What to Expect in 2024 – Roseville-Sacramento Real Estate Market
Nobody has a crystal ball, but everybody wants to know what the real estate market will do in 2024. This is my 23rd year being an active full-time realtor so why not throw my opinion out! LOL.
On the big picture, inflation appears to be slowing down which has helped reduce interest rates to below 8%. Hopefully this will continue through the year. However, don’t expect to see anything lower than 6.5%.
ELECTION YEAR!
In all the forecasts I have read, nobody has mentioned that this being the presidential election! Anything can happen to keep the “people happy”. Incumbent administrations want to keep the power and therefore do things that make sure not to “rock the boat”. This is the wild card in any forecast.
The Market Is Always Changing
As the wise saying goes; “Change is the only constant in life”, and this holds true for real estate. In the last half of 2023 we had a little more dramatic changes when mortgage interest rates went from 3.5% to 8%. Buyers paused and resale home sales slowed down dramatically by 30-40%.
The NEW normal – Low Inventory
Since 2020 and even earlier inventory has been at record lows, and it appears LOW INVENTORY will be around for the foreseeable future. 2024 will be more like a “normal” market and certainly not a crash like the mainstream media made it sound. In a “normal” market both buyers and sellers have room to negotiate without anyone gaining an upper hand. Historically speaking over the past 40 years 6-7% interest rates are average.
Sellers Need to be Realistic
We all heard the stories of 10 to 15 offers on a home and selling at thousands over asking price. Those days are gone. Yes, multiple offers still occur for well-priced homes that have been updated or move-in ready. Pricing your home is going to be key to getting the best offer on your property in the shortest period. Sellers should consider offering buyer concessions such as a credit for closing costs or interest rate buy down especially for first-time home buyers. Sellers should also plan to do cosmetic repairs and freshen their home up with fresh paint etc. before putting their home on the market.
Buyers Will Have More Control
Yes, you will have higher interest rates, but the focus should be on your monthly payment. Although the market has slowed down, we still have low inventory on the market. Less than 2-month supply of homes for sale is considered low. In a normal market 3–4-month supply is typical. Buyers will have time to view multiple properties and in some cases negotiate for certain concessions. There are more items to negotiate than just price. We are not in a market where you can “low-ball” and expect the seller to accept any price, nor anytime soon.
Things to watch in 2024
- Interest Rates: High interest rates will restrict the flow of potential buyers simply because of affordability issues. Recently there are signs that inflation has slowed and hopefully we have avoided a recession as well. Rates have already dropped. If wait if you can get 6.5 – 6.75% it is highly unlikely rates will drop below this. FOCUS on your monthly payment/budget.
- Inventory – LOW INVENTORY is the new normal! The chart below shows the number of months of inventory for the past year. As you can see, we continue to stay under 3-month supply. The fewer homes on the market the less likely sellers are dropping their prices.
3. Average Sales Price per sq.ft. – This is not an exact measurement from home to home but
worth watching on a macro level. The chart below shows the average price per sq.ft. during the past 12 months. Another way to look at this is that this will give you some idea of the average home sale price.
4. Volume Of Sales: The number of homes sold last year was 40% lower than in 2022. Simply because most homeowners have lots of equity in their homes and ultra-low mortgages at 2 & 3%. This greatly reduces inventory and it appears this will continue for a few years to come.
5. New Home Sales – New construction continues to do well since we continue to see immigration from the bay area and other parts of the state. Affordability continues to be the problem. The average cost of a new home starts at $650,000 before any upgrades. Construction materials and the process have shot-up due to inflation.
In summary, 2024 is an election year and things could change rapidly if the government wants to keep “us happy”. The local Sacramento/Roseville market will continue to have low inventory.
Buyers are the key. As soon as interest rates drop below 7% we will see buyers returning to the market. Home values did not drop in 2023 as many expected. There is no recession and there is no significant reason to expect homes values to drop.
The local real estate market will continue with the “New Normal”. Both buyers and sellers will have room to “talk”. I will provide updates when the time comes should any of the these indicators should change.
Meanwhile Happy New Year! Call me anytime for additional information!
John Ecklein, Realty ONE Group/Complete
916-308-7642
john.ecklein@gmail.com
