The California housing market moderated for the fourth month in a row in September 2021. After a busy summer, the state's housing market continues to stabilize. After setting another record in August, California's median house price fell to $808,890 in September, down 2.3 percent from $827,940 in August. September's price was 13.5 percent more than last September's $712,430, according to the California Association of Realtors (C.A.R.).
The median price in California remained above the $800,000 benchmark for the sixth consecutive month but the double-digit price year-over-year price gain was the smallest in 14 months. However, September saw a recovery in existing house sales which reversed a four-month slump. September's monthly sales pace was up 5.6 percent from 414,860 in August but down 10.5 percent from a year earlier, when 489,590 houses were sold. The month-over-month rise was the highest since August 2020, and despite continuing declines from the previous year, statewide sales increased 16.8 percent on a year-to-date basis.
The supply-demand imbalance continues to heat the market, with many buyers offering sales bids that are higher than the asking price. Over 62.2% of homes sold above the asking price in September, but it was also the lowest level since February 2021. However, market competitiveness should ease and house prices should moderate, providing a chance for homebuyers who waited out the extremely competitive market early this year to reconsider purchasing. Both sales growth and price growth slowed in September.
Homes are flying off the shelves in record time. The median number of days it took to sell a California single-family home inched up from 9 days in August to 10 days in September and was slightly lower than the 11 days in September 2020. Tight inventory and low mortgage rates, similar to national housing market trends, are fueling the rise in California home prices.
While this type of price appreciation has an impact on housing affordability, higher home prices should encourage more sellers to list their homes for sale, slowing the rate of appreciation. The normalization of the market and modest improvement in housing inventory over the past few months have created an opportunity for homebuyers who had avoided the highly competitive housing market that had prevailed for much of the previous year to seize the opportunity.
Housing costs have been on the rise in California, which has impacted affordability. Only less than 25% of home buyers can afford to buy a median-priced home in the Golden State. According to C.A.R.'s Traditional Housing Affordability Index (HAI), the percentage of home buyers who could afford to buy a median-priced existing single-family home in California in the second quarter of 2021 fell to 23 percent from 27 percent in the first quarter of 2021 and 33 percent in the second quarter of 2020.
The figure for the second quarter of 2021 is less than half of the affordability index peak of 56% in the second quarter of 2012. C.A.R.'s HAI calculates the percentage of all households in California that can afford to buy a median-priced single-family home. C.A.R. also publishes affordability indices for specific regions and counties within the state.
- As of the second quarter of 2021, a statewide median-priced existing single-family home would require a minimum annual income of $150,800.
- An effective composite interest rate of 3.20 percent would mean that the monthly payment on a 30-year, the fixed-rate loan would be $3,770 assuming a 20 percent down payment.
In September 2021, the median price in all of the major regions continued to grow on a year-over-year basis, with three of them increasing by double-digits. Home prices continued to rise steadily from the previous year, with 44 out of 51 counties tracked by C.A.R. showing a year-over-year gain from 12 months ago, and 38 of them increased more than 10 percent from last September
- The San Francisco Bay Area had a year-over-year price gain of 21.7 percent, with the median price being $1,290,000.
- The Central Valley had a year-over-year price gain of 15.4 percent, with the median price being $450,000.
- Southern California had a year-over-year price gain of 15 percent, with the median price being $755,000.
- The Central Coast had a year-over-year price gain of 5.8 percent, with the median price being $886,900.
- The Far North had a year-over-year gain of 5.7 percent, with the median price being $370,000.
- The Los Angeles Metro Area had a year-over-year price gain of 15.9 percent, with the median price being $730,000.
- Inland Empire had a year-over-year price gain of 16.9 percent, with the median price being $520,000.
California is still a seller’s market and home prices have reached record-highs across all the regions due to tight supply. Nearly 62% of homes sold above the asking price in September. New construction can’t keep up with demand in the California housing market. Every major region saw home prices continuing to increase from last year as buyers competed amid a shortage of homes for sale. There is an increase in demand leading to bidding wars and subsequent higher selling prices.
