Residential real estate pundits and much of the Realtor industry is predicting lower interest rates and rising home inventory in 2024. If both predictions come true, it will likely make for a healthy and strong market.
Since the start of this year is slow on news, let’s study the “way too early” January numbers on interest rates and local inventory levels in our South Bay cities.
Mortgage Rates, Per St. Louis FRED
I like to check-in with the St. Louis FRED economic data, especially when 30-year mortgage rates are such a key factor in the housing market right now.
To end 2023, the average 30-year fixed mortgage rate in the United States stood at 6.61%.
To end January 2024, the average rate was 6.63%.
So thus far, we are flat when it comes to mortgage rates in 2024. But we are way down from peak 30-year mortgage rates that reached 7.79% in October of 2023.
The dataset is far too small to consider any type of 2024 trends with one month’s worth of data. What’s more. most Beach City and Palos Verdes buyers will be jumbo borrowers who likely borrow at 0.5% to 0.75% lower rates thanks to the underwriting standards and incentives given to high-net-worth borrowers.
South Bay January Inventory Levels
Moving onto home listing inventory levels locally – I am going to break it down from the beach to the Palos Verdes Peninsula.
While the statistics are far too small of a sample size and early in the slow part of the year, it is fun to study the below results to project what might come for 2024.
Manhattan Beach Inventory – Down 2.7%
- Jan 2024: 72 Listings
- Jan 2023: 74 Listings
Palos Verdes Estates Inventory – Up 40.7%
- Jan 2024: 38 Listings
- Jan 2023: 27 Listings
Redondo Beach Inventory – Down 5.5%
- Jan 2024: 86 Listings
- Jan 2023: 91 Listings
Rancho Palos Verdes – Up 4.6%
- Jan 2024: 68 Listings
- Jan 2023: 65 Listings
Rolling Hills Estates Inventory – Down 11.8%
- Jan 2024: 15 Listings
- Jan 2023: 17 Listings
Hermosa Beach Inventory – Up 16.7%
- Jan 2024: 42 Listings
- Jan 2023: 36 Listings
Perfectly mixed results from the beaches to Palos Verdes.
When it comes to the beach cities, the larger markets of Redondo Beach and Manhattan Beach saw their for-sale listings contract even further from 2023. So much for rising inventory, truly a bummer for buyers.
Hermosa saw a nice pop in listings but hardly enough to help the market due to its smaller size.
As far as the Palos Verdes Peninsula, the larger markets of Palos Verdes Estates and Rancho Palos Verdes which make up 80% of The Hill’s real estate marketplace, went the opposite of the beach and saw their inventories increase.
Smaller Rolling Hills Estates saw its listing inventory fall.
It is simply too early in the year to draw any conclusions. And a one-month January comparable is not the best way to measure inventory trends, but it is interesting to have the first statistics of the year.
Mortgage rates are also holding steady and may continue to do so if Fed Chair Jerome Powell chooses to not rate cut as often as the market expects.
And to conclude, the weather always can have an impact on our southern California home market. This wild and wet atmospheric river almost certainly delayed listings last week and likely many more planned listings coming this week – from photography & staging delays to strategically listing in better weather.
Let’s hope a lot more listings come soon, and the positive data begins to reveal itself in the coming months.