A recent housing market forecast published by Realtor.com suggested that California could have several of the hottest real estate markets in 2024. Southern California, in particular, is expected to see significant growth in 2024 in terms of home prices and sales.
Here’s a look at the hottest California housing markets of 2024, based on industry analysts’ latest data and projections.
Are These the Hottest California Housing Markets of 2024?
In December 2023, the research team from Realtor.com published a ranking of what they believe will be the hottest real estate markets of 2024. They analyzed current and projected housing trends for the nation’s 100 largest metropolitan areas and ranked them by “combined forecasted growth in home prices and sales.”
Several California metropolitan areas were ranked within the top 10 hottest housing markets of 2024. Most of them were located throughout Southern California, specifically.
According to the Realtor.com report:
“Five California metros entered our top 10 list of housing markets, but none were Bay Area or Northern Californian metros. The top five Californian metros include Oxnard, San Diego, Riverside, Bakersfield, and Los Angeles. These five metros are expected to have sales growth of 13.1%, on average, in 2024, compared to an average decline of 4.1% for other Californian metros in the largest 100 list.”
This should be no surprise to those who follow real estate trends in California. San Diego and other housing markets in Southern California have generated many headlines over the past year due to home price growth and related trends.
These markets began to ramp up again during the second half of 2023, when many other U.S. cities were still flatlining. So they would top a list like this one.
The 10 Hottest Markets According to Realtor.com
Here are the 10 U.S. metro areas that are expected to have the hottest housing markets in 2024 in terms of combined home price and sales growth:
- Toledo, OH
- Oxnard-Thousand Oaks-Ventura, CA
- Rochester, NY
- San Diego-Chula Vista-Carlsbad, CA
- Riverside-San Bernardino-Ontario, CA
- Bakersfield, CA
- Springfield, MA
- Worcester, MA-CT
- Grand Rapids-Kentwood, MI
- Los Angeles-Long Beach-Anaheim, CA
Zeroing in on Southern California
Home buyers in Southern California could encounter some stiff competition in 2024. Home sales are expected to increase significantly in most major cities in that region over the coming months. And this comes at a time when housing market inventory remains at low levels.
Realtor.com’s hottest California housing markets for 2024 are part of the top-10 list above. These numbers represent the anticipated change (growth) in home sales and prices during 2024 for each metro areas shown. Along with this data are the average home prices in each area, according to Zillow:
Oxnard-Thousand Oaks-Ventura, CA
- Home sales: +18.0%
- Home prices: +3.3%
- Average home price: $833,491
San Diego-Chula Vista-Carlsbad, CA
- Home sales: +11.0%
- Home price: +5.4%
- Average home price: $894,373
Riverside-San Bernardino-Ontario, CA
- Home sales change: +13.8%
- Home price change: +2.0%
- Average home price: $555,039
Los Angeles-Long Beach-Anaheim, CA
- Home sales change: +9.2%
- Home price change: +3.5%
- Average home price: $903,521
The authors of this forecast noted that Southern California, in particular, is projected to outperform the state as a whole in terms of market activity.
But despite the projected increase in sales for 2024, home sales within these SoCal housing markets are “still 20%-35% lower than in a typical year before the pandemic in 2017-2019.” So it might be more accurate to say that Southern California is returning to normal faster than the rest of the U.S., at least regarding sales activity.
What It Means For Home Buyers
Granted, these are housing market predictions and not certainties. A lot might change over the course of 2024 that could affect local real estate and economic trends in California. But the message for home buyers is clear at this point.
If you plan to buy a home anywhere in Southern California during 2024, consider doing it sooner rather than later.
Home prices are expected to creep upward next year in all of Southern California’s major metros, especially in the San Diego area. So, those buyers who put off their purchases until later next year could pay a higher price for a home.
Additionally, an increase in sales activity could make it harder to find and purchase a home. When home sales rise, we see a corresponding increase in the number of multiple-offer scenarios among competing buyers.
The bottom line: By entering the California real estate market earlier in 2024—rather than later in the year—you might get a better deal on a home while encountering less competition.
Lower Mortgage Rates Attracting Buyers
As you might already know, mortgage rates have declined steadily for the past two months in a row. And we’ve already seen an increase in the number of home loan applications nationwide, suggesting that more and more buyers are entering the real estate market.
This trend could accelerate the Southern California real estate market in 2024, especially since nearly 70% of homeowners in the area use mortgage loans when buying a house.
In the fall of 2023, the average rate for a 30-year fixed mortgage loan rose to a 20-year high of 7.79%. But after hitting that high watermark, mortgage rates dropped for eight consecutive weeks and ended the year at around 6.6%.
Economists expect the Federal Reserve to make additional rate cuts next year, which (indirectly) could cause mortgage rates to drop even lower. These and other factors might add more areas to the list of the top California housing markets for 2024 and make Southern California more competitive, just as the Realtor.com forecast predicts.
Potential Increase in Inventory Levels
New housing inventory may be seen if the Federal Reserve halts its interest rate increases and mortgage rates continue to slow and even dip into the new year.
Many homeowners may have hesitated to put their homes on the market out of fear of trading in their current low mortgage rates for a much higher rate with a new home purchase. But lower rates could incentivize them to put their homes up for sale, which could increase inventory and help the California housing market rebound in 2024.
Understanding the Hottest California Housing Markets of 2024
Before buying a home, buyers in the Golden State should keep their finger on the pulse of the hottest California housing markets for 2024. Doing so will help them make a more informed decision about where to buy and how much they can expect to spend.
If you’re in the market for a new home, be sure to partner with a seasoned real estate and mortgage team to find the right home at the right price.