California Housing Market Challenges and Rising Rates: C.A.R. Report
California’s housing market is currently navigating a delicate balancing act, with sellers enjoying favorable pricing while buyers face limited inventory and fierce competition. The latest data from the CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.) reveals a resilient market in 2024, despite challenges posed by rising mortgage rates.
In March, existing single-family home sales dipped by 7.8% from February, marking the first year-over-year decline in three months. However, the median home price surged to $854,490, a 6.0% increase from February and a robust 7.7% jump year-over-year. This price growth highlights the ongoing strength of California’s housing market amidst economic shifts.
While sales volume varied across regions, the Central Coast saw a notable 7.2% increase, bucking the trend of declines in other regions. The supply side of the market is showing signs of improvement, with more properties being listed. However, the pace of new listings may not fully match demand, leading to an imbalance between supply and demand.
Looking ahead, C.A.R.’s forecast predicts a substantial 22.9% jump in existing single-family home sales in 2024, with the median home price expected to climb by 6.2%. Factors such as decreasing mortgage rates and a more buyer-friendly environment are anticipated to drive this rebound.
Despite these positive projections, challenges remain, including high demand, limited supply, affordability issues, strict zoning regulations, and economic factors. The housing affordability index in California hit a 16-year low in the fourth quarter of 2023, with only 15% of households able to afford the median-priced home.
Rent prices in major California cities have also seen year-over-year increases, with San Diego leading at 8%. However, the market remains dynamic, with fluctuations in rent prices across different regions.
As the California housing market continues to evolve, prospective buyers and sellers must stay informed about market trends and economic factors to make informed decisions. The complex interplay of supply, demand, pricing, and affordability underscores the need for a nuanced understanding of the market dynamics in 2024.