San Diego County broke housing records in 2023. That trend continued into the new year with double-digit monthly median price growth in Q1 of 2024. Prices slowed in Q2, but nothing close to what was predicted. Now that interest rates are on the decline and prices are holding steady, are we approaching an influx point for a recalibration or are we on track for a more substantial market correction?
Here are our predictions and suggestions for the remainder of 2024:
Mortgage Interest Rates Will Continue to Drop
Are interest rates up, down or staying the same? Mortgage rates were gradually declining, with the average rate in California hovering around 6.2% and were anticipated to drop below 6% by the end of 2024. This anticipated decline is influenced by the Federal Reserve’s possible rate cuts as unemployment rates were dropping in tandem with stock market pressure. However, unemployment has been stagnant and it is looking more likely that interest rates will hold steady.
Median Home Prices Staying Strong
Median home prices have shown resilience, with an expected increase of 4.6% for 2024. This growth is higher than initially forecasted, reflecting the ongoing demand and limited supply in the housing market. Prices over the past year have softened from their peaks in late 2023, and it is not likely prices will hold. The average median home price in San Diego is ~$940,000.
Home Inventory is on the Rise
Home inventory levels have started to accumulate more than previously forecasted. The inventory is expected to increase by 14.5% for the year. This rise in inventory is partly due to more newly built homes entering the market, providing some relief to the constrained supply. A significant increase in inventory will likely cause prices to remain steady, or adjust downward.
What Our Agents Are Saying
Overall, mortgage rates are declining, home prices are rising, and inventory is increasing, creating a dynamic and evolving real estate market in 2024. If you are in the market, the current market conditions present numerous opportunities to find valuable properties that meet your needs and investment goals. If high mortgage rates continue to be a barrier for affordability, look for seller paid rate buydowns to help you close the deal.
Rural Real Estate
Metropolitan and urban properties are directly affected by the dynamics discussed above. However, rural properties are historically more susceptible to and more directly impacted by market corrections. This means less competition, and perhaps more potential property options during transitional market conditions, such as those we are presently experiencing throughout the state of California.
Anticipated Impact of the NAR Settlement on Market Conditions
As the real estate industry continues to evolve, the recent National Associations of Realtors settlement is expected to have a significant impact on market conditions. The most noticeable change will be in the transparency of agent compensation, shifting the landscape for buyers and sellers alike. Buyers may now be more actively involved in negotiating broker fees as part of their purchase agreements, which could lead to greater scrutiny of transaction costs and influence on real estate prices. Additionally, sellers may face increased pressure to offer competitive terms to attract buyers. In response to these shifts, industry professionals will need to adapt their strategies to ensure continued success in a market where both transparency and consumer protection take center stage.