reveals single-family home sales across the state stayed flat for December 2023, while being down 7.1% from Dec 2022. The statewide median price for houses fell .
Will house prices go down in 2024 California? ›
Average Home Prices: The average median home price in California is $739,100, up by 6.5% 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 99.4%, with an incline of 1.3 pt YoY compared to September 2023.
How much will housing cost in 2023 in California? ›
What's happening in the California housing market at the regional level?
| State/Region/County | Nov. 2023 | Price YTY% Chg |
|---|
| Calif. Single-Family Home | $822,200 | 6.2% |
| Calif. Condo/Townhome | $660,000 | 8.2% |
| Los Angeles Metro Area | $785,000 | 9.0% |
| Central Coast | $955,000 | 6.1% |
5 more rowsDec 28, 2023
The months from March to June are the best time to buy a house in California. This is due to the higher inventory, increased competition among sellers, and potentially lower asking prices.
What will the housing market look like in 2024 in California? ›
California housing market will rebound in 2024 as mortgage rates ebb. Existing, single-family home sales are forecast to total 327,100 units in 2024, an increase of 22.9 percent from 2023's projected pace of 266,200.
Is it a good time to buy a house in California 2024? ›
Positive Rebound in California Housing Market. In 2024, the California housing market is expected to experience a rebound, primarily attributed to a decrease in mortgage rates. The forecast predicts a substantial increase of 22.9 percent in existing, single-family home sales compared to the projected pace of 2023.
Should I sell my house now or wait until 2024? ›
Best Time to Sell Your House for a Higher Price
April, June, and July are the best months to sell your house in California. The median sale price of houses in June 2023, was $796,400, which is expected to grow more in 2024. However, cities like Arcadia and San Mateo follow an upward trend throughout the year.
Will my house be worth less in 2024? ›
Not only will prices not drop substantially in 2024, but prices are actually more likely to continue rising. The National Association of Realtors predicts that when August 2024 rolls around, existing home prices will be 2.6% higher than the year before. Freddie Mac expects a 0.8% bump during the same timeframe.
Will house prices ever go down in California? ›
Historically, California has been considered one of the safest bets in real estate when it comes to appreciation and investor profits. However, a recent study by Realtor.com found several California cities could see property values decline in 2024.
Over these past dozen years, California housing has been a seller's market 38% of the time and “balanced” 62%. In that same period, the Realtors' median selling price for existing single-family homes rose at a swift 8% annual pace. Clearly, as California house hunters know, buyers were not driving the market.
Why is it so expensive to live in California? ›
Housing drives California's high cost of living — RentCafe's data show housing costs to be 101% more expensive than the national average. Transportation, utilities and food are 27%, 22% and 17% above average, respectively. While some coastal California cities lost population during the pandemic, housing values rose.
What percent of Californians can afford a house? ›
As per the latest quarterly assessment by the California Association of Realtors, only 15% of residents in California have the financial means to purchase a home at the median price, marking a 1 percentage point decline from the previous quarter and a 3 percentage point decrease from the preceding year.
What month are houses cheapest in California? ›
In general, home prices go lower during the late fall and winter, when most people are focusing on holidays and less people are home-shopping.
How much should I make a year to buy a house in California? ›
Zillow says seven metropolitan areas in the U.S., including four in California, require homebuyers to have an annual income of $200,000 or more to comfortably afford a home. Here's where and the annual income needed to comfortably afford a home: San Jose - $454,296. San Francisco - $339,864.
What time of year is cheapest to buy a house? ›
However, if you're looking for a bargain, you're likely to find the lowest prices in the winter. There are fewer buyers over the winter months, so many sellers take their homes off the market for the season with the plan to start fresh in the spring.
Is it better to buy house in 2023 or 2024? ›
In October 2023, the average interest rate for a 30-year fixed-rate mortgage hit 8% for the first time since 2000, according to Mortgage News Daily. The expert consensus is that mortgage rates will come down in 2024, and will generally land in the upper 5% to mid 6% range by the end of the year.
Is real estate worth it in 2023? ›
Advantages of a real estate investment in 2023
Investing in real estate can help diversify an investment portfolio, reducing the overall risk. Real estate investment provides a hedge against inflation, as rents and property values tend to increase with inflation.
Will 2024 be a better year to buy a house? ›
Here's where we'll probably find more affordability in 2024: mortgage rates. Though they're still relatively high, experts predict we'll see mortgage rates go down in 2024. The average 30-year fixed mortgage rate is generally expected to end up near 6% by the end of the year.
Why 2023 is the best year to buy a house? ›
FHA-backed home buyers are getting a discount, too. In 2023, the Federal Housing Administration reduced mortgage insurance premiums on all new FHA loans for the first time since the mid-2010s. The move lowered monthly payments by $300 per year per $100,000 borrowed and boosted home affordability.
