Los Angeles 2024 Real Estate Forecast And 2023 Recap

Los Angeles 2024 Real Estate Forecast And 2023 Recap

Last year we accurately predicted a year of moderate growth, while other “experts” claimed the real estate market was set to crash. In this article we discuss our 2024 Real Estate Forecast, we explain why now may be the perfect time to buy, and why 2024 will be another year of moderate growth.

Mortgage Interest Rates Decline

While Q3 saw significant rate increases, Q4 was much the opposite, with mortgage interest rates dropping from high 7% into mid 6%. This came largely as a result of the Federal Reserve’s announcements that it is expecting three rate cuts in 2024, which would take the Fed’s target interest rate from the high end of 5.5% down to 4.75%. Anticipating these rate cuts, the mortgage market responded by dropping interest rates. While the average rate saw a high of 7.79% in late October, that number dropped down to 6.61% in late December, and it has remained in the 6.6% range since then.

The tail end of the graph below depicts the sharp drop in the average rate on a 30-year mortgage at the end of 2024.

Interest rate data courtesy of Freddie Mac.

In our Q3 update, we predicted a decline in interest rates as a result of the Fed’s easing on anticipated rate hikes. We encouraged our buyers to buy during a time when competition was low, with the ultimate goal of refinancing into a lower-rate mortgage at a later date. Clients who took advantage of our advice are now well positioned to significantly decrease their cost of living, while having secured a property during a time of low demand. We expect the downward trend on interest rates to continue into 2024, hopefully resulting in interest rates reaching mid to high 5% by the end of the year.

Prices Climb As Dropping Interest Rates Increase Demand

Not surprisingly, the decline in interest rates caused an influx in demand in the market, which caused prices to float well above the market in 2022. Closed sales in November saw a dramatic increase of 15.4% in comparison to November of 2022, and closed sales in December saw an increase of 6.7% in comparison to December of 2022.

The green line in the graph below depicts the monthly median sale price in 2023, and is an excellent depiction of how prices dropped in response to announcements of high interest rates in early 2023, and then climbed as rate cuts came onto the horizon.

Data courtesy of California Association of Realtors.

In our Q3 update, we predicted that we expected to see prices in Q4 to remain above where they were in Q4 of 2022. Once again, our prediction was correct, and clients who took advantage of that advice will have secured significant appreciate in a short period of time.

Predictions For 2024

With the Federal Reserve’s announcement that it intends to cut the target interest rate multiple times in 2024, we are anticipating further drops in the average rate for a 30-year mortgage. This will drive increased demand in the market. While we don’t expect a surge in demand like mid-2020, we expect another year of stable growth and increases in property value.

For those looking to sell their homes, we will be suggesting that they may want to hold off until the summer months, when demand will likely peak. For those looking to purchase a home, we are advising our clients to secure a property early this year while demand is low, even though interest rates are relatively high, with the plan to refinance into a lower rate later this year.

Please call or email us at 213-973-9439 or info@esquirereb.com to further discuss our 2024 Real Estate Forecast, or how Esquire Real Estate Brokerage can help you in the Southern California real estate market.

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