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  • Writer's pictureNancy Bennett

What Makes a Healthy Real Estate Market?

A healthy real estate market is one where the flow of home sales is consistent on a monthly basis. Over the past 12-18 months, we have experienced a significant drop in home sales, however the price or value of these home sales has stayed relatively consistent.  In other words, less homes for sale, and prices are staying steady. 

What is going on?

As with any business, if there is a shortage in housing supply in areas where there is high demand, it can drive up the home prices. 

In California, statistics show that homeowners aren’t listing their homes. New reports say that baby boomers aren’t willing to let go of their homes. There doesn’t seem to be a solution for the housing crisis, and as the U.S. and California economy return perhaps later this year, it’s easy to see home prices in California picking up pace.

California Association of Realtors’ latest report reveals single-family home sales across the state stayed flat for December 2023, while being down 7.1% from December 2022.

Who is selling?

I find sellers today are mostly listing for lifestyle reasons, such as inheriting a property, moving out of state, job transfer, moving up, moving down, divorce, etc. But the number of actual sellers putting their homes on the market so far this year is very low, especially in our county.

Current 2024 C.A.R. President Melanie Barker said, “The housing market had a tough year in 2023 as a shortage of homes for sale and high costs of borrowing continues its negative impact on housing inventory and demand. With mortgage rates expected to come down in the next 12 months, home sales will bounce back as buyers and sellers return to a more favorable housing market. Home prices should see a moderate increase in 2024 as well.”

Who is buying?

The Fed continues to struggle with its battle with inflation while sending signals both ways regarding expected rate cuts this year. There’s lots to consider in weighing the California real estate market outlook besides mortgage rates. Consumer spending, which has supported the economy, may have to continue doing so, until more housing can be built and small business gets full traction again.

Most buyers are using conventional financing over the past year vs. all-cash purchases.  Investors who are in the market are looking for projects to keep their crews busy and first-time buyers may be waiting on the sidelines for a rate drop, or to be chosen in the California Dream Loan program that rolls out in April.

In my experience, buyers are taking longer to make a decision about purchasing a home, as they weigh the pro’s and con’s of the market and economy today.


First half of 2024

The first two quarters of this year may be a bit slow with less homes coming to market, homebuyers taking their time, and an economic outlook that seems a little sluggish right now.  

Although it may not be considered a “healthy market,” home values are not dropping and homebuyers are still out there right now. Slow as you go seems to be the overarching theme so far this year.

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© 2022 by Nancy Bennett

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