Navigating the Spring Real Estate Market in Southern California: What to Expect
As spring approaches in Southern California, the real estate market is gearing up for what is typically a busy time for buying and selling homes. However, the past four years of pandemic-influenced market fluctuations have made it difficult to predict what to expect this season.
One major factor to consider for those looking to buy a home is borrowing costs. Mortgage interest rates have been on the rise, with the average rate on a 30-year fixed mortgage reaching 6.9% as of last week. This means higher monthly payments for buyers, but still lower than the peak rates seen in October. The Mortgage Bankers Association forecasts rates to average 6.6% in the second quarter and end the year at 6.1%.
For sellers, high rates may mean fewer potential buyers attending open houses, but there are still buyers out there willing to pay at today’s higher rates. Some homes are even receiving bidding wars from wealthy buyers who can afford the higher mortgage rates.
In terms of inventory, new listings in January were up compared to the previous year in L.A. County, signaling a potential shift in the market. However, inventory remains tight due to many homeowners holding onto their low mortgage rates. Economists do not expect a return to normalcy soon, as building new homes in California remains challenging and high mortgage rates may deter some from selling.
As for home prices, they have remained relatively flat in recent months, partly due to high mortgage rates limiting bidding wars. However, experts predict that as buyers return in the spring, prices may start to climb again. Overall, Zillow expects home prices in January 2025 to be higher than January 2024 in the Southern California area.
While the real estate market in Southern California may not be as hot as it was during the pandemic boom, there are still opportunities for both buyers and sellers to make moves this spring. It will be important to stay informed on market trends and be prepared for potential fluctuations in borrowing costs and home prices.