Hot Property Q&A: Insights on the Real Estate Market in 2024
What should buyers or sellers expect from Southern California’s real estate market in late 2024? While lack of inventory, interest rates and price uncertainty are continuing issues post-COVID-19, there are many bright spots in the real estate market as well. We asked real estate experts with extensive knowledge of the region to weigh in on how to approach buying, selling or even just starting to think about either.
Joyce Rey
Head of Global Luxury Division for Southern California, Coldwell Banker | [email protected]
SOUTHERN CALIFORNIA IS STILL EXPERIENCING A HOUSING SHORTAGE. WHAT IS YOUR ADVICE TO BUYERS LOOKING FOR THEIR IDEAL HOME IN THE REGION?
NORIEGA: There will always be a finite inventory in Southern California housing. If you find a home that truly resonates with you, strong consideration should be given to buying that property as it may be years before another suitable property becomes available.
STYNE: Be patient and don’t just settle. Wait for the right property and maybe be a bit aggressive as well. In many areas of Southern California, property values are a bit high and sellers are still ambitious with their list prices. If something has been on the market for a while and there is opportunity, put pen to paper and try. Somewhere between the seller’s wish price and your wish price, there is a deal to be made, but if you don’t try, you will never know.
PASTERNAK: In a housing shortage, the “perfect house” may not be feasible, but a motivated and prepared first-mover has a greater chance of securing their dream home. But it becomes that much more important to work with a knowledgeable and trustworthy real estate agent that will help navigate current market conditions.
REY: Inventory is definitely still limited and the best advice 1 can give any buyer is to consult with an experienced and knowledgeable agent - someone who is a specialist in the area and can guide you through every possibility with properties both on and off the market!
SEGAL: Waiting for your “ideal” home may keep you on the sidelines. Instead, expand your price point and geographic location to the limits of your comfort zone and convenience and start writing offers on the inventory that is currently on the market. You can always make improvements to your property to fine-tune your needs.
GAULT: Utilize a real estate professional who considers it their job to create inventory for you once they have a sound understanding of exactly what you need and want out of your next home.
WILLIAMS: In a competitive market like Southern California, it’s crucial to work with a reputable and experienced agent. A skilled agent can provide access to listings as soon as they hit the market - or even before - and help you craft the most competitive offer. This is especially important in multiple-offer situations, where having expert guidance can make the difference in securing your ideal home.
HOW DOES A SECOND HOME MAKE SENSE FOR BUYERS, WHETHER IT IS IN SOCAL OR BEYOND?
REY: A second home is an absolutely great plan! There is no better investment that one can make than prime residential real estate in top neighborhoods. A second home, wherever you might choose, will likely appreciate in the long run.
WILLIAMS: A second home offers great potential for passive income, especially as a rental property when you’re not using it. Real estate is consistently one of the safest and most valuable investments, providing both personal enjoyment and financial returns in the long run.
GAULT: A second home makes sense when it makes sense. I connect my clients with finance professionals who empower us to have a holistic conversation based on their purchasing power and cater to their lifestyle goals.
PASTERNAK: A second home could make sense for some buyers. It’s important to be aware of all the financial implications including maintenance, upkeep and any possible rental management fees. Further, one must be aware of local laws and regulations surrounding short-term rentals. Understanding these possible limitations is key to deciding whether a second home is a good idea.
NORIEGA: More and more of my clients are buying Southern California properties as a second home or as a “co-primary” residence. They want to live in Southern California for all that it offers: weather, beaches, amenities. But they do not want to be subject to the state taxation. So, they are buying their Southern California home to reside in without jeopardizing their primary residence in a more tax-friendly state.
A: SEGAL
Owning a second home without either the intention of renting it and/or really enjoying it for your personal gain is not a sound investment. If you have the resources to acquire an additional home, it can serve you if you truly take advantage of it.
A: STYNE
If you will spend time there and enjoy it yes, and there are always opportunities for second homes to pay for themselves. The best investment... when it is the right investment in the right location over the long term will always be real estate.
WITH NO “PERFECT TIME” TO BUY OR SELL A HOME, WHAT ADVICE CAN YOU GIVE TO THOSE LOOKING TO DO EITHER? WHEN IS THE “BEST” TIME? WHAT ARE SOME RULES OF THUMB TO FOLLOW WHEN YOU’RE PLANNING TO CONDUCT A REAL ESTATE TRANSACTION?
