Alright! It’s that time again, my favorite blog post to write all year. It’s the one where I am forecasting everything that is about to happen in Costa Mesa real estate for the year of 2024! Here we go:
Mortgage Rates Come Down
Yes! It’s just what we need to be honest. Rates hit a high in October 2022 and again in October 2023 cresting above 8% for new mortgages. Yikes! Perhaps you don’t want to close on a home in October? (!). Rates are starting this January in the high 6% range, and I predict that we see rates slowly start to fall by the middle of the year, and I think we will see some rates in the high 5% range this summer. I don’t think they will stay there, but I do think we should see rates in 6% range for the majority of the year.
Inventory Chill Continues
We start the year this January with 44 homes on the market in active inventory, and the inventory shortage will continue into the spring. A healthy Costa Mesa real estate market would have about 150-180 active listings; that number would provide more balance and get us to a market that has more buyer/seller equilibrium. I do think as the year goes on, inventory will increase. But watch out for the typical spring market to have lots of competition and lots of multiple offers again.
OK, I Still Need to Move
The “gridlock” of pent-up seller demand and new listings finally eases this summer. People who have been “hunkered down” with low interest rates in the 3% range finally give up waiting for rates to move and put their homes on the market. Many people believe the rates of 2021 in the low 3% range were sincerely once-in-a-generation rates. People with these rates still need to relocate and or move up to a larger home, and summer will unlock some (BUT NOT ENOUGH!) of this inventory.
City of Costa Mesa Choices
The city of Costa Mesa begins planning this year for considerations of housing in the Fairview Development Center. This should be interesting. It appears there is a big push for affordable housing, but what Costa Mesa really just needs is housing. The lack of available housing is remarkable. The unfortunate thing is that with a site as large as FDC, there could be an amazing plan built out with lots of options across price spectrums for first-time buyers, move-up buyers, and luxury buyers. My guess is the city will add more than 50% of low-income when it simply isn’t what we need. Adding ADU’s in existing neighborhoods isn’t the answer either. A good plan that builds the FDC into a robust neighborhood is what we need.
Mesa Del Mar Continues Tear
Mesa Del Mar, once considered a sleepy little mid-century tract, has absolutely rocketed to the Costa Mesa Real Estate hot list in the past 2 years. Considered a value play like College Park for many years, this neighborhood is now attracting millennial families looking to get into a Costa Mesa neighborhood that has a great vibe, is close to the Camp and shopping and South Coast Plaza, and is also close to all the great shopping in Eastside Costa Mesa. At the beginning of 2021, there were a handful of closings in the mid $800k range, and as the year went on it was common to see the upper $900k to $1,000,000 price point in Mesa Del Mar. Now? Be prepared to start your bidding at $1,200,000! And that is for a fixer/mid-century/fixer/fixer/fixer! Recent high end closings in Mesa Del Mar have shot the high watermark in Mesa Del Mar to $1,850,000.
Eastside Newport, err, Eastside Costa Mesa Continues Hot Streak – x
Mesa Verde Cracks $1,700,000
Coming in at the end of 2023 at a remarkable $1,500,000 median price, our fearless projection is that this year’s early activity in 2024 in Mesa Verde will push the median sales price above $1,700,000 as the year comes to an end. Expect to see micro neighborhoods like the Upper Bird Streets push some early sales over $2,500,000 to catch up with some of the sales that happened last year in the inner loop.
Mesa Verde Sees Multiple $4M Sales
Last year had one sale over $4,000,000 on Capri Lane. I would expect to see another one, if not two happen this year on the golf course of Mesa Verde Country Club.
Westside Increases Value Significantly
The Freedom Homes and surrounding tracts that are west of Placentia should expect to see significant growth in price this year. Expect most starting prices for the simple 3 bedroom/1 bath, no garage configurations to start in the low $1,000,000 range, and also expect to see quite a few sales happen above the $1,500,000 mark this year.
Flipping Out
Think the market has been challenging for the ordinary buyer? The flipper in the Costa Mesa real estate market has had an even tougher time finding inventory. The ones that do find deals, find them at higher entry points and need to sell at higher values than expected. But it will continue to work this year, as so many buyers prefer now to buy homes that are “done” or “finished”. Lots of investors will also shy away from the Costa Mesa real estate market due to the City of Costa Mesa being unbelievably harsh to any homeowners regarding any permits. Ten years ago, the city was known to be good to work with; now contractors think the city is currently the worst in the County of Orange for any permits and ongoing work.
Exit Stage Left?
Nationally the expectation this year is that once interest rates lower to the low 6’s and high 5% range, we will see more inventory as sellers have been waiting for improved rates to sell and then move and buy again. I expect a good amount of Costa Mesa sellers this year to realize that this may be the top for prices and exit the state, especially before the election and all the fun political environment that it will bring.
What do you think?
Do you think there are other predictions that will happen this year for Costa Mesa real estate?
