California’s housing market continues to evolve, with important updates that both buyers and sellers need to be aware of.  From the Federal Reserve’s interest rate cuts to the fluctuation in home prices, these changes are making a significant impact across the state. Whether you're a first-time homebuyer or a seasoned seller, understanding these shifts will help you make the best decisions in today’s real estate market.

Impact of the Fed’s Rate Cut

In September 2024, the Federal Reserve made a significant move by lowering its benchmark interest rate by 0.5%. This cut was made in response to a steady decline in inflation, which has been rising consistently over the past year. Although mortgage rates are not directly tied to the Fed’s rate, they are influenced by it. In fact, before the rate cut was even announced, many banks had already started to lower mortgage rates in anticipation.

For buyers, this means it could be a good time to secure a more affordable mortgage. Lower interest rates result in lower monthly payments, which might allow you to purchase a bigger home than you initially planned. For sellers, this is also good news. With more buyers entering the market thanks to the rate cut, you could see more offers coming in on your property.

Home Prices in California

While interest rates are coming down, home prices are still rising, though not as fast as before. In August 2024, California home prices increased by 3.4% compared to last year, marking the 14th consecutive month of price growth. However, month-over-month growth between July and August was only 2%, which is the smallest increase we’ve seen between these months since 2008.

This slower growth may be a sign that home prices are stabilizing. For buyers, this could mean less pressure to rush into the market, but prices are still expected to increase gradually. Sellers may need to adjust their expectations, particularly when it comes to setting the right price for their home in today’s market.

Buyer and Seller Challenges in a Shifting Market

Many buyers are taking a “wait and see” approach, hesitant to make a move while interest rates are still fluctuating. This has led to a slowdown in home sales, with August seeing a 6.3% drop in sales compared to the previous month. However, pending sales are up, indicating that buyers are still interested in the market but may be waiting for better timing.

For sellers, this presents its own challenges. With fewer buyers actively making offers, pricing your home correctly becomes crucial to avoid it sitting on the market for too long. You’ll want to attract interest without undervaluing your property—finding the right balance is key in this evolving market.

Regional Breakdown: LA, Orange, Riverside, and San Bernardino Counties

The California housing market varies from region to region, and it's important to consider what's happening in your specific area. Here's a quick breakdown of key data from Los Angeles, Orange, Riverside, and San Bernardino counties:

• Los Angeles County: In August 2024, 3,452 homes were sold, with the median sales price dropping to $928,000, down slightly from July. Active listings increased, and homes are staying on the market slightly longer than before. However, homes are still selling for about 100% of the asking price.

• Orange County: The median sales price for August 2024 is $1.4 million, reflecting a 6.9% increase year-over-year. However, fewer homes were sold in August compared to July, and the market is seeing more active listings and a longer time to sell.

• Riverside County: The median sales price in Riverside is $630,000, with a drop of $20,000 from July. Home sales have slowed, but active listings have risen, giving buyers more options. Homes are still selling for around 100% of the asking price, but 35.7% of sellers had to reduce their prices.

• San Bernardino County: August 2024 saw 685 homes sold in San Bernardino County, fewer than in July. The median sales price remained the same month-over-month, but year-over-year growth was 4.4%. Active listings are up, and homes are selling for 100% of their asking price, though 43.6% of homes required a price reduction.

The Impact of New Construction on Home Inventory

One of the most significant developments this month is the rise in new home construction across California. In August 2024, new home starts increased by an incredible 3.9%, with a particular focus on single-family homes. After a slow July, the market for new builds is picking up, with many developers feeling more confident due to lower mortgage rates.

This surge in new construction is great news for buyers, as it increases the available inventory, giving more options. For sellers, however, it’s crucial to monitor new builds in your area, as increased competition could affect home prices.

What the Future Holds for the California Housing Market

Looking ahead, the future of the California housing market remains uncertain but promising. With interest rates expected to drop further and more buyers returning to the market, we may see increased competition, especially in desirable areas. However, sellers should be mindful of pricing as the market cools and new construction ramps up.

Staying informed is key to navigating the shifting California housing market. Whether you're looking to buy or sell, understanding the latest trends and data will help you make the best decisions. If you have any questions or need personalized advice, don’t hesitate to reach out!

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