This is one of our favorite SPT columns as it gives us the opportunity to reflect on the prior year that was in our local real estate market. We enjoy sifting through the data and sharing our insights. So, let’s dig in!
As reported last year, 2023 was remembered primarily for significantly lower sales volume (-19.5% in San Pedro) due in large part to mortgage rates reaching nearly 8%, which was considerably higher than many in the lending industry had projected. While there was some price softening (-3.1% in San Pedro), this decline was modest due to the tight inventory climate that has persisted throughout the South Bay.
Going into 2024, The California Association of Realtors® projected “an increase in existing SFR home sales of +22.9% next year to reach 327,100 units, up from the projected 2023 sales figure of 266,200. The 2023 figure is -22.2% lower compared with the pace of 342,000 homes sold in 2022. The California median home price is forecast to rise +6.2% to $860,300 in 2024, following a projected -1.5% dip to $810,000 in 2023 from $822,300 in 2022. A persistent housing shortage and a competitive housing market will continue to put upward pressure on home prices next year. With the economy expected to soften in 2024, the Federal Reserve Bank will begin loosening its monetary policy next year. Mortgage rates will trend down throughout 2024, and the average 30-year fixed rate mortgage could reach the mid -5% range by the end of next year,” said C.A.R. Senior Vice President and Chief Economist Jordan Levine.
How did our local market perform in 2024?
According to MLS statistics (2024 vs. 2023) at the time of our column submission (12/17/2024), there were 269 SFRs sold in San Pedro, which was up +11.2% (+27 homes) compared to the same period in 2023. The median sales price was $950,000, which increased slightly (+2.7%) from the previous year. Days on market (DOM) increased to 20 days compared to 12 in 2023. In neighboring Rancho Palos Verdes, there were 283 homes sold, which was up (+1.8%) from 278 homes sold in 2023. Median sales prices increased slightly (+2.8%) from $1,817MM to $1,867MM in 2024. DOM went from 13 to 17 days in 2024. Overall, there were 3,029 SFR’s sold in the Greater South Bay, which was up (+2.7%) from 2,949 homes sold in 2023. The median sales price increased (-7.9%) from $1,115MM to $1,200MM in 2024. DOM increased from 13 days to 14 days in 2024.
2024 played out mostly as predicted but with slightly lower increases in sales volume and home prices as anticipated. This can mostly be attributed to mortgage rates hovering between 6.5% to 7% for most of the year instead of decreasing to the mid 5% range as projected.
What can we expect in 2025?
The California Association of Realtors® projects an increase in existing SFR home sales to total 304,400 units, up +10.5% from 2024’s revised projection of 275,400. The California median home price is forecast to climb +4.6% to $909,400 in 2025, following a projected +6.8% increase to $869,500 in 2024 from 2023’s $814,000. The average 30-year, fixed mortgage interest rate is projected to decline from 6.6% in 2024 to 5.9% in 2025.
Although inventory levels are expected to improve, they should remain relatively tight locally due to higher demand with mortgage rates expected to decline. This could put some upward pressure on prices so we shall see how it all unfolds in 2025. Wishing you all a Happy New Year!
Mike Harper and Peter Hazdovac are both licensed Realtors® and co-owners of HH Coastal Real Estate, an independent local brokerage. For more info, visit www.hhcoastal.com.
