Will Housing Prices Drop In California 2024: 4 Things To Know
The situation is under control in the last quarter of 2024. The price is still very high, but the increase is now much lower, and the same can be seen for rent, mortgage rates, and other fees related to the housing market. However, the last few years have been quite challenging for people who are paying the rent or a loan. For instance, the mortgage rate increased from 3% to 7% during this year.
When it comes to California, the prices are around 4% higher when compared to the last year. For instance, the average price of a house in Los Angeles is around $850,000. On the other side, sales are dropping due to higher prices. That could lead to a decrease in 2024.
Therefore, if you are looking to rent or buy a house or apartment, the most important thing is to be aware of how the situation can be tricky these days. Therefore, the support of professionals in this area is necessary. In that matter, if you are interested in bay area real estate, or some other parts of California, you should check the listings that you can find here.
When it comes to the predictions related to 2024, there are many factors that can affect the stability of the real estate market. The world economy is facing many challenges, and that is affecting the real estate industry as well. Here are some of the most important things to know about the housing market in California and what to expect in 2024.
1. What Are the Current Trends?
It is important to research the current trends related to the housing market to create a more precise prediction for the following year. Still, it is quite complex because there are so many different factors that are causing instability. First of all, sellers are quite optimistic and tend to put a much higher value for their assets when selling.
The best example is the difference between the average price for a house, around $800,000, and the average closing price, which is under $700,000. The same trend can be seen for both condos and houses. However, an increase in prices in recent years did not lead to more options in active listings. On the contrary, the situation is quite the opposite, with a drop of more than 40% in available assets for sale.
When it comes to the renting, we can see a much higher stability, while the increase in prices is following the inflation and other negative economic trends that we are facing these days. The average rent is now over 10% higher than it was last year. That brings many experts to make the conclusion that we can expect the same in 2024.
2. Expert’s Expectations
The ongoing increase in prices is causing the real estate market to be more passive. In addition, people fear that we will face another recession in 2024, with serious consequences for the global economy, making many reconsider their plan to buy a house or a condo. However, while some people might think that the lack of potential buyers might lead to greater stability or even a decrease in value, chances are much bigger that this market will continue to follow inflation and other factors.
Moreover, the officials are planning to introduce new economic measures to fight the inflation, and that might cause a short-term recession in the US. That could be a factor that will lead to a more stable real estate market, at least when it comes to a rise in prices. According to many experts, there is even a chance that the value might drop up to 7% in some parts of California.
3. Factors That Are Affecting the Real Estate Market
Understanding how different factors could have a bigger or smaller impact on the real estate market is crucial. Some of them can be only short-term, while there are influences from internal factors that will determine the trends for real estate in 2024. The most important factors are the economy, demographics, interest rates, official regulations, trends in the market, and more.
With many indications that we might face recession in the following year, it is expected that the number of sales will drop significantly. The simple reason for that is that people are not ready to spend a lot of money. Also, the interest rates are higher these days, which is affecting those interested in a mortgage.
On the other side, California is a very popular state, and a lot of people are interested in moving there due to high potential to start a career in various areas. Therefore, renting will continue to be very popular, and the expected rise of rented apartments will increase. The price of rent will continue to increase as well, and the pace should remain the same as it was in 2024, but there are many political and economic factors that could cause even higher prices.
4. Is It Realistic to Expect a Price Drop?
While the current trends show that the market is getting some level of stability and even a slight drop compared to the first two quarters of 2024, the same conditions might remain only for the first quarter of 2024. Even though there are factors causing the drop in prices, inflation and other financial challenges will most certainly lead to an increase at a certain point.
The interesting fact is that now might be the best moment to buy a house. It is questionable whether the current negative trend with prices will remain for longer, while long-term projections say that the prices will surely become higher by the end of 2024. Therefore, investing in property in California can be a great investment for keeping your funds safe in a recession.
Last Words
There was a rapid increase in prices seen in last few years, and that lead to drop in sales, which is expected. People are not sure whether it is a good idea to buy now or wait for houses to become cheaper. Still, it is challenging to predict whether the prices will remain stable or start increasing rapidly again.