GAULT: Utilize a real estate professional that you can sense cares more about your buying or selling goals than their commission. A professional will provide you with an open and transparent perspective of your hyperlocal market’s performance in the scope of broader financial trends.
SEGAL: Simply put: Buy a home when you need it. When your work or life needs change and housing is a priority, buy the best location you can find and sacrifice the non-essential amenities. Focus on the quality of your life first and foremost and let your living environment support your mental and physical health.
WILLIAMS: The best time to buy or sell a home is when your life circumstances call for it. If there’s no pressing need, then timing your transaction with the market cycle is ideal. Real estate typically follows a 10-12 year cycle, so waiting for the right moment can be beneficial. As we often say, you’ll always wish you bought 10 years ago!
PASTERNAK: While there is never a “perfect time” to sell or buy real estate, it is quite often a necessity as stages of life change. For buyers, it’s important to have realistic expectations and to be flexible - buyers should be open-minded about neighborhood, amenities and features.
REY: Typically, a real estate investment, sale or purchase cannot be truly planned but is based on one’s personal needs. The most attractive real estate markets in general are the spring and fall seasons. However, the main consideration is to choose an experienced agent who can make it easy any time of year.
NORIEGA: For those considering selling, I consult with all of my clients to do what is necessary to prepare the property for its best presentation and first impressions. For buyers, I want them to see everything that is on the market in the neighborhoods they are considering so that they have a greater understanding of the market.
STYNE: As a buyer the best time to buy is when you find the right home for you. Even though interest rates are higher, what goes up also goes down. And if interest rates are getting in the way, keep this in mind: Date the rate and marry the house. As a seller, the best time to sell is when you want to sell or need to sell. In Southern California, we don’t necessarily have “seasonal” markets, but there are times of the year where there is more activity - the spring and summer markets - and yet having said that there is a lack of really good, well priced inventory, and when a good home comes on the market, it doesn’t matter what day of the year it is. There will be activity.
WITH ALL THE DISCUSSION REGARDING INTEREST RATES, HOW IS YOUR BUSINESS BEING AFFECTED?
WILLIAMS: Interest rates have declined by nearly two full points since last year, and we expect them to continue decreasing. This trend boosts consumer confidence and positively impacts mortgage payments, making it a win for both buyers and the overall real estate market.
STYNE: I believe my business like everyone else’s business has been affected. You have to keep in mind that even though there are some very high-priced, all-cash deals that have been done, those UHNW buyers are likely borrowing against their portfolios. I think the market shift we are all experiencing now is not only about interest rates; it is about an election year, global uncertainty, an inflated market as well as buyer fatigue. The lack of inventory is giving the optics of prices remaining stagnant. However, if you look at the statistics, prices have come down. Buyers should take advantage and put pen to paper. And a note to sellers: Buyers are only putting pen to paper when there is a perceived value.
SEGAL: Perception drives our market condition. Lower interest rates are a very positive influencer towards people’s perceptions of our housing market. We are already seeing an uptick in activity, transactions and requests for showings.
GAULT: With recent changes in presidential nominees and a broader acceptance of the anticipated decline in rates, the housing market is quickening for both new listings and stale ones. Seasonality is still heavily at play in resort markets with off-season and shoulder months bearing less productivity. But as rates decrease, even incrementally, the pent-up demand is beginning to release.
REY: The recent interest rate reduction has had a very positive effect on business as a whole, and the additional cut that is anticipated in the next month will also generate activity, especially on the part of today’s buyers.
PASTERNAK: With super-low interest rates, there was a larger pool of buyers and sellers transacting. The rise of interest rates directly impacted affordability for many buyers. Some buyers paused their home searches as they hoped prices would come down. We have since seen that prices did not come down drastically and many buyers have adapted to the new interest rates.
NORIEGA: The rise in interest rates from their previous all-time low has had an effect on our real estate market. In some areas of the market, it has caused the market to slow down as the rising mortgage costs have prompted buyers to be more critical of a purchase and also pause and wait for the interest rate market to institute rate reductions. With the recent Fed rate cut of .5 basis points, we are now seeing more inventory come on the market and more buyers transacting as the rate cut has helped to instill consumer confidence.
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