The Southern California housing market is a hot topic. Known for its beautiful beaches, year-round sunshine, and vibrant cities, Southern California has always been a desirable place to live. The housing market is showing a continued upward trajectory, with home prices experiencing modest growth and sales remaining strong, although the pace has slowed slightly from recent highs.
While some areas might show signs of cooling, the overall market continues to be a seller's market, indicating that it's still a competitive environment for buyers. Let's dive deep into the key aspects shaping the Southern California housing market in 2024 to help you make informed decisions.
Southern California Housing Market Trends in 2024: A Deep Dive
I've been covering the Southern California real estate scene for several years now and I've seen a lot of ups and downs. But one thing that continues to surprise me is the resilience of the market. Despite economic uncertainty and shifts in interest rates, Southern California remains a highly desirable place to live, which impacts the housing market.
Home Sales
The Southern California housing market saw a solid performance in home sales throughout the first ten months of 2024. While sales growth has slowed down compared to the previous year, the numbers are still positive compared to the pre-pandemic years.
Based on the data from C.A.R., sales of existing single-family homes in Southern California in October 2024 were up 11.9% year-over-year and 14.2% month-over-month. This indicates that while the rate of increase is slowing, the market is still active.
If we look at individual counties, we see a mixed bag. For example, Los Angeles County saw a remarkable 23.1% month-over-month increase in sales, while Imperial County saw a slight decline of -5.8%. This kind of variation is not uncommon across different regions in Southern California, as each has its own unique set of factors influencing local markets.
Home Prices
The median sold price of existing single-family homes across Southern California in October 2024 was $865,000. This represents a 5.5% year-over-year increase and a 1.8% month-over-month increase.
Let's break it down by county:
- Orange County: experienced a median price of $1,350,000, a 5.9% year-over-year increase.
- Los Angeles County: saw a median price of $956,210, a 7.0% year-over-year increase.
- San Diego County: saw a median price of $1,010,000, representing a 7.9% year-over-year increase.
- Riverside County: exhibited a median price of $635,000, an increase of 4.1% year-over-year.
- San Bernardino County: had a median price of $499,000, a 5.1% year-over-year increase.
- Ventura County: showed a median price of $940,000, a 4.6% year-over-year increase.
- Imperial County: experienced a median price of $389,990, a 2.6% year-over-year increase.
These numbers from C.A.R.'s data indicate a continuation of the upward trend in home prices, although the pace has slowed down from the feverish pace we saw earlier in the year.
| State/Region/County | Oct. 2024 | Sept. 2024 | Oct. 2023 | Price MTM% Chg | Price YTY% Chg | Sales MTM% Chg | Sales YTY% Chg |
|---|---|---|---|---|---|---|---|
| Southern California | $865,000 | $850,000 | $820,000 | 1.8% | 5.5% | 14.2% | 11.9% |
| Imperial | $389,990 | $397,500 | $380,000 | -1.9% | 2.6% | -5.8% | 6.5% |
| Los Angeles | $956,210 | $960,370 | $893,650 | -0.4% | 7.0% | 23.1% | 10.9% |
| Orange | $1,350,000 | $1,397,450 | $1,275,000 | -3.4% | 5.9% | 12.3% | 14.8% |
| Riverside | $635,000 | $605,000 | $610,000 | 5.0% | 4.1% | 8.2% | 10.4% |
| San Bernardino | $499,000 | $485,000 | $475,000 | 2.9% | 5.1% | 5.3% | 0.8% |
| San Diego | $1,010,000 | $1,000,000 | $936,250 | 1.0% | 7.9% | 10.5% | 14.3% |
| Ventura | $940,000 | $900,000 | $899,000 | 4.4% | 4.6% | 20.4% | 25.1% |
Housing Supply
One of the major factors influencing the Southern California housing market is the ongoing shortage of housing inventory. Despite some signs of improvement, the number of homes available for sale is still relatively low compared to historical averages.
In many areas of Southern California, we are still seeing multiple offers on homes, which drives up prices. This competition is particularly intense in the more desirable neighborhoods and areas with excellent school districts.
This low inventory situation is impacting buyers in a few ways:
- Increased competition: Buyers often find themselves in bidding wars, needing to offer above asking price to be competitive.
- Limited choices: The selection of homes available might be limited, forcing buyers to compromise on their preferences.
- Faster sales: Homes that are priced well and in desirable locations are often selling very quickly.
In my opinion, this is the largest single factor driving the Southern California market right now, and is likely to continue impacting the market through 2024 and possibly beyond.
Market Trends
The Southern California housing market is displaying a few key trends in 2024:
- Moderating Price Growth: While prices are still rising, the pace of appreciation has slowed compared to the past few years. It's a sign that the market is beginning to cool down, but it's important to remember that this is still a strong market.
- Increased Inventory (Slow and Gradual): While still low, the housing supply has shown a slight increase in 2024. This is a positive development for buyers, but it's too early to say if it's a long-term trend.
- Shifts in Buyer Preferences: The pandemic caused many people to rethink their housing needs. Buyers are now placing a higher value on features such as outdoor spaces, home offices, and proximity to nature. This is leading to higher demand in areas that cater to these preferences.
Is Southern California a Buyer's or Seller's Housing Market?
While the Southern California housing market has shown signs of cooling down, it's still predominantly a seller's market.
The reasons for this include:
- Low inventory
- Continued strong demand
- Limited new construction
- Steady population growth in the region
However, we are starting to see some shifts that favor buyers:
- Slower price growth
- Slightly increased inventory (though still low)
- Some sellers becoming more willing to negotiate
This means that buyers have a slightly better position than they did a year ago. However, it's still crucial to be prepared to act quickly and have your financing in place before making an offer.
Are Home Prices Dropping?
While we're seeing a slowdown in price growth, there is no indication of a significant or widespread price drop across Southern California. It's important to avoid making broad generalizations. For instance, in some neighborhoods that were overheated in 2023, we might see prices plateau or even slightly decline. However, in other areas with strong demand and limited inventory, prices will continue to rise, albeit at a slower pace.
Southern California Housing Market Forecast 2024-2025
Looking ahead, I believe that the Southern California housing market will continue to be a competitive environment for buyers, but with some opportunities.
- I expect home price appreciation to slow further in 2024, with growth rates potentially declining to the 2-4% range.
- The housing supply is expected to increase gradually, offering more choices to buyers.
- Interest rates will likely remain elevated, but their impact on the market is expected to lessen as people adjust to the new norm.
- Demand for housing in Southern California will likely remain strong, driven by population growth and the desirability of the region.
My overall forecast is for a more balanced market in 2025. While it will still be a seller's market in many areas, buyers will have slightly more leverage.
In my experience, this market is more sensitive to changes in interest rates than some others. As interest rates stabilize or potentially decline, we could see renewed buyer confidence and a pickup in activity. I also feel that areas with a higher concentration of jobs, including those around the tech and entertainment sectors, are likely to remain robust compared to some of the more rural parts of Southern California.
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