Predictions for the 2024 Housing Market
First and foremost, happy New Year! I personally feel a sense of optimism for 2024 in terms of the economy and housing market here in the Bay Area. The cost of living here is still high, however, economic indicators are very strong and should translate into a very active year for housing. 2023 was a year of high inflation and increasing interest rates that put many people’s plans on hold.
So, when trying to predict what will happen in 2024, here are four of the metrics I like to review, and how I interpret them.
Let's use 95124 as an example:
Homes for sale | Number of homes listed for sale, end of month
Trend: 63% lower than December 2022.
Low inventory drives prices higher. Great for sellers, but may be frustrating for buyers.
Median days on market | Sold listings
Trend: Trending up after being flat this Summer. Up 56% compared to December 2022.
This is a non-issue. A lot of the older inventory is selling off after the holidays, which makes the median “days on market” higher but is not indicative of a slowing market.
Median sales price | Median price of sold homes (in 1000s)
Trend: Year over year, despite the increase in interest rates, the median sale price in San Jose is up 12%, largely due to low supply! Seasonally, home prices have been moving up gradually since Autumn 2023. This is good news for sellers, and is a direct result of ongoing low inventory and recently improved interest rates. I suggest that buyers get pre-approved now as prices could accelerate quickly this year.
Trend: Slowly decreasing. Even small changes in interest rates have dramatic effects. For example, an 80% loan payment for a $1,600,000 home was costing buyers about $ 9,400 per month when rates hit 8% in November 2023. The decrease to 7% rates brought the payment down to around $8,500 per month - almost $1000 lower per month! We expect the Fed to continue to cut rates this year, so this will continue to encourage buyers and sellers to take action.
Seasonal buying habits and the 2024 elections:
Typically more buyers start shopping in late Winter and early Spring, and when you add in the lower interest rates we are starting to see, we should see a very busy Spring market.
Sellers, let’s consider the potential effects of the November elections. I expect that the current administration will apply pressure on the Fed to keep rates stable leading up to elections. However, as we approach Autumn, the news will likely become very distracting to buyers and have a slowing effect on the market. If I were planning a sale this year, I’d try to make it happen before September.
I hope this review is helpful as you think about your plans for 2024. Give me a call if you’d like to talk over any questions specific to your property and situation. I would love to hear from you and be your resource!
Kirsten Reilly, Broker Associate