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Overall, the jobs report is indicative of a resilient labor market signaling the likelihood of continued support for consumption spending and thereby, for economic growth. The high cost of housing in California has made homeownership less attainable for many residents. The median home price in the state is significantly higher than the national average. The combination of high home prices, rising interest rates, and stringent mortgage qualification rules has created affordability challenges for prospective buyers. Comparing the fourth quarter of 2023 with the previous quarter, housing affordability declined in 15 counties, while it remained unchanged in 17.
Rental Resources
Nonetheless, Kuba Jewgieniew, CEO of Realty ONE Group, a real estate brokerage company, is optimistic about a recovery this year. “Better that rate reductions happen at a metered pace, incrementally improving buyer opportunities over a stretch of time, rather than all at once,” Gumbinger says. The choice between the two depends on your investment goals, budget, and willingness to manage the property. Some sellers didn’t bother with offers that retained certain contingencies, which essentially are the legitimate reasons you can back out of a deal.
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Homeownership Rate
Notably, 19 counties exhibited improvements in affordability, attributed to more modest price declines compared to other regions during the same period. This nuanced interplay between counties underscores the localized nature of the challenges faced by potential homebuyers. This scenario suggests that elevated interest rates are likely to persist through the first half of the year, putting continuous downward pressure on affordability.
Some buyers find deals in shifting Southern California housing market
Michael Gorkowski, a Virginia-based real estate agent with Compass, is also trying to figure out how to manage the potential ruling. The Department of Justice confirmed it will permit listing brokers to display compensation details on their websites. However, buyer agents will need to undergo the tedious task of visiting countless broker websites to find who’s offering what. Moreover, the National Association of Realtors agreed to a monumental $418 million settlement on March 15 following a verdict favoring home sellers in a class action lawsuit. Still subject to court approval, the settlement requires changes to broker commissions that will upend the buying and selling model that has been in place for years. As we head into peak home-buying season, signs of life have begun to spring up in the housing market.
Census Bureau, 2023 had the lowest total home sales for the spring season (March through June) since 2011 (Exhibit 2). Looking at our unique, real-time Loan Product Advisor® (LPA) data, we can get an early pulse of where the housing market is headed. Examining the year-over-year changes, Mariposa County witnessed the most significant decline, dropping nine points from the fourth quarter of 2022 to the same period in 2023. Kings, Stanislaus, and Yuba followed closely, registering a six-point decrease in affordability. – Riverside, located in the Inland Empire region, showcases steady growth potential in its housing market. Sales of homes priced at or above $1 million have remained relatively stable, while the sub-$500,000 segment has experienced modest declines.
Nonetheless, demand for homes seems unabated so far in the first three months of 2024, and that momentum may very well continue throughout the spring homebuying season. The FHFA Purchase-Only Home Price Index for January ticked down by 0.1% month-over-month compared to an increase of 0.1% in December 2023. However, with housing demand on the rebound, year-over-year, house price growth remained strong at 6.3% for January. Considering the balanced market activity and optimistic forecasts from real estate professionals, now may be a favorable time to consider purchasing a house in California.
This imbalance between supply and demand has driven up housing prices, making it difficult for many prospective buyers to afford homes. – Madera, situated in California's Central Valley, emerges as another area poised for home price growth. Data from the CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.) paints a picture of a California housing market in 2024 that's both resilient and challenged. March saw a slight slowdown, with existing single-family home sales at 267,470, a 7.8% decrease from February.
The data illustrates a median sale-to-list price ratio of 100%, indicating that homes in Los Angeles County, CA generally sold for around the asking price during March 2024. Last year, rising mortgage interest rates chilled the previously hot Southern California housing market. It reveals the average monthly rent paid for market rate apartments and rental homes in the city, excluding public housing.
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Top 10 Most Competitive Cities in California
Such continued affordability challenges are a major reason some experts predict Southern California home prices have further to fall. Tressa Pope, founder of TPG Mortgage Lending in Burbank, said people using down payment assistance programs have also had luck. When competition was fierce, sellers often refused to consider those buyers, because they feared paperwork would bog down the deals.
Gibbs says that if sellers don’t offer compensation, many buyers who can’t otherwise afford to pay a broker will choose to go unrepresented. For the week ending April 25, the 30-year fixed mortgage rate stood at 7.17%, according to Freddie Mac. Los Angeles has consistently experienced job growth, making it an attractive destination for job seekers. The city's diverse economic landscape provides opportunities in various fields. It is a hub for creative industries, with Hollywood serving as the epicenter of the global entertainment industry. Additionally, the tech sector has witnessed substantial growth in Silicon Beach, an area on the west side of Los Angeles, home to numerous tech startups and established companies.
Here are some key factors that interact with each other, creating a complex and dynamic housing market in California. The Los Angeles Metro Area saw a median price increase of 9.0% year-over-year, reaching $801,000 in March 2024. Similarly, the Central Coast experienced a 3.0% year-over-year price increase, with a median price of $950,000. In contrast, the Far North region witnessed a 5.6% year-over-year price increase, reaching $374,950. For now, the relative lack of homes for sale is a favorable factor for sellers. On the other hand, higher mortgage rates could squash what was a modest rebound.
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