San Diego could become a top real estate market in 2024 if mortgage rates fall and sales increase, according to a new forecast.
America’s Finest City was highlighted Tuesday at a digital summit hosted by the National Association of Realtors as a region with potential for increased sales activity and price increases.
Not everyone agreed that Southern California was seeing a lot of activity. Several economists and analysts attended the event, and most agreed mortgage rates are expected to be cut next year. This could make the current owner well-positioned to sell and make the home more affordable for new buyers.
Daniel Hale, chief economist at Realtor.com, said he expects to see increased sales activity not only in many Rust Belt cities, but also in some areas of Southern California where demand is pent-up. Stated.
She predicts that sales in metro San Diego, which includes all of San Diego County, will increase by 11% in 2024 and prices will increase by 5.4%. Realtor.com ranks metro San Diego as the No. 4 projected market among her 100 largest metropolitan areas. We ranked markets by a combination of sales and price growth.
The top market is Toledo, Ohio, where sales are expected to increase by 14% and prices by 8.3%, according to the website. This was followed by Oxnard (18% sales increase, 3.3% price increase) and Rochester, New York (6.2% sales increase, 10.4% price increase). Portland, Oregon, had the worst forecast, with sales down 25.6% and prices down 7.4%.
The median home price in San Diego County in October was $825,000, so Realtor.com predicts it will be around $870,000 by the end of the year.
Lawrence Yun, chief economist for the National Association of Realtors, was less optimistic about high-cost markets like San Diego. He said most of the increase in activity will likely be in Austin, Dallas-Fort Worth, Durham (North Carolina), Harrisburg (Pennsylvania), Houston and Philadelphia.
Yun predicted the average mortgage interest rate would be 6.3% in 2024, while Hale predicted it would be 6.8%. All of these are down from Tuesday morning’s average of 7.09%, according to Mortgage News Daily.
Using the October median price, the monthly cost of a home in San Diego County would be approximately $4,855, assuming a 20% drop on a 30-year fixed-rate mortgage. Mr. Hale predicted it would drop to $4,727, while Mr. Yun predicted it would drop to about $4,500.
Yun said a weakening job market, flat rent prices and struggling regional banks are all reasons why the Fed could stop raising interest rates or even cut them. Recent forecasts from Goldman Sachs and Barclays suggest two rate cuts next year. The Fed is likely to give some indication of its future plans on Wednesday at the end of its two-day meeting.
Mortgage interest rates typically follow yields on mortgage-backed securities. These bonds are typically tied to the yield on the U.S. 10-year Treasury note.
Hale said the sales forecast would be even higher if it didn’t include potential first-time buyers, primarily millennials, who are still off-market.
“Even though affordability will start to improve, the market remains pretty tough and affordability is nowhere near the best it has been in the last 10 years,” she said.
Hale said possible changes for millennials could be student loan laws or new tax breaks for first-time homeowners. There is a bill in Congress called the “First-Time Home Buyer Act” that would give first-time buyers a $15,000 refundable federal tax credit. But it’s not over yet.
“Anything we can do to make it easier for the younger generation to get in the door,” she said. “I think it’s going to be very important.”