Welcome to 2024! It’s January, the time when I bring out my crystal ball out and let you know what I think will be happening in our local real estate market this year.
Bottom line: 2024 will be better than 2023, but not dramatically so. We’ve had a year to get comfortable with 2023’s interest rate and insurance antics and the new reality that’s emerged. So I’m expecting activity closer to a normal market.
Here’s what I believe we can expect in 2024:
Interest rates will stabilize—and decline. The Fed raised rates three times in 2023, and isn’t expected to raise them this year. In fact, many mortgage professionals believe rates will steadily decline as the year wears on.
Inventory will increase, probably in the spring. Many homeowners who postponed selling in 2023 will stick their head out the door and find that the climate is a bit more hospitable for a move and will be motivated to take action.
Prices will remain flat, mixed in with some decline. Single-family home values will be stable and may even increase a bit. Condo values will generally be flat, with some declines for units with specific challenges when it comes to variables like location, view and high HOA dues.
More home buyers will materialize. Lower interest rates will encourage fence sitters to get pre-approved for loans, and buyers will wade into the market knowing that it’s highly likely they can refinance later at lower rates. Additionally, current renters or those who moved out of the city to work from other places will filter back to San Francisco as companies require employees to work at least part of the week in the office. It’s likely many of these folks will decide to invest in a new home and take a more permanent resident approach to living here.
Insurance will still be a challenge, but a little easier to navigate. We’ve had the past year to adjust to insurance obstacles, and it’s no secret that insurance will cost more until things get under control. In other words, we’re used to the chaos and the high costs, and will now just deal with it.
International conflict and the election will cast a shadow of uncertainty. Okay, so there will be some semblance of anxiety out there. The wars in the Middle East and Ukraine, as well as the presidential election will cause some market volatility throughout 2024. That could easily limit real estate activity as would-be buyers and sellers wait to see how things turn out.