These trends show us that the California housing market remains very competitive. Growth of sales are prices are driven by low mortgage rates, buyers seeking more living space, and a perennial shortage of houisng supply. Homes are selling quickly with a minimal price reduction. The statewide sales-price-to-list-price ratio was 101.9 percent in September. It was the lowest level in seven months. If it's above 100%, the home sold for more than the list price. If it's less than 100%, the home sold for less than the list price.
High demand across all of California's sub-markets means that low inventory and lightning-fast market conditions are not going away soon. There just aren’t enough homes listed for sale to satisfy the demand from buyers. The number of for-sale properties continued to fall from last year by 9.7 percent. It was the smallest decline in two years. C.A.R.’s Unsold Inventory Index (UII) was unchanged from 1.9 months in August and was slightly below last year’s level of 2.0 months. The index indicates the number of months it would take to sell the supply of homes on the market at the current rate of sales.
Will The Housing Market Go Up or Down in California in 2022?
Each month C.A.R. surveys 1,000 California consumers regarding their sentiments about various aspects of the housing market or the economy that directly impact housing to create a California Housing Sentiment Index. In September 2021, the overall housing sentiment index reached 70 (-2 from last month). The California housing market is showing signs of normalization, as high prices and a competitive, gradually improving economy continue to entice more sellers back into the market.
Furthermore, C.A.R. reported that interest rates remained favorable last week, and new listings resumed their upward trend. Although rising mortgage applications and home sales have not yet materialized, California consumers have become slightly more optimistic about buying in the last month, and the remainder of the year is expected to remain at or near the 400,000 unit threshold through December.
Encouragingly, the number of new listings being added to the MLS each day has finally started to exceed closed sales and C.A.R. is still forecasting at least 10% growth in home sales this year. If the economy improves, rates could keep rising slowly, but many experts expect borrowing costs to remain low by historical standards throughout 2021. Here's what consumers feel at this time.
Is it a good time to buy a home in California?
C.A.R.’s monthly Consumer Housing Sentiment Index for September 2021 found that only 19% of consumers believe that now is the good time to buy a home, and 81% think this is not a good time to buy a home. The consumer sentiment is up by 1% from last month. As a result of continuously rising prices in all the major regions, the housing market sentiment also shows that only 33% of the consumers feel that it will be easier to find a home over the next twelve months (+2 from last month's survey). 67% said it won't be easier to find their dream house.
Is it a good time to sell a home in California?
According to the survey, almost one-third (70 percent) of Californians believe now is a good time to sell a home. That’s a decrease of -2 over the August 2021 poll. More than half of the consumers (53%) who participated in the survey still feel that home prices will continue to rise in the 12 months. That’s a decrease of -1% from the previous month. Less than half of the people are optimistic about the economy's recovery. Only 38% (-4 from last month) believe that economic conditions will improve in the state over the next 12 months while 62% still have a gloomy outlook.
California Housing Market Trends 2021 (Describes September)
Here are some of the key points of the California housing market report for September 2021, according to the September 16 release by C.A.R.
- September's sales pace was up 5.6 percent on a monthly basis from 414,860 in August.
- It was down 10.5 percent from a year ago when 489,590 homes were sold on an annualized basis.
- The month-over-month rise was the highest since August 2020.
- Despite continuing declines from the previous year, statewide sales increased 16.8 percent year to date.
- At the regional level, sales in all the five regions fell year over year in September, with two regions seeing double-digit declines.
- The Far North region continued to have the biggest sales decline (-18.8 percent) from a year ago.
- Central Coast also fell by more than 10 percent in sales, with all counties but Santa Cruz dropping by double-digits.
- San Francisco Bay Area (-7.0 percent), Southern California (-8.3 percent), and the Central Valley (-6.2 percent) also saw a decline in sales year over year, but the declines were more moderate.
- All but 10 of 51 counties tracked by C.A.R. posted a year-over-year decrease in closed sales in September, with 32 counties declining by more than 10 percent in sales from last year.
- Lassen had the sharpest sales decline from a year ago at -52.9 percent.
- Ten counties experienced a year-over-year sales growth in September, a decline from 13 counties from the prior month.
- Yuba (50.7 percent) had the largest sales gain from last year.
California Median Home Price
- Median prices in all major regions continued to grow on a year-over-year basis, with three of them increasing by double-digits in September.
