Sonoma County Housing Market Update & Predictions For 2024: What’s Happening With Rates, Prices & Inventory?
Are you wondering what’s going on with Sonoma County real estate this year? Our market is always evolving, so it’s important to stay up-to-date if you’re eager to achieve your real estate goals. From declining sales to interest rates and inflation, let’s take a look at the real estate trends that are shaping our market and what’s to come the rest of the year.
The Elephant in the Room: Interest Rates & Inflation
Inflation has accumulated to 20% over the past four years, however, the rate of inflation has steadily declined since 2022. It is now close to the Fed’s desired 2% rate, prompting the late August announcement by Federal Reserve Chair Jerome Powell that it is “time” to begin reducing rates.
As for interest rate predictions, experts from Fannie Mae, the Mortgage Bankers Association, and the National Association of Realtors (NAR) predict that interest rates will end the year around 6.67%, with a slight decrease to 6.25% in 2025.
Additionally, at least a single rate cut is anticipated in September, which could provide some relief to potential buyers… finally!
Sales Volume is Way Down From the Pandemic
It’s time to face the facts: the average sales volume for agents has decreased nationally from $3.4 million to $2.5 million over the last year. (That’s -27%!) This downturn marks the slowest market conditions in terms of sales volume since the 1990s.
However, there is a silver lining to this year’s market.
Experts are predicting a late-year surge in sales and expect 40% of 2024’s sales volume to occur in the final months of the year.
This anticipated surge indicates a robust finish to the year, offering exciting opportunities for both buyers and sellers.
Supply & Demand: Why Home Prices Aren’t Dropping Much
First, let’s talk supply. Inventory levels are on the rise!
In fact, there are about 36.7% more homes available on the market compared to last year, according to Realtor.com’s senior economist Ralph McLaughlin.
This increase in inventory provides more options for buyers, making it an excellent time to explore the market and find the perfect home.
So, why haven’t home prices dropped much with inventory on the rise?
In June, the median sold price of single-family homes in Sonoma County was $833,000, down only▼2.0% year-over-year, despite a big increase in inventory. Blame it on the wine country lifestyle, but we still have enough demand in Sonoma County to prevent a major crash in home prices. Overall things are shifting to a more balanced market.
Rising Rent Is Also a Factor At Play…
Another factor contributing to high demand is ongoing rent hikes. That’s right, every year rent goes up, whereas your mortgage stays the same. So even though it may technically be more expensive to rent than buy today (due to interest rates), locking in your housing costs is always a wise investment in the long run.
To put this into perspective: rental rates have increased 30% from 2020!
22 million people nationwide claim their rent is 30% of their income—and 12 million claim it’s 50% of their income.
Many young families are exploring homeownership as a hedge against inflation and looking at it as an opportunity to build their net worth over time. So despite the high prices, they are choosing to buy vs throw away money on rent, looking at it as an investment in their future
Millennials: There’s a lot of On-Deck Potential Buyers
The market demographics are shifting in an exciting way. In fact, 31% of current buyers are first-time home buyers.
Millennials are largely leading the market right now, with 45.5 million who are in the “household formation” age. This wave of young buyers is creating a vibrant and dynamic future for real estate.
Navigating the real estate market may come with its share of challenges, but it also offers a wealth of opportunities for buyers and sellers. By staying updated on the latest real estate trends, you can make informed decisions that align with your goals. The market is ever-evolving and brimming with potential, and with the right insights, you can seize the many benefits it presents.
If you have any questions about the current housing market, don’t hesitate to reach out to me. I’m here to guide and inform you every step of the way.
***This information was sourced from the webinar: Brian Buffini’s Mid-Year 2024 Bold Predictions which originally aired on July 22nd. Watch the replay to learn more about the current real estate market and the stats referenced in this article.
