Zillow has the daunting task of trying to predict what will happen to the 2024 Real Estate market on a national level. Will their predictions come true in Orange County?
This is my take on Zillow’s 2024 predictions when applied to Orange County:
“More homes will hit the market as homeowners accept mortgage rates aren’t falling any time soon”
Agree. ✅ When using “rolling 12 months” of new listings introduced on the market in 2023, they were at their lowest level since data was available in my MLS tools. I don’t see how it can go lower as I often saw months of single digits in entire cities that normally see over 30 listings. Keep in mind this just applies to overall supply. Their next prediction is tied more toward the balance of supply and demand.
“Home buying costs will level off, giving hopeful buyers a chance to catch up”
For condos and townhomes, I agree ✅ we will see likely a period of a few months of homes sitting on the market longer as prices have become out of reach for many. The increased supply will come from a combination of the Zillow earlier prediction above and rates going slightly lower which will make some “move up” sellers more incentivized to make their move as they outgrow their smaller condo. The best example of this I’m seeing are the younger couple who just had their 2nd child and has outgrown their 2 bedroom condo and now needs to sell. There are likely more homeowners in this situation than the buyers who can afford the new prices. Since the buyers of this segment of the market are usually more interest rate sensitive and place less than 20% down, I think the months of supply will be higher in 2024.
❌ For single family homes, I don’t see enough supply entering the market to compensate for the increased demand. As crazy as it may sound, a single family home at $1,200,000 is still first time homebuyer territory to some. You combine that with the condo owners who want a larger property and the downsizing sellers who want a smaller home that creates an bottleneck which results in a continued shortage of listings.
The new starter home will be a single family rental
❌Disagree. With all the new apartment buildings and townhomes that have been constructed the last 5 years, these will be the more affordable and a more widely available choice. As much as Southern Californian would like to enjoy a backyard, the choices are very slim and the price premium can be out of reach for many. Single family homes are seeing multiple applicants and landlords can be extremely picky.
“More markets will follow New York City’s lead with rental demand surging near downtowns”
❌ Disagree. While I agree that more companies will have their employees return to the office in 2024 and that will create more demand for downtown rentals, this won’t apply to Orange County because quite frankly, we don’t have true downtowns in Orange County where there’s a concentration of jobs. Yes, we have our share of suburban downtowns we call “Downtown Fullerton” or even “Old Towne Orange” but those are just literally a few blocks of retail with some apartments mixed in. We have a concentration of office buildings in Irvine, Newport Beach and Costa Mesa, but many of the workers in those areas prefer a commute to nearby suburbs.
“Traditional home buyers will compete with home flippers for homes that need TLC”
Agree. ✅ With reality TV shows like “Flip or Flop” and others, the casual buyer has been more willing to take on a fixer home.
“Artificial intelligence will enhance the home search experience”
Agree. ✅ Technology has really evolved for browsing homes in the last 10 years. Things that seemed like gimmicks like 3D tours, video, and google street views are now the basics of marketing a home for sale.
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