- The San Francisco Bay Area had the largest jump (21.7 percent) of all regions.
- The Central Valley was the second strongest growing at 15.4 percent.
- It was followed by Southern California (15 percent).
- The Central Coast had the fourth-highest price growth rate of all regions with its median price increasing 5.8% year-over-year.
- The Far North region posted a growth of 5.7 percent.
- In September, 44 out of 51 counties tracked by C.A.R. showed a year-over-year gain from 12 months ago.
- 38 of them increased more than 10 percent from last September.
- Del Norte had the largest growth of 42.0 percent.
- Six counties had a drop in their county median price.
- Lassen falling the most at -24.8 percent.
California Housing Supply
- California’s housing supply leveled off in September as the market transitioned into the off-season.
- Three out of five counties reported by C.A.R. declined in active listings from last September.
- 24 of them dropping by 10 percent or more year-over-year.
- Marin had the largest decline in supply from a year ago, falling 52.8 percent from September 2020.
- Over one-third of the reported counties improved in housing supply from a year ago.
- Santa Barbara led the pack with a year-over-year growth rate of 93.6 percent.
- September’s Unsold Inventory Index (UII) was unchanged from 1.9 months in August and was slightly below last year’s level of 2.0 months.
- The index indicates the number of months it would take to sell the supply of homes on the market at the current rate of sales.
Median Days & Sales Price to List Price Ratio
- The median number of days it took to sell a California single-family home inched up from 9 days in August to 10 days in September and was slightly lower than the 11 days in September 2020.
- C.A.R.’s statewide sales-price-to-list-price ratio was 101.9 percent in September 2021 and 100 percent in September 2020.
- It was the lowest level in seven months.
- Looking at sale-to-list percentages can help buyers and sellers get a sense of how to negotiate on pricing.
- The higher ratio of 100% or above shows a strong market favoring sellers.
- The statewide average price per square foot for an existing single-family home remained elevated.
- September’s price per square foot was $393, up from $321 in September a year ago.
Mortgage Interest Rate
- The 30-year, fixed-mortgage interest rate averaged 2.90 percent in September, up from 2.89 percent in September 2020, according to Freddie Mac.
- The five-year, adjustable mortgage interest rate was an average of 2.45 percent, compared to 2.98 percent in September 2020.
California Housing Market – Regional Sales and Price Trends – September 2021
Sales dipped in all five major regions compared to the same period last year, according to regional data. Median prices in all of the major regions continued to grow on a year-over-year basis, with three of them increasing by double-digits in September.
These monthly and yearly trends numbers can be positive or negative depending on which side of the fence you are — Buyer or Seller? Home sales rebounded in June 2020 for the first time since the pandemic and California’s median home price reached $626,170, improving 6.5 percent from May and 2.5 percent from June 2019. The monthly price increase was higher than the historical average price change from May to June and was the highest ever recorded for a May-to-June change.
Factors are businesses reopening, mortgage payments are falling, and some sellers are more ready and eager to sell. Sales remain strong in a traditional off-season and this year looks promising across the region. It looks like 2021 will end with a new record at home sales and prices. Median prices in all major regions continued to increase but none set a new record high in September 2021. 44 out of 51 counties tracked by C.A.R. showing a year-over-year gain from last September. Whether you’re looking to buy or sell, timing your local market is an important part of real estate investment.
For sellers in the California housing market, it is a good time to sell. A low inventory would keep the prices from falling. Sales Price to List Price ratio has been 101.9% in September 2021. 62% of homes were sold above their initial asking prices on MLS. A seller would always prefer this ratio to be close to 100% or higher.
For buyers in the California housing market, it is a good time to buy. Low-interest rates continue to fuel optimism for homebuying. The 30-year, fixed-mortgage interest rate averaged 2.90 percent in September, according to Freddie Mac. Interest rates remain low giving buyers the purchasing power and home prices a boost. Fortunately, new listings have finally started to rise, which could help to sustain a higher level of home sales deeper into summer by providing much-needed supply.
All of these factors have led the market to optimism in homebuyers. Recent forecasts from industry groups like Freddie Mac and the Mortgage Bankers Association have predicted that the average rate for a 30-year fixed mortgage could stay within the low 3% range well into 2021.
