Southern California Leads the Way as Mortgage Rates Drop and Buyers Seek Affordability
The year 2023 was marked by a stubborn lack of housing inventory and high mortgage rates, which deterred many prospective homebuyers. However, experts predict that 2024 could bring a much-needed break for buyers as mortgage rates steadily drop. With this positive development, the housing market is poised for growth, and some markets are expected to see a significant increase in both home sales and listing prices. In particular, Southern California emerges as a promising region, offering relative affordability compared to the national median home price. Additionally, Midwestern and Northeastern states boast affordable markets with strong local economies and high quality of life. Let’s explore which markets are set to experience the strongest growth in the coming year.
Southern California Shines with Double-Digit Sales Growth
Five of the top ten housing markets for 2024 are located in Southern California. These markets are projected to outperform the rest of the state, with an estimated average sales growth of 13.1% compared to a decline of 4.1% in other California areas within the top 100. The top five Californian metros are Oxnard, San Diego, Riverside, Bakersfield, and Los Angeles. Despite historically low sales levels, these areas are expected to see significant improvements over the depressed numbers of 2023. The allure of Southern California lies not only in its sunny weather but also in the relative affordability it offers compared to other parts of the state.
Midwestern and Northeastern Markets Offer Affordability and Stability
While Southern California dominates the top housing markets, the Midwest and Northeast also have their share of promising markets. These areas stand out for their affordability, with median listing prices lower than the national average. Furthermore, a significant percentage of homeowners in these markets live in homes without a mortgage, shielding them from the impact of higher interest rates. The local economies in these regions, fueled by education, healthcare, and manufacturing, are projected to have strong job growth, keeping unemployment below the national average. Additionally, these areas offer a high quality of life, with ample recreational, cultural, and educational opportunities for homeowners.
The California Dichotomy: Not Just the Bay Area
It’s worth noting that the top housing markets in California are not located in the Bay Area or Northern California. Instead, markets like Oxnard, San Diego, Riverside, Bakersfield, and Los Angeles take the spotlight. Although these areas are expected to experience double-digit sales growth in 2024, they will still have historically low sales levels compared to the pre-pandemic years of 2017 to 2019. This trend mirrors the national figures, which are projected to be roughly 25% below those of the pre-pandemic period.
Conclusion:
As we enter 2024, the housing market shows signs of recovery and growth. With mortgage rates dropping, prospective homebuyers can finally catch a break and take advantage of lower prices. Southern California emerges as a hotbed of activity, with five of its metros leading the way in terms of sales growth. Meanwhile, the Midwest and Northeast offer affordable markets with stable local economies and a high quality of life. While challenges remain, the housing market in 2024 presents opportunities for both buyers and sellers to make their moves and find their dream homes.
