Statewide sales of single-family homes have been below the 300,000 threshold since September 2022 and will likely stay below that level in the first quarter of 2024. Real estate experts, however, project the market will eventually bounce back this year.
The state recorded 257,630 home sales in 2023, a decline of 24.8% from 2022, marking the largest annual sales decline in California since 2007, according to the California Association of Realtors.
“The housing market had a tough year in 2023 as a shortage of homes for sale and high costs of borrowing continued to have a negative impact on housing inventory and demand,” Melanie Barker, president of the California Association of Realtors, said. “With mortgage rates expected to come down in the next 12 months, home sales will bounce back as buyers and sellers return to a more favorable housing market. Home prices should see a moderate increase in 2024, as well.”
Median prices on the rise
While California’s statewide median price of $819,740 dipped .3% in December compared to the previous month median price of $822,200, it posted its largest year-over-year gain since May 2022: December’s median price marked a 6.4% increase compared to the same time last year. The annual median home price is expected to climb to $860,300 in 2024.
“Easing inflationary pressure and a soft economic outlook suggest that we will see some interest rate cuts in the upcoming year, which bode well for a housing market recovery,” Jordan Levine the association’s chief economist, said. “With rates declining to a seven-month low in late 2023, Americans are feeling more positive about the market, and we could begin to see some increase in market activity. The improvement is expected to be gradual as tight housing supply will remain the norm in 2024.”
Sales volume in all major markets in California dipped in December on a year-over-year basis. The San Francisco Bay Area experienced an 11.4% decline in the number of homes sold compared to the previous year. Year-over-year home prices, however, increased in all major regions in the state compared to December 2022 with the San Francisco Bay Area posting a jump of 12.6%.
San Mateo & Santa Clara counties
In San Mateo County, December home sales rose 8.3% year-over-year. The December median sales price of $1.8 million was 7.5% above the $1.67 million recorded in December 2022.
In Santa Clara County, 2023 December home sales rose slightly (.2%) from December 2022. The county’s annual and month-over-month home prices have been rising. December’s median home price of $1.72 million was 16.7% above December 2022’s median price of $1.49 million and .4% higher than the $1.7 million median price recorded the previous month in November 2023.
“Sellers who locked in historically low interest rates hesitated to sell their homes even if they wanted to, so both buyers and sellers waited on the sidelines, Eileen Giorgi, president of the Silicon Valley Association of Realtors, said. “We’re hopeful the market will turn the corner with the decline of interest rates from their peak last October and that we’ll see more market activity soon.”
The 30-year, fixed-mortgage interest rate averaged 6.82% in December, up from 6.36% in December 2022, based on Freddie Mac’s mortgage survey data.
Silicon Valley Association of Realtors (SILVAR) is a professional trade organization. It represents 5,000 Realtors and affiliate members in the real estate business on the Peninsula and in the South Bay. SILVAR promotes the highest ethical standards of real estate practice, serves as an advocate for homeownership and represents the interests of property owners in Silicon Valley.
The term Realtor is a registered collective membership mark, which identifies a real estate professional who is a member of the National Association of Realtors and who subscribes to its strict Code of Ethics.
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