California Housing Market Forecast 2021-2022 (New Predictions)
Here's a rundown of the forecast released by CAR in October 2021
What are the California real estate market predictions for 2021 & 2022? California housing market is shaping up to continue the trend of the last few years as one of the hottest markets in the U.S. Supply constraints and higher home prices will bring California home sales down slightly in 2022, but transactions will still post their second-highest level in the past five years, according to a housing and economic forecast released today by the CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.).
- Existing, single-family home sales are forecast to total 416,800 units in 2022, a decline of 5.2 percent from 2021’s projected pace of 439,800.
- California’s median home price is forecast to rise 5.2 percent to $834,400 in 2022, following a projected 20.3 percent increase to $793,100 in 2021.
- Housing affordability is expected to drop to 23 percent next year from a projected 26 percent in 2021.
C.A.R.'s “2022 California Housing Market Forecast” assumes a 5.2 percent decrease in existing single-family home sales next year, to 416,800 units, down from the predicted 439,800 units in 2021. The forecast for 2021 is 6.8% greater than the pace of 411,900 houses sold in 2020. California's median house price is expected to climb 5.2 percent to $834,400 in 2022, from $659,400 in 2020. Demand and supply imbalances will keep prices rising, but higher interest rates and a partial adjustment of the sales mix will likely slow the price rise. The rise of remote working will help keep costs in control and prevent the statewide median price from increasing too quickly in 2022.
According to C.A.R.'s 2022 projection, the US gross domestic product would expand by 4.1 percent in 2022, after a predicted rise of 6.0 percent in 2021. With a predicted nonfarm job growth rate of 4.6 percent in 2022, up from 2.0 percent in 2021, California's unemployment rate will fall to 5.8 percent in 2022, down from 7.8 percent in 2021. In 2022, the average 30-year fixed mortgage rate will be 3.5 percent, up from 3.0 percent in 2021 and 3.1 percent in 2020, but still low by historical standards.
Let us look at the price trends recorded by Zillow over the past few years. Since Oct 2011, the California home values have appreciated by nearly 132.4% — Zillow Home Value Index. ZHVI is not the median price of homes that are sold in a month within a geographic region. It is calculated by taking all estimated home values for a given region and month (Also called Zestimates), taking a median of those values, applying some adjustments to account for seasonality or errors in individual home estimates.
It, therefore, represents the whole housing stock and not just the homes that list or sell in a given month. By this calculation, the current typical home value of homes in California is $708,936. It indicates that 50 percent of all housing stock in the area is worth more than $708,936 and 50 percent is worth less (adjusting for seasonal fluctuations and only includes the middle price tier of homes).
In Oct 2020, the typical value of homes in California was around $598,000. Home values have gone up 21.9% over the last twelve months. It can be said that California is currently the seller's real estate market which means that demand is exceeding the supply, giving sellers an advantage over buyers in price negotiations. There are fewer homes for sale than there are active buyers in the marketplace. Buyer demand remains robust, which has been pushing home prices up by a double-digit rate of appreciation.
Latest Weekly Trends & Forecast From California REALTORS®
CAR's latest weekly housing data for the week ending October 09, 2021, shows that assuming that the COVID situation improves further, the economy and housing market should continue to perform well in 2022. While statewide house sales are projected to decline slightly next year, our newest estimate indicates that housing demand will remain strong, with sales reaching their second-highest level in five years. While interest rates will remain historically low, the market will remain competitive in 2022. As the market continues to normalize, structural issues will resurface, and house prices will stay high.
According to the latest C.A.R. housing and economic projection published recently, supply limitations and rising house prices will slow California home sales in 2022, but they will still be the second-highest in five years. A 5.2 percent decrease in existing single-family house sales is predicted for 2022, down from 439,800 units in 2021. The 2021 number is up 6.8% from the 411,900 houses sold in 2020. The statewide median house price is expected to climb 5.2 percent to $834,400 in 2022, from $659,400 in 2020.
The C.A.R. Annual Housing Market Survey predicts that house sellers will net $322,500 in 2021, up 53.6% from last year. Sellers who had stayed in their property for five years or longer had an average net cash gain of $381,000, up 31.4% from 2020. In 2021, less than 1% of all house sellers made a net loss, far below the long-term average of 9.9% and the lowest amount since 2005.
