California Housing Market Update: Buyer Demand Rebounds as Mortgage Rates Stabilize

As we approach the end of 2024, the California housing market continues to present a mix of opportunities and challenges. Whether you're a first-time homebuyer, a seasoned seller, or simply someone keeping an eye on the market, staying informed about the latest trends is crucial. In this detailed update, we'll dive into key aspects of the market, including mortgage rates, buyer demand, and the potential actions of the Federal Reserve. We'll also take a closer look at specific market data for key counties across California.

California Housing Market Overview

The California housing market has shown resilience in 2024, with strong job growth reported in July. However, a deeper analysis reveals that the situation may not be as positive as it first appears. While the state added 21,000 new jobs, the real picture is more complex. Many workers are taking on multiple jobs, and the number of unemployed workers has actually increased over the past 18 months. This mixed job market could lead the Federal Reserve to consider lowering interest rates later this year, providing a potential boost to the housing market.

Inflation has been a significant concern throughout the year, but recent trends suggest that it may finally be under control. For the second consecutive month, inflation has remained below 3%, giving hope that the Federal Reserve may lower rates in their upcoming meeting. This is good news for homebuyers, as lower rates could make housing more affordable. However, prices in the service sector, along with wages and housing costs, remain stubbornly high, making it challenging for inflation to drop as much as the Fed would like.

Mortgage Rate Trends

Mortgage rates have been a hot topic in 2024, with many wondering whether now is the right time to buy or refinance. Currently, the average rate for a 30-year fixed mortgage has stayed around 6.5% for the past few weeks. This stability is encouraging, especially as the bond market shows signs of optimism. The 10-year Treasury yield, a key indicator for mortgage rates, remains below 4%, suggesting that rates are unlikely to increase in the near future.

For homebuyers, this means that the current environment is favorable for securing a mortgage. If the Federal Reserve does decide to lower rates, we could see even more attractive mortgage options in the coming months. However, with rates holding steady, now may be a good time to lock in a rate if you're ready to make a move.

Buyer Demand in California

Traditionally, the real estate market in California experiences its highest buyer demand between April and August, with sales peaking in the summer. After that, the market typically cools off as kids head back to school and families settle in for the fall. However, 2024 appears to be breaking from this pattern. Despite the seasonal slowdown, buyer demand is showing signs of life, driven in part by a slight decline in mortgage rates.

Mortgage applications have seen their smallest decline this year, and pending sales in July jumped significantly. This increase in pending sales suggests that we may see stronger-than-usual home sales in the coming months, even as we move into what is typically a slower period for real estate. If you’re thinking about buying or selling, it’s important to keep these trends in mind, as they could impact your timing and strategy.

California Labor Market and Its Influence on Real Estate

The strength of California’s labor market is a critical factor in the state’s real estate market. While nonfarm job growth has been positive, the overall picture is more nuanced. The number of people actually employed has dropped by over 100,000 in the last 18 months, and the number of unemployed workers has grown significantly. Additionally, job growth has been uneven across the state, with smaller metro areas seeing faster growth than larger ones.

This uneven job growth could signal that economic activity isn’t as robust as the job numbers suggest, which may lead to further revisions in the future. For homebuyers and sellers, it’s important to consider these factors when making decisions, as they could influence the overall health of the housing market.

Predictions for the Winter Housing Market

As we look ahead to the winter months, there are several factors that could lead to an unseasonably strong housing market. Lower mortgage rates are likely to encourage more buyers to enter the market during the holiday season, especially if the Federal Reserve decides to lower rates further. Additionally, the upcoming presidential election could influence the market, as some buyers may hold off on making decisions until after the election, leading to a post-election bounce in activity.

If you’re considering buying or selling a home this winter, it’s worth keeping an eye on these trends. The combination of lower rates, a potential post-election surge in buyer activity, and improving economic conditions could create a unique opportunity in the market.

Practical Advice for Buyers and Sellers

While market trends and predictions are important, the best time to buy or sell a home is ultimately when you’re ready. Whether you’re in the contemplation, preparation, or action stage, it’s important to move forward when it aligns with your personal and financial goals.

For those in the contemplation stage, now is a great time to explore your options and gather information. If you’re in the preparation stage, consider getting pre-approved for a loan or beginning to prepare your home for sale. And if you’re in the action stage, work with a trusted realtor to navigate the market and make your move.

County-Specific Market Data

Let’s take a closer look at what’s happening in specific counties across California:

• Los Angeles County: Home sales increased by 11% from last year, with the median sales price at $940,000. Active listings are up by 37.4%, and homes are selling for 100% of the list price.

• Orange County: The median sales price stands at $1.39 million, with home sales up by 12.4% year-over-year. Active listings have also increased by 38.5%, indicating a busy market.

• San Bernardino County: Home sales rose by 22.2% from last year, with a median sales price of $515,000. Active listings are up, but many sellers are adjusting prices to meet market demand.

• Riverside County: The median sales price is $650,000, up 5.7% from last year. Homes are selling within 28 days, and active listings have seen a significant increase.

In Monrovia, the median sales price has reached $1.09 million, up 9.2% from last year. With only eight homes sold in July, it’s a competitive market with homes selling quickly at or above the list price.

Staying informed about the California housing market is key to making the right decisions for your real estate journey.

Whether you’re a buyer or a seller, understanding the trends, predictions, and data can help you navigate the market with confidence.

Remember, the best time to make a move is when you’re ready, and I’m here to help you every step of the way.

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