California’s housing market is experiencing a significant downturn, as evidenced by recent data from the California Association of Realtors. Home sales in the state have plummeted to their lowest level in 16 years. This decline is part of a continuous 29-month drop in home sales, with a 7.4% decrease from October to November 2023 and a 5.8% decline compared to November 2022.
Several factors contribute to this trend. Elevated mortgage interest rates and a persistent shortage of homes on the market have been major impediments. However, with mortgage rates recently falling to their lowest in four months and indications from the Federal Reserve of further rate cuts in 2024, there is potential for a resurgence in the housing market as more buyers might reenter the scene.
Despite the sales slump, home prices haven’t fallen significantly. The median cost of a single-family home in California is $822,200, a 2.2% decrease but still 6.2% higher than the previous year.
This paradox of weak sales but stable prices is attributed to the tight supply of homes for sale. There’s an expectation that the recent decrease in mortgage rates, combined with steady home prices, could encourage more homeowners to list their properties in the upcoming spring buying season.
Regionally, the housing market downturn has been widespread. Among the 34 counties monitored, 23 experienced over a 10% year-over-year decrease in home sales.
Notably, Northern California’s Calaveras County faced the steepest decline at 33.3%, with Butte and Mendocino counties following. Major regions across California, including the Central Valley, Central Coast, San Francisco Bay Area, Southern California, and the Far North, all saw declines in sales.
This data highlights the complexity of California’s housing market, where varying regional dynamics and broader economic factors interplay, shaping the real estate landscape.