As we near the end of the year, supply, demand, and house prices are all anticipated to cool. Indeed, closed sales fell to their lowest level since late February in the first full week of October, while new active listings fell to their lowest level since late January. REALTORS'® predictions for house prices have also been revised downward, with just 24.2 percent of our poll respondents last week believing prices will increase in the next week, down from a high of 73.7 percent at the end of April. If the market continues to trade in line with its seasonal trend, it is expected to moderate further but stay stable going ahead.
The percentage of California REALTORS® who expected listings and prices to rise was 23.1 percent and 24.2 percent respectively. Here's a rundown of the latest weekly market trends.
- All parties involved – buyers, sellers, and agents – agreed that home prices will likely remain on their upward trend in the short term.
- 24.2% (+21.8%) of California Realtors® feel prices will rise in the coming weeks.
- 21% (-16.5%) think that sales will grow in the coming weeks.
- An average of 694 daily closed transactions was reported in the past week, down 26.2% week-over-week.
- An average of 851 contracts was signed per day in the past week, down 9.4% week-over-week.
- Seller's optimism continues to dip in the latest weekly trends.
- An average of 786 new listings per day was reported in the past week, which represents a decline of -11.4%.
- Only 23.1% (-8.9%) of California Realtors® think listings will be up next week.
- Interest rates always fluctuate, just as the real estate market does.
- The recent improvement in the pandemic situation and the shortage of labor availability has pushed rates upward recently.
- On Friday, the 10-year Treasury yield climbed 6 basis points to 1.6 percent, surpassing a level last seen on June 4.
- Despite the poor employment statistics, investors anticipate the Fed to keep tapering, which may lead to a rate hike before the end of the year.
- We don’t see huge changes ahead in the coming months.
- They could fluctuate as more economic data become available throughout the year but the average 30-year fixed-rate average will likely stay close to 3 percent in 2021.
- Home prices continued to grow solidly from last year.
- 49 counties tracked by the association reported a gain in median price on a year-over-year basis in August, as tight supply and heated market competition continued to put upward pressure on home prices.
- An ongoing shortage of supply is the main reason for price appreciation.
- With the cost of borrowing at historic lows, buying a home makes more sense than renting for many first-time buyers.
- For repeat buyers, there is an increasing desire for a larger second home.
- Affordability is at the Lowest Level Since Mid-2018, according to C.A.R.’s Traditional Housing Affordability Index (HAI).
- A highly competitive market fueled by low-interest rates and a tight supply of homes for sale pushed the state’s median home price nearly 34 percent higher than a year ago.
- The percentage of home buyers who could afford to purchase a median-priced, existing single-family home in California in the second quarter of 2021 dropped to 23 percent from 27 percent in the first quarter of 2021 and from 33 percent in the second quarter of 2020.
- A minimum annual income of $150,800 was needed to make monthly payments of $3,770, including principal, interest, and taxes on a 30-year fixed-rate mortgage at a 3.20 percent interest rate.
- Thirty-seven percent of home buyers were able to purchase the $585,000 median-priced condo or townhome. An annual income of $108,000 was required to make a monthly payment of $2,700.
- The C.A.R.’s 2020 Annual Housing Market Survey finds that 39 percent of REALTORS® who responded said their buyers are opting for a bigger home.
- This trend is likely to continue in 2021 as well.
- 35 percent said buyers are opting for a property with more rooms.
- 37 percent said buyers are opting to live in a suburb rather than a city.
- 26 percent said buyers are opting to live in rural areas rather than cities or suburbs.
Impact of COVID-19 on The California Housing Market (Summary)
Before the coronavirus outbreak, the declining interest rates bolstered February home sales and prices in the California housing market. The no. of home sales in February went up 6.6 percent from the 395,700 level in January, marking the first time in three months that sales jumped above the 400,000 benchmarks. February also marked the eighth consecutive month of year-over-year sales increases, according to the CALIFORNIA ASSOCIATION OF REALTORS®.
