Welcome to today’s real estate news roundup! In the housing market predictions for 2024, there are signs of a transitional phase with potential activity heating up as mortgage rates decrease and more resale inventory enters the market. However, affordability challenges persist, and the inventory shortage remains severe. Builder sentiment is dampened, and existing-home sales have declined, although there are indications of the market moving back into balance. Meanwhile, Sacramento State University is set to begin construction on a new student housing building that will provide affordable beds for undergraduates, aiming to alleviate the housing shortage on campus. California’s housing crisis continues to escalate, with soaring costs and limited supply, leading to efforts to increase housing production and explore innovative solutions. Lastly, community land trusts in California are gaining momentum as a means of preserving existing affordable housing and stabilizing communities at risk of gentrification. Read on to delve deeper into these stories and gain valuable insights into the current real estate landscape.
Housing Market Predictions For 2024: When Will Home Prices Be Affordable Again? – Forbes Advisor
The housing market might finally be entering a transitional phase. Summer sales have been tepid thus far, but there are signs that activity could heat up by the end of the summer as mortgage rates edge down and much-needed resale inventory continues to enter the market, giving buyers more options. Other good news for home shoppers is the ongoing decline in the median price for a new home—now below the median resale home price—even as builders continue offering buyer incentives.
Nonetheless, experts say the housing market will only see renewed momentum once mortgage rates drop enough to ease affordability challenges and incentivize homeowners locked in at low rates to move so inventory grows substantially to meet demand. U.S. home prices posted a 5.9% annual gain for May, down from a 6.4% annualized gain in April, according to the latest S&P CoreLogic Case-Shiller Home Price Index. Yet, even as this annual gain marks a slowdown, the index still broke the previous month’s record high, indicating home prices are still out of reach for many.
Despite more resale homes entering the market, the inventory shortage remains severe and likely will for some time, thanks to multiple headwinds. For one, many homeowners remain “locked in” at ultra-low mortgage rates, unwilling to exchange for a higher rate in a high-priced housing market. Consequently, demand continues to outpace housing supply—and likely will for the remainder of this year.
Builder sentiment continues to wilt with the summer heat. High mortgage rates and sticky inflation are primarily to blame for the dampened outlook for new construction, with builder confidence inching down from 43 to 42 in June, according to the most recent National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index (HMI). This reading marks the third consecutive month of downward movement and negative sentiment.
Existing-home sales slumped 5.4% in June, according to the latest report from NAR, marking the fourth straight month of declines as home prices reached their highest on record, putting off potential buyers. Sales also fell 5.4% compared to June last year. However, there are signs that the market is moving back into balance, with pending home sales increasing in all four U.S. regions.
Though home prices and mortgage rates remain high, there are signs the housing market is moving back into balance—albeit slowly and unevenly across regions. Declining mortgage rates will likely incentivize would-be buyers anxious to own a home to jump into the market. Expect this increased demand amid today’s tight housing supply to put upward pressure on home prices. Most experts do not expect a housing market crash in 2024 since many homeowners have built up significant home equity. The issue is primarily an affordability crisis. High interest rates and inflated home values have made purchasing a home challenging for first-time homebuyers.
Sacramento State to begin construction on new student housing building that will provide affordable beds for undergraduates | Sacramento State
Construction will begin this October on Student Housing III, a five-story, 97,100 square-foot facility at Sacramento State University. The building will feature 285 affordable and 40 standard-rate beds and is scheduled to open in June 2026. The project is funded by California’s Higher Education Student Housing Grant Program (HESHGP), which aims to provide affordable student housing. The new building will help alleviate the housing shortage on campus and improve enrollment and retention rates. The facility’s design has been approved, and additional funding will be provided through CSU revenue bonds and campus housing program reserves. The building will include various amenities and sustainability features, such as recreation rooms, study areas, natural light and ventilation, and charging stations for e-bikes and scooters.
California’s home costs have run away from working-class residents • Sacramento News & Review
California’s housing crisis has reached alarming levels, with escalating prices and a lack of supply driving up housing costs to untenable new levels. According to a recent report by the state Legislative Analyst’s Office, a mid-tier home in California costs more than twice as much as a similar home in the rest of the country. The average monthly payment for Californians is nearly $6,000, putting homeownership out of reach for many working-class residents.
The report highlights the need for increased housing supply as a crucial solution to the affordability crisis. The state has designated certain communities as “prohousing,” providing them with exclusive grants and additional funding opportunities to accelerate housing production. Other innovative approaches, such as tiny homes and tenancy in common arrangements, are also being explored to address the housing crisis.
While there is no single solution to the complex issue of affordability in California, efforts at various levels are necessary to make progress. The state must continue to incentivize and reward communities that prioritize housing development and affordability. Additionally, programs like Project Homekey and the expansion of community land trusts are contributing to the creation of more affordable housing options.
Dan Walters: Eye-popping construction costs intensify California’s housing shortage – Marin Independent Journal
California’s chronic housing shortage has reached critical levels, with escalating construction costs exacerbating the problem. The state’s goal of building 2.5 million new housing units over an eight-year planning cycle is falling short, with private and public developers meeting only a third of the target. High interest rates and rising costs of building materials and labor are major factors contributing to the stagnant housing market. Governmental projects, which often include various mandates and financing complexities, tend to have the highest costs. However, innovative approaches such as modular construction and strict cost limits are being explored to bring down expenses.
A new $50 million housing fund created by Apple and private philanthropists aims to finance projects that meet cost limits, signaling a step in the right direction. To effectively address the housing crisis, California must find ways to maximize its resources and achieve more affordable housing options.
‘Taking it off the speculative market’ Nonprofits help tenants to stay put
Community land trusts in California are gaining momentum as a method of preserving existing affordable housing. These non-profit organizations buy land and then sell or rent the buildings on top of it to low-income residents. The number of community land trusts in California has tripled since 2014, with the model being used in diverse communities such as indigenous tribes, immigrant neighborhoods, and formerly-affordable inland cities. By taking control of buildings and ensuring long-term affordability, community land trusts help stabilize communities at risk of gentrification and displacement. They offer an alternative to building new units and can help close the homeownership gap between different income groups. Despite challenges, such as high construction costs and limited funding, community land trusts are seen as a valuable tool in addressing California’s housing crisis.