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Like many parts of the country, California’s housing market has historically grappled with low inventory levels, a situation exacerbated in recent years due to various economic and demographic factors.
The trend of reduced supply continued throughout the early months of 2023, primarily driven by escalating mortgage rates that dampened buyer enthusiasm and slowed the real estate market’s momentum.
However, California’s housing market inventory in 2024 is starting to rise again. Inventory levels, which have been a point of concern for both buyers and realtors, are showing signs of improvement.
This change is partly attributed to recent decreases in mortgage rates, which appear to be restoring buyer confidence and encouraging more homeowners to list their properties. This influx of new listings is beginning to balance the market, providing more options for those looking to buy a home in California.
Additionally, current economic policies and market trends suggest that mortgage rates in CA may continue to fluctuate, influencing buyer and seller behaviors. Prospective buyers, especially first-timers, are advised to stay informed about these changes and consider getting pre-approved for a mortgage to better position themselves in this competitive market.
As we delve deeper into 2024, this report will provide a comprehensive update on California’s evolving housing inventory landscape, offering insights and forecasts crucial for buyers and sellers.
Here’s an updated look at California’s housing market supply situation and how it might change during the rest of 2024.
A few days ago, researchers from Realtor.com published a housing market update with data extending through the end of December 2023. Among other things, this report showed that home buyers across the U.S. currently have more properties to choose from than a year ago.
This report also suggested that housing market inventory in California and nationwide could continue to grow during 2024, making things easier for home buyers.
To quote their January 2024 report:
“For the first time since May 2023, home shoppers are seeing a larger number of unsold homes on the market, according to the Realtor.com® December Monthly Housing Trends Report, released today.”
The company’s economists also said they expect declining mortgage rates to positively impact home seller sentiment, with more new listings coming onto the real estate market in the months ahead.
Throughout the past year, most major cities across California have witnessed a notable decline in housing inventory, primarily characterized by a reduction in active listings. Influenced by economic uncertainties, high mortgage rates, and changing demographic patterns, this trend has presented challenges for potential homebuyers and real estate professionals.
However, more recent data indicates a significant shift in this trend, as the California housing market has begun to experience a resurgence in inventory. In recent weeks, there has been a discernible increase in the number of new listings entering the market.
This uptick is attributed to several key factors, including adjustments in mortgage rates, growing consumer confidence, and a stabilizing economic environment.
Cities like Los Angeles, San Francisco, and San Diego, known for their historically competitive markets, are now showing signs of increased activity, with a greater variety of properties becoming available. This mainly benefits first-time buyers and those looking for more affordable housing options.
Additionally, suburban areas and smaller cities within the state contribute to this growth in California housing market inventory in 2024, offering alternative options for those seeking different lifestyles or lower housing costs.
The Realtor.com report mentioned above-provided data for total “active listings” and more recent “new listings.” When measured year-over-year, all major metropolitan areas in California experienced an increase in “new listings” (i.e., homes that came onto the market recently).
This trend could help improve California’s housing market inventory as we move further into the year.
The numbers below show the increase in new listings for California’s major metros during the one-year period from December 2023 to December 2024:
According to Multiple Listing Service (MLS) data and other sources, California had about a 2.8-month supply of homes for sale at the end of 2023. That’s an improvement from the all-time record low one-month supply level at the end of 2021, but still low by historical standards.
Translation: It’s still a tight real estate market, but it’s improving.
Mortgage rates have played a significant role in California’s housing market inventory situation and elsewhere across the U.S.
Last year, higher mortgage rates led to a decline in real estate market supply levels nationwide. That’s because many homeowners had significantly lower rates than the current averages, which made them reluctant to sell their homes and purchase another one.
But this so-called “lock-in” effect has eased over the past few months due to declining mortgage rates.
On January 11, the mortgage-buying corporation Freddie Mac reported that the average rate for a 30-year fixed home loan was steady at around 6.6%. That’s quite an improvement from the 7.79% peak in late October last year.
These and other factors have motivated sellers and brought more homes onto the market, improving California’s housing market inventory situation.
According to Danielle Hale, chief economist at Realtor.com
“We are optimistic that inventory levels are moving in a positive direction … Some sellers are motivated already, but other households may hold out for lower rates before selling or moving to new homes.”
Lower mortgage rates can make it easier to get approved for a mortgage in CA and make homebuying more affordable.
California’s housing market inventory in 2024 is showing signs of growth and improvement. This could benefit many home buyers across the Golden State later this year.
But challenges remain, and affordability tops the list.
A November 2023 report from the California Association of Realtors showed that fewer than one in five home buyers in California (15%) could afford to purchase a median-priced home. That’s assuming a 20% down payment.
Mortgage rates and housing market inventory are two critical considerations for California home buyers in 2024. But they pale in comparison to the affordability challenges.
All of this underscores the importance of exploring your mortgage options. For example, the 15% affordability statistic mentioned above used a 20% down payment as part of the calculation.
But the truth is, most home buyers in California make smaller down payments than that. Eligible borrowers could put down as little as 3% on a conventional loan or 3.5% for an FHA loan.
If the Realtor group had used those lower down payment thresholds in their assessment, they would’ve ended up with a significantly higher affordability index.
Most home loan programs today allow borrowers to use gift money for their down payment and closing costs. So, while California is the most expensive state in the country for home buyers, there are still ways for buyers to succeed in 2024.
The key takeaway is that the California Housing Market Inventory in 2024 is expected to increase. This is good news for homebuyers wanting to buy a home in CA without fiercely competing with other buyers vying for the same properties.
Have mortgage questions? Sammamish Mortgage now serves borrowers all across the state of California. We offer various financing options with flexible down payments and qualification criteria. Please contact us with your financing questions or to apply for a loan!
Whether you’re buying a home or ready to refinance, our professionals can help.
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No Obligation and transparency 24/7. Instantly compare live rates and costs from our network of lenders across the country. Real-time accurate rates and closing costs for a variety of loan programs custom to your specific situation.