According to a United States Department of Commerce report, the median price nationwide for a home sold in February was $345,900, up 6.3 percent from January. As the coronavirus pandemic hit the country, the sales activity in the California housing market took a sharp decline. Many buyers backed out of purchase due to coronavirus concerns. Due to the Covid-19 outbreak, the new California home sales also began to drop from March onward. Here's the review of the California real estate market from March onward.
Impact of COVID-19
The immediate impact of the coronavirus pandemic on the California housing market was that realtors canceled their open houses and half of all agents reported a drop in buyer interest. A flash poll conducted by C.A.R. between March 14-16 found that 54% of realtors had buyers who backed out from buying a home because of the coronavirus, and about 45% had sellers who backed out from selling a property. The pandemic further impacted the buying or selling of a house as California issued a statewide ‘stay at home’ order on March 19 to slow the spread of the coronavirus.
All non-essential businesses were essentially shut down. The real estate industry and many businesses that support it have been deemed non-essential. Real estate transactions like home buying, title research, residential leasing, and renting were allowed to continue. So were things like building maintenance and cleaning. Home construction was typically allowed to continue, as well. This meant that people could continue to live in their apartments and call the property manager to get the plumbing fixed.
Home sales and purchases already begun could be completed. However, it became much more difficult to arrange open houses or take photos of a property for sale. Some realtors adapted by setting up virtual showings of properties, whether it was via cell phone video, high-resolution photos, or drone. However, photographers can’t travel to properties, while stagers and appraisers can’t travel to homes that owners want to sell.
This froze the housing market for the most part due to shelter-in-place orders. Financial services were considered essential; this included banks and mortgage lenders. Unfortunately, the shutdown of up to 80 percent of the country means many are afraid to take out a home loan even if they still have a job. That is why mortgage applications fell by 30 percent in the last quarter of March 2020 while unemployment applications hit a record three million.
The U.S. Initial Unemployment Insurance Claims are that over 40 million people have already lost their jobs.
As new coronavirus cases were detected in California and the ‘shelter-in-place’ mandate was extended, a sharp sales decline increased unsold inventory – leading to a balanced real estate market. The COVID-19 pandemic kept both buyers and sellers on the sidelines in the California housing market. Many potential sellers delayed putting their homes on the market, which led to fewer new listings. Some buyers were excited and decided not to enter the market due to their weak financial condition. California home sales experienced the worst month-to-month sales decline in more than four decades.
According to C.A.R, home sales dropped sharply in April from both the previous month and year as the housing market began to feel the full impact of the state’s stay-at-home order.
This was because of a decline in open houses and home showings that are impossible to hold in such conditions. Existing, single-family home sales totaled 277,440 in April on a seasonally adjusted annualized rate, down 25.6 percent from March and down 30.1 percent from April 2019. Additionally, sales in escrow were also delayed by the closure or limited availability of all the essential services related to a home sale.
The statewide median price remained above the $600,000 benchmark for the second consecutive month in April, price growth showed clear signs of softening when compared to the past six months. The April statewide median price of $606,410 for existing single-family homes in the state dipped 1.0 percent from March, and the 0.6 percent gain was essentially flat from April 2019, when the median price was $603,030. The year-over-year price gain was substantially smaller than the six-month average gain of 7.8 percent recorded between October 2019 and March 2020.
California home sales fell to the lowest level since the Great Recession as the housing market suffered the full impact of the coronavirus pandemic in May, according to a June 16 release by CALIFORNIA ASSOCIATION OF REALTORS®. As housing demand in California fell sharply in May, home prices also took a dip. The median home price fell below last year’s price for the first time since February 2012 and broke the state’s 98-month year-over-year price gain streak.
All major regions dipped in sales by more than 35 percent from last year. The Bay Area and Central Coast dropped the most at -51.1 percent each. Southern California home sales dropped by -45.6 percent, and the Central Valley by -36.6 percent. Existing single-family home sales were down by 13.9 percent from April and down by 41.4 percent from May 2019. May’s statewide median home price was $588,070, down 3.0 percent from April and down 3.7 percent from May 2019. Year-to-date statewide home sales were down 12.9 percent in May.
Median prices continued to dip in May from last year in the Central Coast and the Bay Area but inched up slightly in the Central Valley region. The median home price was virtually unchanged in Southern California. The unsold inventory index jumped to 4.3 months in May from 3.4 months in April and was up from 3.2 months in May 2019. Total active listings continued to decline on an annual basis for the 11th consecutive month.
