Open house visitor numbers have surged, new listings coming on market have risen, the pipeline of coming listings is filling up faster than last year, and the number of homes going into contract is climbing rapidly as the market wakes up. With dramatic improvements since October in interest rates, stock markets and consumer confidence, both buyers and sellers are re-engaging to a much greater degree, and the velocity of the market is accelerating.
The inventory of house listings remains very low compared to pre-pandemic norms, and the demand vs. supply dynamic is very tight in that segment: One of the big questions in 2024 is how many homeowners, having held off listing their houses since mid-2022, move forward with selling. The supply of condo listings is considerably higher, and while condo and house sales numbers are similar, condo inventory is 130% higher. But condo market conditions also appear to be heating up in 2024, with market conditions varying significantly between neighborhoods.
January statistics based on closed sales - sales prices, sales volume, days-on-market, overbidding percentages - will mostly reflect listings that went into contract in late 2023, the slowest market of the year. Spring, typically the most active selling season, will probably result in substantial changes in these indicators. Depending on the weather, "spring" in the Bay Area can begin as early as February.
"Although affordability continues to impact homeownership, the combination of a solid economy, strong demographics and lower mortgage rates are setting the stage for a more robust housing market. Mortgage rates have been stable for nearly two months, but with continued deceleration in inflation, rates are expected to decline further. The economy continues to outperform due to solid job and income growth, while household formation is increasing at rates above pre-pandemic levels. These favorable factors should provide strong fundamental support to the market in the months ahead." FHLMC (Freddie Mac), 2/1/24
"Over the last two months, [consumer] sentiment has climbed a cumulative 29%, the largest two- month increase since 1991… For the second straight month, all five index components rose... there was a broad consensus of improved sentiment across age, income, education, and geography." University of Michigan, Consumer Sentiment Index, Preliminary January Report, 1/19/24
"The recession America was expecting never showed up... Instead, the economy grew 3.1% last year, up from less than 1% in 2022, and faster than the average for the 5 years leading up to the pandemic. Inflation has retreated substantially [and] unemployment remains at historic lows…” The New York Times, 1/26/24, "Economists Predicted a Recession. So Far They've Been Wrong."
The California Association of Realtors forecasts that compared to 2023, the number of state home sales in 2024 will increase 23%, the CA median house sales price will rise 6.2%, and the average 30-year mortgage interest rate will decline to 6.3%. Jordan Levine, CAR chief economist, 1/18/2024
