Wrap-up of the California Home-Buying Market in 2023

It was a wild and unpredictable year in real estate in California. The home-buying market saw fluctuations in 2023 that will likely impact 2024 growth, and fears of a housing market bubble remain. We’re looking past the headlines to identify trends and break down the financials of another dynamic period in our real estate market.

How to Break Down Another Home-Buying Year 

Analyzing the annual real estate market is complex. Understanding economic, demographic, and social factors can help to understand and predict future trends. Real estate experts employ a range of methodologies to sift through vast amounts of data and identify patterns that can help predict future trends in the market, and we will link to several of their predictions here. 

Analysis of the Real Estate Market – Important Factors

Key aspects of their analysis include studying historical data and examining trends in property prices, transaction volumes, and market activity over the past several years. By identifying patterns and correlations in historical data, experts can gain insights into the cyclical nature of the real estate market and make informed predictions about future movements.

Economic indicators play a crucial role in the analysis of the annual real estate market. Experts closely monitor macroeconomic factors such as interest rates, inflation, and employment rates, as these variables can have a significant impact on property values and demand. For example, lower interest rates may stimulate borrowing and increase demand for real estate, while higher rates could have the opposite effect. 

Additionally, experts consider demographic trends, population growth, and migration patterns to anticipate shifts in demand for housing in specific regions. By examining these factors, real estate professionals can gauge the overall health of the market and make informed projections about which areas are likely to experience growth or decline in the coming years.

New Tech Plays a Role

Technological advancements have also changed the way experts analyze the annual real estate market. Data analytics tools and machine learning algorithms are increasingly employed to process vast amounts of information quickly and identify hidden patterns that may not be immediately apparent. These advanced analytical tools enable experts to make more accurate predictions about future market trends, providing valuable insights for investors, developers, and policymakers. 

As the real estate market continues to evolve, the integration of technology into the analysis process becomes increasingly vital for staying ahead of the curve and making well-informed decisions in the dynamic real estate landscape.

National Home-Buying Trends in 2023

Let’s start with happenings in real estate on a national level, since those always trickle down to impact state economies. Bankrate summarizes the market as “slow sales with high rates and prices.” This is traditionally true. Not too many people buy homes in the last three months of the year. 

And homes are still prohibitively expensive in much of the country. When combined with high interest rates, sales slow. The average 30-year mortgage rate was at about 6.5% at the end of March. It increased to 7.8% on average at the beginning of October. As a result, the National Association of Realtors states: “Existing-home sales descended 4.1% in October to a seasonally adjusted annual rate of 3.79 million. Sales slumped 14.6% from one year ago.”

We also know that sales slid in the West, particularly in California.

The California Housing Market Going Into 2024

Despite high prices and high interest rates, experts consider California’s real estate market to be pretty healthy. In some of our state’s regions, it remains a seller’s market, but the shift to a more neutral status is active.

Below are the California Association of Realtors (CAR)’s median sold price readings for single-family home sales.

Market RegionMedian Sold Price (May 2023)Median Sold Price (May 2022)Year-to-Year Price ChangeYear-to-Year Sales Change
California (statewide)$836,110$893,200-6.4%-23.6%
SF Bay Area$1,300,0001,465,000-11.3%-23.8%
Far North$380,000$425,000-10.6%-21.8%
Central Coast$1,000,000$995,0000.5%-17.3%
Central Valley$485,000$510,000-4.9%-20%
LA Metropolitan Area $765,000$805,000-5%-21.8%
Southern California $800,000$845,000-5.3%-22.3%

As you can see, single-family home sales are dropping statewide. This heavily impacts first-time home buyers. And San Francisco and Los Angeles are seeing particularly high prices for homes. Demand, however, is expected to stay steady.

Why Focus on California?

Examining a state’s real estate market rather than focusing solely on national trends allows for a more nuanced understanding of the dynamics at play within specific regions. Real estate is inherently local, and factors influencing property values can vary significantly from one state to another. California, in particular, is tough to compare to other states in the West. Our economy is larger and demand is generally higher.

No Two States are the Same

By delving into state-level data, analysts can account for regional economic conditions, job markets, and demographic shifts that may have a profound impact on local housing markets. For example, a state with a booming technology sector may experience robust demand for housing in certain metropolitan areas, while another state relying on traditional industries might see different trends. Thus, a state-focused approach enables a more accurate and targeted assessment of real estate opportunities and challenges.

State-level analysis is essential for investors and developers seeking to identify emerging trends and opportunities. Different states exhibit distinct economic drivers, regulatory environments, and population trends, all of which influence the real estate landscape. For instance, variations in state-level policies, such as tax incentives or zoning regulations, can significantly impact the attractiveness of a particular market for real estate investments. 

Understanding these nuances at the state level allows experts to tailor their strategies to capitalize on specific local conditions, whether it involves investing in growing markets, navigating regulatory landscapes, or adapting to demographic changes unique to a particular state.

Think Local to Understand Real Estate

The national real estate market may not always accurately reflect the conditions of individual states, either. Economic disparities, cultural differences, and geographic factors all contribute to the heterogeneity of real estate markets across the country. State-level analysis provides a more granular view, enabling professionals to discern localized trends that may not be evident when examining broader national metrics. In essence, a state-focused approach recognizes the intricate tapestry of the U.S. real estate market, allowing for more informed decision-making and a deeper understanding of the factors shaping property dynamics in specific regions.

So, Will the California Housing Market Crash?

We see a lot of questions about a potential California housing market bubble. One thing that appears to remain true is that home prices are not dropping by any significant amount anytime soon. This is despite an outflow of residents and a general increase in available homes. Any market corrections on the way are expected to be low-key in nature.

Overall, good news abounds. The real estate market is strong in California, and Monumental Windows and Doors is happy to support our active network of architects, builders, and dealers crafting beautiful homes across the state. 

Take a moment to browse our 2024 product brochure and explore our glass wall doors and windows. Thank you for coming along with us on this journey!