The 34 percent year-over-year decrease in listings was the biggest drop since March 2013. The median number of days it took to sell a California single-family home dipped to 17 days in May from 18 days in May 2019. C.A.R.’s statewide sales-price-to-list-price ratio was 99.7 percent in May 2020, up slightly from 99.3 in May 2019.
After the California real estate market suffered its worst month in 13 years, California’s Realtors and landlords saw a big rebound in June. The housing markets in Los Angeles, San Francisco, San Jose, San Diego, and Sacramento saw the biggest recovery. Home Sales were up 42.4 percent from May and down 12.8 percent from June 2019. The luxury market suffered the most with more than 50% drops in sales. Sales Price to List Price Ratio of 99.5% in June means homes are selling very close to their listing prices.
June’s statewide median home price was $626,170, up 6.5 percent from May and up 2.5 percent from June 2019. Throughout the state, single-family home prices rose 6.5% to $626, 170, or a rise of $38,000 from the previous month. Sales grew 42.5% from May. California condo prices rose 4.6% and month-to-month sales increased by 68.5%. Condo prices have risen 4.6% YoY while sales slumped 16.2%.
The return in the COVID-19 cases remains a concern across the nation and California, and it may hinder the housing market's recovery in the second half of 2020. Meanwhile, the lowest ever mortgage rates have been able to increase buyer activity, which in turn may help to sustain the rise in sales in the coming months.
After falling to the lowest level since the Great Recession, continued to improve in August as home sales climbed to their highest level in more than a decade. The median home price broke last month’s record and hit another high, according to the September 16 release by C.A.R.
Existing, single-family home sales totaled 465,400 in August on a seasonally adjusted annualized rate, up 6.3 percent from July and up 14.6 percent from August 2019. August’s statewide median home price was $706,900 up 6.1 percent from July and up 14.5 percent from August 2019. Year-to-date statewide home sales were down 6.8 percent in August.
The California housing market outperformed expectations in September, breaking a record high median price for the fourth straight month. Existing, single-family home sales totaled 489,590 in September on a seasonally adjusted annualized rate, up 5.2 percent from August and up 21.2 percent from September 2019.
September’s statewide median home price was $712,430 up 0.8 percent from August and up 17.6 percent from September 2019. Year-to-date statewide home sales were down 3.7 percent in September. The home price exceeded the $700,000 mark for the second consecutive month.
Existing, single-family home sales totaled 484,510 in October on a seasonally adjusted annualized rate, down 1.0 percent from September and up 19.9 percent from October 2019. October’s statewide median home price was $711,300 down 0.2 percent from September and up 17.5 percent from October 2019. Year-to-date statewide home sales were down 1.3 percent in October.
Existing, single-family home sales totaled 508,820 in November on a seasonally adjusted annualized rate, up 5.0 percent from October and up 26.3 percent from November 2019. November’s statewide median home price was $699,000 down 1.7 percent from October and up 18.5 percent from November 2019. Year-to-date statewide home sales were up 1.3 percent in November.
Existing, single-family home sales totaled 509,750 in December on a seasonally adjusted annualized rate, up 0.2 percent from November and up 28 percent from December 2019. December’s statewide median home price was $717,930, up 2.7 percent from November and up 16.8 percent from December 2019. For 2020 as a whole, sales of existing statewide homes were up 3.5 percent from last year.
Existing, single-family home sales totaled 484,730 in January 2021 on a seasonally adjusted annualized rate, down 4.9 percent from December and up 22.5 percent from January 2020. January’s statewide median home price was $699,890, down 2.5 percent from December and up 21.7 percent from January 2020.
Existing, single-family home sales totaled 462,720 in February 2021 on a seasonally adjusted annualized rate, down 4.5 percent from January and up 9.7 percent from February 2020. February’s statewide median home price was $699,000, down 0.1 percent from January and up 20.6 percent from February 2020, according to C.A.R.
