The California housing market outlook for 2023 is looking uncertain, with sagging economic data and higher interest rates potentially taking a toll. According to the latest report from the California Association of Realtors (CAR), the state’s median home price declined 3% in November, down from $801,190 to $777,500 in October. This represents a loss of $34,700 in just one month for homeowners holding onto their properties in hopes of selling later.
One factor contributing to the drop in prices may be the rising mortgage rates. According to Freddie Mac, the 30-year, fixed-mortgage interest rate was around 6.81% last month, compared to 3.07% 12 months ago. This means that mortgage payments have grown 50% year over year, which combined with steep inflation, may make it difficult for some buyers to afford a home in California.
In addition to the impact of rising interest rates, home sales in the state have been declining for nearly a year and a half, with a typical drop of 30% from the previous year. On a monthly basis, sales plummeted 13.2% in November, compared to the long-term average of .5%.
Despite these challenges, the California housing market is still seeing strong interest from buyers in other states. However, it’s worth noting that home prices remain far above prepandemic levels and it would take a significant economic shock to bring them back down.
There is some good news for buyers, as housing inventory has increased in 41 of the 55 counties reporting. The median days to sell a home has also grown to 24 days, which may encourage more homeowners to put their properties on the market and negotiate better prices and terms for buyers. If you’re considering purchasing a home in California, now may be a good time to start looking and negotiating a deal.
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