January/February 2024 - Los Angeles Real Estate Market Update
Despite inflation rising slightly more than expected at the end of last year, news headlines in 2024 so far have been mostly positive. Consumers begin to believe that overall price growth is slowing, while rates are stabilizing, and more homebuyers on the sidelines are coming back to the market. These are encouraging signs that could kick start the housing market in the new year and could help turn the market around. If the sentiment remains upbeat and the upward momentum continues, we could see a bounce back in market activity in the near term.
Lower rates brought some homebuyers off the sidelines at the start of the year, with mortgage applications surging 9.9% week-over-week in the first week of 2024, according to Mortgage Bankers Association.
Meanwhile, home prices should maintain their upward momentum as tight supply remains the norm and the market will likely observe a mid-single-digit year-over-year growth rate in the statewide median price in at least the early part of 2024.
The average 30-year fixed-rate mortgage remains below 7% where it has been since early December. This has helped to thaw the housing market, which has seen pending sales rise for the first time since rates hit bottom in early 2021. However, as the rebound in housing demand has yet to be accompanied by & equal (or greater) supply response, the real estate market in Los Angeles is quickly becoming competitive once again as fewer sellers are reducing price and the median price continues its upward trend that began last summer. From our perspective, it is still a seller's market.
Inflation continues to trend down and that has bolstered hopes that the Fed is through raising interest rates and will begin to make cuts to the Fed Funds Rate later this year. This should help to bolster home sales during the spring and summer months as gradually declining rates help to slowly alleviate the “lock-in” effect that many homeowners currently feel as a result of their historically low rate on their existing mortgage.
-California Association of Realtors (CAR)