Existing, single-family home sales totaled 446,410 in March 2021 on a seasonally adjusted annualized rate, down 3.5 percent from February and up 19.7 percent from March 2020. March’s statewide median home price was $758,990, up 8.6 percent from February and up 23.9 percent from March 2020. Year-to-date statewide home sales were up 17.1 percent in March.
The most important thing to remember is that it is a health crisis – not an economic one. This pattern differs from a standard economic recession, which is a situation in which economic activity falls for 6-18 months and then recovers more slowly. A wave of job losses nationwide will create many distressed home sellers in the California real estate market. Yet this is a buying opportunity for investors who have financing.
The slowdown in what is normally a busy season will cause some realtors to go out of business. Mortgage brokers and lenders will experience a boom in business since record low-interest rates cause a spike in mortgage refinances. We’ll also see a flurry of activity in the California real estate market as people pick up where they left off. For example, those who wanted to move before school starts in the fall aren’t going to wait another year to see what the housing market is going to do.
They’ll rush to showings and try to close on a property, as long as their financial situation is stable. We can expect the summer of 2021 to see record activity in the California housing market due to the standard spike in real estate transactions before the school year starts.
On top of this are the young graduates and couples that want to buy their own homes. Plus there will be long-term renters who recognize the opportunity that low mortgage rates represent, searching for homes once they can be pre-approved for a mortgage and visit properties.
There will be a slower economy for a while, but several ongoing trends aren’t going to reverse themselves. Millennials will want to move out of their parent's homes and into their own. We can’t say there will be a coronavirus-led baby boom, but many families having been stuck inside with their kids will decide they want a larger home, yard, or both.
We can talk about the many people who’ve moved out of California to other states. Yet the state continues to attract immigrants from around the world. And young native-born Americans flock here for high-paying jobs, as well. That isn’t going to change due to the virus. Tech giants expanding to Seattle or Portland haven’t relocated their development hubs out of Silicon Valley.
Furthermore, the demand for rentals in the California housing market remains strong. This is why we don’t expect to see a decline in monthly rents, though housing prices may fall significantly before shooting back up. A secondary effect of the coronavirus outbreak is that it has crimped supply chains around the world and slowed down construction.
This will drive up the value of both new and existing properties in the California housing market since the supply of new and redeveloped properties has been stifled. And there is certainly the possibility the California housing market will see bidding wars on the few available and desirable properties by people who have more margin thanks to historically low mortgage rates.
We can expect a few shifts in the California housing market long-term. Realtors will probably continue to utilize 3D virtual tours, using 360 cameras to capture images of every room in the house. This helps them sell the home 24x7x365, whether or not everyone is stuck at home.
While appraisers, stages, and construction crews can’t work remotely, we can expect far more back-office work in the real estate industry to be done remotely because that’s become commonplace. We can also expect online contract reviews and digital signatures to become the norm because it allows real estate transactions to move forward through some of the participants are at home.
Demand for housing was very strong before the coronavirus hit the U.S. This pandemic is not expected to last nearly as long as the United States subprime mortgage crisis, which was a nationwide financial crisis, occurring between 2007 and 2010.
The sharp sales drop in May was the steepest we’ve seen but there are encouraging signs that show the market is recovering and should continue to improve for the remainder of 2020.
Some of the realtors saw no decline in their businesses even during the peak of the pandemic. According to them, the real estate sector was active even in the pandemic. The way of operating business has changed. People are working from home. They are using applications like FaceTime to show buyers homes instead of traditional open houses.
Lenders experienced a surge in demand as opportunistic buyers move to take advantage of low mortgage rates. Brett Jennings, the founder of Real Estate Experts, writes, “our market is still thriving” in Santa Clara County, seeing only a few cancellations despite shelter-in-place conditions and the fact that “we have one of the highest counts of active COVID-19 cases in California.”
According to Dr. Svenja Gudell, the chief economist of Zillow Group, when they examined pandemic histories ranging from the 1918 flu epidemic to the 2003 SARS outbreak, they noted that economies “snapped back quickly once the epidemic was over.”
Residential real estate is likely to fare far better than the commercial real estate sector. Sometimes, you have to take advantage of these market disruptions to see that many investors will pump the brakes on investing out of fear and other illogical emotional reasons, while others see the opportunity of having access to more real estate inventory, possibly better pricing, and still historically low-interest rates.