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STYLE AND ACCESSIBILITY IN THE SOUTHERN CALIFORNIA MARKET

Friday, March 29, 2024   /   by Bob Cowan

STYLE AND ACCESSIBILITY IN THE SOUTHERN CALIFORNIA MARKET

SOUTHERN CALIFORNIA HOUSING MARKET 2024

STYLE AND ACCESSIBILITY IN THE SOUTHERN CALIFORNIA MARKET

House model in Southern California

Although CEOs and consumers are a little more upbeat about the economy, housing prices are still unabatedly high.

In the Southern California real estate market, availability and affordability are still crucial terms. Many homebuyers would probably still face difficulties in 2024, according to a new analysis from the California Association of Realtors (CAR).

California Association of Realtors Report

The analysis pointed out that although inflation is slowing down much more slowly than anticipated, interest rates may yet continue to decline.

The Labor Department's report on Tuesday, as reported by the Associated Press, indicated that the consumer price index increased by 0.3% in January compared to a 0.2% increase in December. Prices have increased by 3.1% from a year ago, which is less than the 3.4% increase in December and much less than the 9.1% inflation peak in the middle of 2022.

As to AP, the most recent figure remains far higher than the Federal Reserve's goal threshold of 2%.

According to the CAR research, the aggregate data points to consumers starting to have greater optimism about the state of the housing market. Those who have been holding off may decide to reenter the market if the economy continues to grow and rates continue to decline.

Since the end of 2023, sales and listings have been gradually increasing, according to CAR. Should the market momentum continue, the California housing market may have a promising start to 2024.

However, according to CAR, housing affordability remained a problem in California in the fourth quarter of 2023, with the state's index for existing single-family homes staying at 15%, unchanged from the previous quarter.

For a second quarter in a row, California affordability remained at its lowest point in sixteen years at the end of 2023 due to persistently high house prices in the state combined with rising mortgage rates.

The effective mortgage rate increased by 25 basis points (bps) from quarter to quarter and by 59 bps from the previous year to reach a 23-year high of 7.39% in the fourth quarter of 2023. The monthly mortgage payment for a median-priced home, including taxes and insurance, increased by 0.7% from the third quarter of 2023 and by 11.2% from the fourth quarter of 2022, according to CAR numbers.



In the fourth quarter of 2023, a monthly payment of $5,570 was required, based on CAR numbers, requiring a minimum yearly income of $222,800. According to CAR, home prices are still predicted to climb in 2024, therefore affordability will likely be low but may somewhat improve if rates decline over the course of the following year.

In the meanwhile, Fannie Mae's most recent Home Purchase Sentiment data showed another increase in January 2024, with the index rising 3.5 points to 70.7 in the most recent monthly reading—the highest level since March 2022.

According to CAR, this was caused in part by a rise in the percentage of consumers who anticipated a short-term drop in mortgage rates as well as an increase in consumer confidence in job stability.

According to the CAr survey, the percentage of respondents who believe that mortgage rates will decrease over the next 12 months actually hit a record high of 36% in January.

According to the report, despite this optimism, consumer view of buying a home remained negative. Only 17% of consumers said they thought now was a good time to buy, which is the same as it was the previous month.

In 2024, mood toward buying a home may be slightly more positive, but it will still be low due to the anticipated modest improvement in affordability in the upcoming quarters.

At the same time, consumers' estimates for inflation in the upcoming year were basically unchanged in January, according to the most recent New York Fed's Survey of Consumer estimates.

According to the CAR study, the median inflation expectation at a one-year horizon was 3% in January 2023, the same as in December 2023, but a significant decrease from the 5% recorded in January 2023.

According to the report, two out of every five respondents (41.3%) expected inflation to increase over 4% in the coming year, while one out of every four respondents (24.5%) thought inflation should hover between 2% and 4% in a year, and one out of every three respondents (34.1%) predicted inflation to fall below 2% in the coming year.

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  bob cowan, your home sold guaranteed, platinum living realty, orange county, march 2024, southern california

Platinum Living Realty
Bob Cowan
120 Newport Center Drive
Newport Beach, CA 92661
949-441-9918
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