Marin: January 2024 Market Stats

Dramatically improving economic indicators suggest a brighter 2024 housing market:

• In the last 2 months of 2023, the average, weekly, 30-year mortgage interest rate dropped from 7.79% to 6.61%. With the fall in inflation this past year, the Fed is widely expected to begin dropping its benchmark rate, probably in multiple steps, in 2024. The consensus forecast among analysts is for further declines in mortgage interest rates.

• After its end-of-year rally, the S&P Index was up 25% and the Nasdaq was up 45% in 2023 (though it ticked down in early 2024). This plays a major role in the Bay Area household wealth. 

• On an annual basis, the 2023 median house sales price was down 4% from 2022 (the peak of the market), while on a quarterly basis, the Q4 price was up 4% year-over-year.

The 2023 market was characterized by high interest rates, financial market uncertainty, surprisingly strong demand (considering the first two issues), and an extremely low supply of new listings - which maintained upward pressure on prices, even as housing affordability dropped.

Sales numbers plunged due to loan rates and the inadequate supply of homes for sale, while for prospective sellers, the motivation to move was reduced by the mortgage lock-in effect. With interest rates falling, and economic conditions and consumer confidence rebounding, the big question is how much do rates need to fall for buyers and sellers to start participating in the market in normal numbers again? Right now, the direction is trending positive.

Note: As often seen in recent years, the complex economic, political, and social factors affecting interest rates, inflation, consumer confidence, and housing and financial markets can change quickly in unexpected ways. Forecasts and predictions are best guesses based on the interpretation of recent economic data and trends.