High mortgage rates have continued to negatively affect the housing market in California. The California Association of Realtors reported that although there has been a small increase in home sales, the overall sales volume is still much lower than usual.
Home Sales Trends
In 2024, the sales of single-family homes in California went up by about 4% from the previous year. This was the first increase in three years. Despite this growth, the total number of homes sold is still not as high as it used to be. According to Guillermo Flores, a senior research analyst, the sales figures have been consistently low, staying under 400,000 homes per month for over two and a half years.
Impact of Mortgage Rates
Currently, the average rate for a 30-year fixed mortgage is at 7%, which is triple what it was during the lowest points of the COVID-19 pandemic. The high rates are discouraging many people from buying homes, as there is little sign that these rates will decrease soon. The Federal Reserve’s ongoing struggle with high inflation means that lowering interest rates isn’t a likely option shortly.
Home Prices Stagnating
The median price of a single-family home in California was $861,020 in December 2024, only slightly higher than the previous year’s $852,880. Prices peaked in May at $908,000 but have since shown signs of stalling. Oscar Wei, deputy chief economist at the California Association of Realtors, noted that the recent price increases are smaller than the average increase over the past six months, suggesting that prices might start to drop.
Regional Price Differences
The most expensive homes are still in the San Francisco Bay Area, where the median price reached $1.2 million by the end of the year. This is followed by the Central Coast at $995,000, and Southern California at $850,000. Prices in these areas vary widely, showing different growth rates and sales changes year-over-year.
This summary of California’s housing market in 2024 highlights the challenges and slow growth caused by high mortgage rates and economic uncertainties.
