Market Update December 2023
Westlake Village, Agoura Hills, Oak Park, Thousand Oaks and Newbury Park
By: Michael Rice | December 1, 2023
My View From Inside
It’s December which means it’s time to forecast what’s in store for the real estate market in 2024.
2023 Didn’t Go Quite as Expected
The market “experts” had a poor showing in 2023. In fact, almost every major variable moved either less than expected, or the complete opposite of what was forecast. However, 2023 was a bit of an anomaly. Over the years, the forecasts have been much more accurate on most of the data points. I’m hopeful that 2024 will be more inline with the forecast.
How’d We Do and Where Are We Headed?
The Overall Economy
- 2023 Forecast: The U.S. economy was expected by many to enter a 6-12 month long recession beginning in early 2023. (Recession is defined as 2 consecutive quarters of negative GDP)
- Reality: GDP was up in the first 3 quarters so far with the 3rd quarter growing at a rapid 5.2% annual rate.
2024 Forecast: The U.S. economy is expected to grow 1.7% in 2024. And according to the Wall Street Journal survey of economists, now only 48% expect the US to enter a recession, down from 63% this time last year.
Mortgage Rates
- 2023 Forecast: The consensus forecast going into 2023 predicted rates peaking at 6.35% and dropping to 5.73% by the fourth quarter.
- Reality: Mortgage rates peaked at 7.79% in October and are currently 7.2%.
2024 Forecast: 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%. I know what you’re thinking, but there’s much more data to support the 2024 forecast. First, rates are already coming off their highs, inflation has slowed considerably, and many believe the Fed will start to cut rates early next year. Also, rates almost always come down in an election year.
California Home Prices
- 2023 Forecast: C.A.R. expected home prices to drop 8.8% in 2023.
- Reality: Home prices are now expected to end the year relatively flat in California.
2024 Forecast: C.A.R. forecasts home prices to increase 6.2% in 2024. (I assume that’s reliant on mortgage rates dropping.)
Sales Volume in California (number of homes sold):
- 2023 Forecast: C.A.R. forecasted that 7.8% fewer homes would sell in 2023.
- Reality: Home sales in CA dropped about 20% in 2023 – a 30 year low.
2024 Forecast: C.A.R. expects home sales to increase 23% in 2024. (Again, I assume that’s based on the expectation that mortgage rates will drop.)
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 once mortgage rates ease. You’ll likely end up with a home at a lower price and the ability to refinance at a lower rate once rates drop.
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What to expect moving forward
- Expect a very slow month of December for new listings since most sellers will wait to list in the new year.
- And sellers with older listings are more open to negotiation, hoping to sell before the end of the year.
- Expect bargain shoppers to be out in full force looking for deals from motivated sellers.
- Expect mortgage rates to continue a slow and steady climb down.
Seller’s Corner
The recent drop in mortgage rates and record low inventory is skewing the market in sellers favor. However, it’s still critically important to price your home correctly from the beginning. Buyers are eagerly waiting to pounce. If you miss that first window to attract a buyer, you may have a tough time getting them to come back again once you inevitably drop the price.
What's The 2024 California Forecast?
According to the California Association of REALTORS
- The median price of a home is expected to increase 6.2% in 2024.
- The number of home sales is expected to increase 22.9%.
- Interest rates are expected to average 6% in 2024.
Market Snapshot
Home Prices
- The median price of a Conejo Valley home was down in November to $930,000.
- That’s 1 consecutive month down.
- Prices are down 1.3% from $942,000 last November.
- And down $130,000 from last month.
For Sale
- November ended with 280 homes for sale.
- Down 3.4% from last November.
- That’s 10 fewer homes than last year.
- And 1 more homes than last month.
Days On Market
- It took 24 days on average to sell a home in November.
- Down 29% from last November.
- That’s 10 days less than last year.
- And 8 days less than last month.
