Shasta County Market Update - February 2024
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MARKET UPDATE FOR FEBRUARY 2024
This month's report has some existing news, home sales are up, listings are up and buyer confidence is growing. The Federal Reserve has indicated their intentions to lower rates this year which could make a positive impact on home prices and affordability. Finally, We have had some welcomed rain in the recent weeks and Shasta Lake is filling up nicely. This month we will be covering some of the hottest topics trending now in the local market. As always, if you have any questions please feel free to contact us at 530-222-3800. Have a great February!
Homes sold in January finished at 162 up 4.5% compared to last year when home sales ended at 155. A large contributing factor to the overall low number of properties sold is the surprisingly low home inventory. With little to choose from, many buyers have been reluctant to jump into the housing market.
Homes pending in January finished at 202, up 33% compared to last year when homes pending finished at 151. In the City of Redding, there are a total of 91 single-family homes in escrow, one of the lowest numbers we can remember in decades.
Homes Listed for Sale
The total homes active for sale in January finished at 560 down 11.7% compared to last year when home inventory finished the month at 634. In the city of Redding active home inventory is down to an eye-catching 171 single-family properties for sale as of February 1, 2024. Low inventory can protect home prices but makes it challenging for buyers to find homes.
Average Sales Prices
The average sales price for a home in January finished at $413,000, up 8.38% compared to last year when the average sales price in January ended at $381,000.
After peaking at 8% for a 30-year mortgage last year, mortgage interest rates have slightly eased, currently hovering around an average of 7%. Many experts expect rates to remain higher in the short term, with long-term projections suggesting rates in the mid-to-low 6 % range at some point this year. The Federal Reserve has stated in recent weeks that they intend to lower the fed rates multiple times in 2024. A reduction in the Federal Reserve rate could cause mortgage interest rates to lower as well.
The latest data provided by the City of Redding revealed that total new construction permits pulled in 2023 finished at 94 down 59% compared to the 232 permits pulled the year prior. Among the many obstacles home builders face, one of the most significant challenges is building a home for a price that a buyer can afford to purchase at today's interest rates. Many builders have been focused on finishing existing projects and waiting for the tides to turn.
The rental market has remained strong with vacancy rates climbing slightly estimated in the 6-8% range. Only about 6-8% of the total rental market is vacant, awaiting tenants. With higher mortgage rates, many would-be buyers have elected to rent, which has kept rents strong. One exception is the short-term rental market (VRBO), where many owners report higher vacancy rates and softening prices. One exception noted is VRBO properties located in popular areas or unique destinations.
The local foreclosure market has grown slightly in recent months, with approximately 181 single-family properties in some stage of foreclosure in Shasta County. The recent uptick in foreclosure activity combines several factors, one being the reduction in loan modifications offered during the pandemic.
Obtaining reasonably priced insurance continues to be a challenge for many in the local Shasta County market and the State of California. Many purchasers have experienced sticker shock after discovering that policies have doubled or tripled over the past year. In addition, some companies have refused to write home insurance policies, making the time and ability to locate insurance even more challenging. Homes located in rural areas are the most prone to challenges and require careful attention and research to locate the best options. The challenges of higher construction costs and wildfire losses have contributed to the overall policy rate increases.
Home Price Expectations
In January, CBS conveyed essential insights unveiled by CoreLogic, a real estate company, outlining projections for price increases in residential real estate across 20 cities in the United States. As per CoreLogic's forecasts, there is a potential for a 7.3% surge in home prices in Redding throughout the year 2024. This is not hard to imagine assuming inventory remains low, and if interest rates drop as expected based on the Federal Reserve's recent statements..
Below is a collection of slides that correlate with many of the topics discussed in this mid-year review. As always, if you have any additional questions please feel free to contact us at 530-222-3800 or simply respond to this email. Here's to a future brimming with promise and possibility in the Shasta County real estate landscape!