2023 Year in Review | Conejo Valley
The market “experts” had a poor showing in 2023. The forecasts called for the U.S. economy to enter a recession (it didn’t), mortgage rates were expected to drop (rates went up), home prices were supposed to come down 9% (prices increased), and the number of home sales were forecast to drop about 8% (sales plunged over 20%).
With rates going up, home owners decided to hold on to their property rather than give up their low rate. As a result, inventory hit record low numbers locally, and even with buyer demand much lower than years past, few homes for sale kept home prices stable. In fact, multiple offers remained common in spite of the higher mortgage rates.
Conejo Valley home prices ended the year up 20% from $916k last year to $1.1 mil in December 2023 – a far cry from the 9% drop that was predicted.
Finally in December, mortgage rates started to reverse course and come down – a trend that’s expected to continue in 2024.
Moving on to 2024
The market is expected to rebound
This time last year, 63% of surveyed CEOs and economists predicted that we would enter a recession in early 2023. Not only did we not enter a recession, but the economy grew considerably. Now, those believing we’ll enter a recession in 2024 is down to 48%.
Even if we do enter a recession, that doesn’t necessarily mean bad news for the real estate market. After the real estate market crash of 2008, many people equate a recession with a housing crash. That’s rarely the case. In fact, home prices have gone up 4 out of the last 6 recessions.
The driving factor for the real estate market in 2024 will be interest rates – the more rates drop, the hotter the market will get. And rates are already dropping.
While housing is traditionally one of the first sectors to slow in a shifting economy, it’s also one of the first to rebound.
What to Expect for 2024 Home Buyers
Three main factors are top of mind for home buyers going into 2024: What’s going to happen with mortgage rates, home prices, and inventory of available homes?
Mortgage rates: The overwhelming consensus is for rates to come down in 2024 with the California Association of Realtors (C.A.R.) forecasting rates to drop to 6%. Many other market experts are forecasting rates to reach the 5s in 2024.
Yes, most everyone got it wrong in 2023 when rates went up rather than down, but there’s much more data to support the 2024 forecast. First, rates have already come off their highs, inflation has slowed considerably, and many believe the Fed will start to cut rates early 2024. Also, rates almost always come down in an election year.
Home prices: Overtime, CA home prices move in one direction – up. Even with the massive hike in rates and low affordability, our home prices went up considerably in 2023. Now, with rates coming down, it only makes sense that our prices would increase even more.
The California Association of Realtors forecasts that home prices will increase 6.2% in 2024. The Conejo Valley typically outperforms state averages so this may be on the low end for us. It would not surprise me to see double digit price gains in the Conejo Valley.
Inventory of available homes: Low inventory continues to be our biggest challenge. In 2023, many months would end with less than 300 homes for sale – record low inventory. For an area with over 150k residents, that’s not nearly enough to meet demand which is why prices conitinued to increase.
Unfortunately this problem isn’t going away anytime soon. Homeowners just don’t want to give up their low rate unless they have to. But, life happens – people outgrow their house, get a new job, need to downsize, or just decide it’s time to move.
Declining rates will help free up some much needed inventory too. The more rates come down, the more homeowners will be willing to give up their low rate and put their home on the market. That will lead to more homes selling in 2024 (forecast: +23% more sales) after seeing homes sales plunge 20% last year to a 30 year low.
Buyers bottom line…
There are many reasons to be optimistic going into 2024. A drop in mortgage rates and an increase of available homes should make things better for home buyers, although still competitive.
If you’re on the fence about buying in the short term, early 2024 is the time to jump in before prices begin to surge as mortgage rates continue to ease. You’ll likely end up with a home at a lower price and the ability to refinance at a lower rate as rates drop.
If you are looking for a home, here’s a great place to start: CONEJO VALLEY NEIGHBORHOOD TOURS.
Conforming Loan Limits 2024: L.A. County $1,149,825, Ventura County $954,500.
What to Expect for 2024 Home Sellers
If you decide to sell your home, the market is still in your favor, especially in the Conejo Valley. However, buyers have less purchasing power and are more cautious today. Multiple offers are still common, but It’s important to not overplay your hand. I’ve witnessed many sellers go from several offers to zero – scaring off good buyers by asking for too much.
Pricing your home correctly is very important again. There are enough eager buyers out there that you can’t really under price your home – the market will bid it up. However, you can overprice your home. An overpriced home will sit on the market and even the inevitable price reduction won’t be enough to stimulate the same amount of interest if it was priced correctly at the beginning.
Making your home “show ready” and easy to see is also critically important. With affordability hitting record lows, many buyers are stretching to get into a house. The more move-in ready your home is, the more buyers you’ll attract.
Sellers bottom line…
It’s a great time to be a seller. You may get lucky and sell in a weekend, or it may take a month or two to find a buyer slightly below your asking price. That’s not unusual. Getting 10 offers in a weekend well over asking – that’s unusual!
Read my blogs for sellers to help you prepare: TIPS FOR SELLING A HOME
If you would like to discuss how you can get into a new home or help you sell your current home, contact us at 818-384-9929 or Michael@ConejoValleyGuy.com.
Relocating to The Conejo Valley?
The Conejo Valley is a great place to live. We’re known for our relaxing lifestyle with little traffic, low crime, excellent schools and a real sense of community. We’re our own little bubble where people from all over the country choose to raise a family or something else. With rolling hills and abundant hiking trails, something else. Come check it out. I’d love to help you make the move!
