California’s housing market has entered a complex phase. While new listings are trickling in, they’re still well below historical levels, leading to persistently low inventory. Meanwhile, other states, notably Arizona, Florida, and Texas, have seen substantial inventory growth, sometimes surpassing pre-pandemic levels. If you’re considering buying or selling a home in California this fall, here’s a comprehensive breakdown of what’s happening and how it might impact your real estate journey.
Limited Inventory Growth in California
In September 2024, new listings in California hit 21,901, a 16% increase from last year’s 18,802. Yet, despite this boost, we’re still dealing with the lowest September inventory levels (excluding last year) since 2018, when the state saw close to 31,000 listings.
While the 2024 figures show that more homes are gradually coming to market, the number remains limited, especially compared to the surge in other states. This means that potential buyers are still facing fewer choices, and sellers continue to benefit from sustained demand and low competition.
California vs. National Inventory Trends
When looking at the broader national picture, California’s inventory growth lags significantly. Here’s a snapshot of the latest inventory trends in comparable high-demand states:
Arizona: Arizona’s housing supply has risen significantly, hitting its highest level since 2019. Homebuyers there are seeing more options, leading to a more balanced market where price appreciation has slowed.
Florida: Florida’s inventory has also increased dramatically, returning to and even surpassing pre-pandemic levels. The abundance of listings has resulted in more negotiating power for buyers and a cooling of prices in certain regions.
Texas: Texas has seen the most significant rise in listings, with 117,000 homes available by late October 2024. This is a steep increase from 92,000 homes in November 2019, marking an almost 27% rise in inventory since pre-pandemic days. For buyers, this surplus translates to more choices and often competitive pricing.
In stark contrast, California’s inventory sits at about 48,000 homes, an increase from last year but still significantly below the 57,432 homes available in 2019. This limited supply has kept competition relatively high and prices stable compared to other regions.
Price Reductions: A Gradual Rise
According to the California Association of Realtors (CAR), approximately 37.2% of homes on the market in September 2024 had price reductions. This is in line with the share of price reductions seen from 2014 to 2017 but lower than the rapid price cuts observed in 2022, where we saw a jump from 20% to 45% of listings with reduced prices within a single year.
Although the number of price reductions has been rising since early 2024, it remains relatively restrained compared to more volatile states. The gradual increase suggests that sellers, while acknowledging buyer sensitivity, are not pressured to cut prices aggressively.
Why Are Prices Staying Stable in California?
Despite inventory growth and the slight uptick in price reductions, California home prices have remained fairly stable. Here’s why:
Strong Demand: Demand for housing in California remains high due to a combination of limited supply, robust job markets, and attractive living environments in key metro areas like the Bay Area, Los Angeles, and San Diego.
Inventory Constraints: Unlike other states, California’s housing market still has a much lower inventory relative to demand. This supply constraint has mitigated the need for sellers to reduce prices substantially.
Regional Disparities: While California’s overall housing market shows tight supply, some regions may experience unique trends. High-demand areas, such as Los Angeles and Silicon Valley, tend to show more price stability due to sustained interest from both local and out-of-state buyers. In contrast, smaller markets may see more flexibility in pricing, especially where inventory has shown slight increases.
Big Picture: How This Impacts You
For homebuyers, the limited growth in inventory means you might still face stiff competition, especially for homes in sought-after areas. The slower rate of new listings reaching the market can also mean fewer options, so being well-prepared and working with an experienced agent will be crucial.
For sellers, these market dynamics are generally favorable. The restricted supply and stable demand allow you to list your property confidently, knowing there’s likely to be a steady pool of interested buyers. However, pricing appropriately is still essential, as overly aggressive asking prices may not attract as many offers given the slight increase in inventory and growing buyer caution.
Comparative Market Observations for November 2024
In examining inventory levels and price trends between California and other large states:
Texas and Florida: The abundance of listings has started to affect pricing, with both states showing more frequent price cuts than California. With a more substantial supply, buyers are finding more negotiating power, and in many cases, prices are beginning to stabilize or decrease.
Arizona: While Arizona has seen significant growth in listings, the price effects have been less pronounced than in Texas or Florida, due in part to sustained interest in cities like Phoenix.
In California, although inventory is increasing gradually, it remains far from the levels required to create a fully balanced market. Consequently, we’re seeing price stability rather than the decline observed elsewhere.
Key Takeaways for November 2024
If you’re buying or selling a home in California, understanding these inventory constraints and how they shape the market is essential. Sellers can take advantage of the limited supply to position their properties strategically, while buyers need to act promptly and decisively.
For a deeper dive into these trends and tailored advice on how best to approach California’s housing market, connect with a local real estate expert who can provide current insights and guide you through the nuances of buying or selling this fall.
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