2024 Outlook

2024 Outlook

  • Carolwood Estates
  • 01/15/24

To forecast the 2024 housing market, lets begin by reflecting on what adversely impacted sales volume last year. We can thank the confluence of Entertainment strikes for both Writers and Actors, high mortgage interest rates that followed the lowest in decades, Bank closures, a punitive ULA Los Angeles City tax that severely impacted our 5+ million dollar market and crippled the 10+ million dollar market, a Wildlife Ordinance Threat to hillside development and conflicts in the Middle East which created a negative effect to both the perception and reality of our Los Angeles real estate market, exemplified by the decrease in sales volume by as much as 50% below normalized annual sales.

Real Estate markets are fueled by emotional perceptions. If Buyers and Sellers feel the market is in a positive state, activity swells. Conversely, negative perceptions, impacted by adverse conditions, will swing the emotional pendulum well beyond the economic reality into full aversion.

Consider the foundation of the Los Angeles Real Estate Market—We are underpinned by more homeowner equity, than in the past 40 years, dating back to the early 1980’s. The vast majority of homeowners, who have mortgages, have refinanced their debt to historic low interest
rates, which makes it both easier for them to afford their lifestyle and more reticent to sell their homes. That is the major reason why we have such a shortage of available inventory.

What factors will impact our 2024 housing market?

    1. Interest rates are trending down. The average 30-year fixed-rate mortgage has fallen
      from a 23-year high of 7.8% in late October to 6.6% per data from Freddie Mac.
    2. The Entertainment Industry is back to work with content production in full force.
    3. A healthy Equities marketplace creating additional “paper” wealth for investors.
    4. While we don’t like the ULA tax, the high end market is beginning to digest its reality
      and sales volume North of 10 MM is beginning to increase. There is also a ballot
      measure in 2024 to repeal/amend the tax’s economic impact. We shall see...
    5. Southern California’s landscape and climate.
    6. The growing, positive perception of property investment “value” now that prices have
      been checking back (in some micro markets as much as 35-40%) will continue to
      garner Global attention for those looking for “safe haven” investments.
    7. 2024 brings an election cycle. All levels of Government will look to stimulate economic
      growth and promote the promise of greater economic abundance. All of this messaging
      will have a positive impact on the perception of our reality.

We predict a positive outlook for 2024:

Pricing will remain in check as we work through what we believe will be the final year of our housing correction cycle.

Sales volume will be up between 10-15% for the following reasons:

    1. More Buyers will enter the marketplace with lower interest rates and the perception of a healthier marketplace. Validating this point, mortgage applications are up 15% in just 90 days.
    2. There will be a light increase in inventory as part of the natural attrition of sellers looking to sell their homes for a variety of reasons; Scaling up or down, death, divorce and relocation to other locations.
    3. And...existing Developer inventories will be consumed at a greater clip as new construction Inventory pricing becomes continually more aggressive to minimize carrying costs and profit erosion.

We hope you find this Information helpful. Please know we are here to support and guide you with all of your real estate needs now and in the future. Beyond it all, we wish you great health, abundance, prosperity and joy throughout the year.

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