It was a tough Southern California market in 2023, according to the most recent report from the California Association of Realtors (CAR).
“Tight supply and high costs of borrowing continued to have a negative impact on supply and demand,” said the CAR report.
However, the report also noted that easing inflationary pressure and a soft economic outlook suggest that there will be some interest rate cuts on the horizon in 2024, which could spur a housing market recovery.
Americans are feeling more positive about the market as well, with mortgage rates declining to a 7-month low late last year, said the report, adding, “We could begin to see some increase in market activity at the start of the year.
“Meanwhile, home prices should maintain their upward momentum as tight supply remains the norm and the market will likely observe a mid-single-digit year-over-year growth rate in the statewide median price in at least the early part of 2024.”
According to Managecasa.com, which takes a similar stance, “Surveys show consumer sentiment is rising and realtors’ outlook is positive as well. Most of it might be ignoring the lagging effects of the rapid FED rate hikes, and focusing solely on cheaper mortgages coming. But sellers will still face steep challenges in selling their homes.”
Meanwhile, said Managecasa, “Baby boomers aren’t willing to let go of their homes, and thus, there doesn’t seem to be a more permanent solution for the housing crisis, and as the US and California economy return perhaps later this year, it’s easy to see home prices in California picking up the pace.”
And there is still a continuous demand in California, Managecasa added, saying, “While the state has suffered a major loss of businesses and residents, there is a continuous supply of new residents arriving and businesses being formed.
“The attraction of the Golden State never seems to falter,” added the site.
Numbers-wise, California home sales in December remained near the 16-year low reached in November and continued to drop year-over-year for the 30th straight month, according to CAR.
There was an annual sales level of 257,630, said CAR, which is a decline of 24.8% from the revised sales level of 342,530 reported in 2022.
CAR also noted that the annual sales decline in 2023 was the biggest drop in existing home sales in California since 2007. With rates moderated sharply at the end of 2023, home sales should see a bounce back in January and February, they said, but the improvement will be mild in the next couple of months.
According to the Car report, active listings in the state declined on a year-over-year basis for nine straight months, and the decline for the current month remained above 10%. New active listings at the state level also dipped from a year ago for the 18th consecutive month but the annual decline remained below three percent for the second month in a row.
Twenty-four of the 51 counties tracked by CAR increased in new active listings from December 2022, the report added.
“With mortgage rates remaining well below the cyclical peak reached last October, the market will hopefully see more for-sale properties being listed in the first quarter of 2024,” said CAR.
