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| LIFE IN SOLERA | NOVEMBER 2023 | 13 Slower economic growth and cooling inflation will bring down mortgage interest rates in 2024, and create a more favorable market environment to spur California home sales next year, according to a housing and economic forecast released recently by the California Association Of Realtors (CAR.). The California median home price is forecast to rise 6.2 percent to $860,300 in 2024, following a projected 1.5 percent dip to $810,000 in 2023 from $822,300 in 2022. A persistent housing shortage and a competitive housing market will continue to put upward pressure on home prices next year. "2024 will be a better year for the California housing market for both buyers and sellers as mortgage interest rates are expected to decline next year," said CAR President Jennifer Branchini, a Bay Area Realtor. "A more favorable market environment with lower borrowing costs, coupled with an increase in available homes for sale, will motivate buyers and sellers to reenter the market next year. First- time buyers who were squeezed out by the highly competitive market in the last couple of years will try to attain their American dream next year. Repeat buyers who have overcome the "lock-in effect" will also return to the market as mortgage rates begin to trend down." Inflation will continue its gradual decline over the next 18 months, with the CPI registering 2.6 percent in 2024, down from 3.9 percent in 2023. As such, the average 30-year, fixed mortgage interest rate will decline from 6.7 percent in 2023 but remain elevated at 6.0 percent in 2024. While next year's projected average for the 30-year fixed mortgage interest rate will still be higher than the levels observed in the few years prior to the pandemic, it will be lower than the long-run average of nearly 8 percent in the past 50 years. Housing supply in 2024 will remain below the norm despite a projected increase in active listings of between 10 percent to 20 percent, as market conditions and the lending environment continue to improve. "With the economy expected to soften in 2024, the Federal Reserve Bank will begin loosening its monetary policy next year. Mortgage rates will trend down throughout 2024, and the average 30-year fixed rate mortgage could reach the mid-5 percent range by the end of next year," said CAR Senior Vice President and Chief Economist Jordan Levine. "Buyers will have more financial flexibility to purchase homes at higher prices, which could generate increased housing demand and result in more upward pressure on home prices. Sources: California Association of Realtors and California Regional Multiple Listing Service (CRMLS) The California Housing Market By Diana Mangan, Realtor and Resident e California housing market will rebound next year, according to the California Association of Realtors!