This page has been updated to reflect the most recent trends in the San Francisco Bay Area housing market. While the national housing market appears to be cooling, it hasn't declined significantly as much in the Bay Area. The real estate market in the Bay Area is hot, with the median price topping $1 million for the sixth month in a row. As competitive buyers returned to fight for properties near tech centers, Bay Area home sales remained on a path of record prices and rising sales. Demand outstripped supply in August 2021, resulting in homes selling at an exceptionally quick rate.

The median sale price for a Bay Area home last month was $1.26 million. Most homes in Santa Clara County were snapped up in about eight days. The Bay Area housing market is distinguished by high demand, cheap mortgage rates, and a scarcity of available inventory. Due to increased demand from the state's high-income residents who can take advantage of low-interest mortgage rates, home prices are skyrocketing.

Is the housing market in the Bay Area cooling? No, most likely not. And, while inventories may grow in the fall, anticipate plenty of competition from buyers. According to current trends, housing prices in the majority of Bay Area communities will continue to climb over the next twelve months. A significant number of purchasers led home prices to increase over the previous year in August.

Despite this, a new report from the California Association of Realtors suggests that the region's housing market may be leveling off after months of record-breaking prices, bidding wars, and growing fear of unaffordability. The median sales price of this region, which includes all nine counties of Alameda, Contra Costa, Marin, Napa, San Francisco, San Mateo, Santa Clara, Solano, and Sonoma, was $1,265,000 ($716 per Sq Ft). According to C.A.R., this is almost an 18.4% increase over last August.

It was the third-highest year-over-year gain in California after the Far North (19.1 percent) & Southern California (18.8 percent). Bay Area house prices were down by -2.7% from the previous month. Sales of existing homes were down in three of the five major regions of the California housing market. Single-family housing sales in the San Francisco Bay Area were up 2.5% over the previous year, with six of the region's nine counties also posting an increase in sales.

The inventory is quite low. As of August 2021, the months of supply for existing single-family houses have fallen to 1.5 months. For buyers (who didn’t lose a job) low-interest rates are making buying a home hard to resist. Homes are selling for more than the asking price because new home buyers are ready to spend more to win bids. Only those who do not have enough money for a down payment are delaying their purchases. Looking at the low supply of homes, interested investors may have a difficult time finding available properties in the Bay Area.

All the nine counties of the Bay Area posted gains in the home prices as compared to last year. Marin County had the smallest price growth of 3.1% while Alameda county had the largest price growth of 26.4%. Buyers in suburban areas like Santa Clara, San Mateo, and Contra Costa counties appear to be searching for more room in their houses, which is driving up median home prices. Although home prices grew in all the counties only Alameda county posted annual growth of more than 20%. The second-highest was Santa Clara (18.2%).

It was followed by Solano (14.6%), San Francisco (11.2%), Contra Costa (10.5%), and Sonoma (7.7%). Sales Price to List Price Ratio in Bay Area was 106.5% in August signaling a very competitive market. Anything over 100% gives sellers an upper hand in price negotiations. The housing supply remains tight. The unsold inventory index now sits at 1.5 months, which means it would take less than six weeks to squeeze away all the listings from the market at the current sales pace. Months of supply has seen a decline from last July when it was 1.9 months.

Bay Area Housing Market Trends 2021 (Describes August)

Below is the latest tabulated housing market report for the entire Bay Area release by the California Association of Realtors. The tabulated report shows the sales and prices of the Bay Area counties for August 2021. Much of the Bay Area real estate market remains firmly in “seller's market” territory with months of supply of available single-family homes being 1.5.

San Francisco (County) Housing Market Trends 2021 (Resales | Rents | Condos)

Tech hubs like San Francisco and San Jose have drawn substantial homebuyer demand over the years but San Francisco’s infamously hot real estate market saw an outward migration due to the pandemic. People were leaving the city, increasing demand in the suburbs. The value of suburban single-family homes is skyrocketing, while rents and pricing in tech hubs are falling. Recent market trends indicate that the market is reviving and will most likely heat up again in the coming months.

• In August, the existing single-family home sales growth was positive in SF county.
• The closed sales were up by 13.6% from the previous year, according to C.A.R.
• The median price for a single-family home in San Francisco County was $1,850,000, up 11.2% YTY and down -0.1% MTM.

The number of active listings in San Francisco peaked in August of last year, reaching a four-year high. In August, the median listing price of a San Francisco home was less than $1.4 million, the lowest since February 2019. Many real estate agents believe that the San Francisco housing market has begun to cool, even though demand remains strong in suburban neighborhoods. The pandemic has accelerated migration out of large cities, and it seems like most of the movement is going to be a permanent one.

In California, San Francisco and Los Angeles are the top markets for outward migration, for both permanent and temporary moves during the pandemic. Rents and condominium prices are expected to grow over the next twelve months, according to most analysts. Lesser-known areas with greater space, such as the Richmond, Sunset, and West Portal, are becoming increasingly popular for single-family homes.

Rents were falling in many major cities across the country due to the pandemic, but the drop was most pronounced in San Francisco, one of the nation's priciest housing markets. Housing markets like San Francisco, Santa Clara, Boston, Seattle, and others, have seen rents decline by double digits since the onset of the pandemic. Studio rents have been falling on a year-over-year basis since March when the pandemic led to lockdowns but it took until May for rents to begin falling for one and two-bedroom units.

In March 2020, just before the pandemic fully impacted the housing market, rents in tech cities were growing 2.8% year-over-year. Nearly a year later, in February, tech cities saw rent growth hit its lowest point. After months of price declines in the bay area rental market, San Francisco and San Jose are finally seeing rents grow. According to Realtor.com, following the upward trend, San Francisco rents reached $2,895 in August 2021, up 1.4% year over year. Earlier this year, rents in San Francisco were declining by 12.6% compared to last year.

San Francisco rents peaked at $3,008 in August 2019, just $113 (3.8%) greater than the current monthly rent. In the densest areas with big tech industries, rents are still lagging behind historical peaks. It is mostly because tech workers account for a disproportionate share of San Francisco residents, and tech companies are more likely to have implemented broad or permanent work-from-home policies. This gives those workers the freedom to live wherever they want, and many of them have decided that they do not want to live in San Francisco.

The Bay Area continues to see an accelerating rate of rent growth, suggesting that the signals of a rebound from earlier this year are now a trend that’s likely to continue. San Francisco posted the largest median one-bedroom monthly gain among the three major Bay cities at 5.3 percent (source: Zumper). On a quarterly basis, it’s clear that the Bay Area has turned a corner.

After four quarters of sharp drops in rent, each of its three major cities saw rents rise in Q2 of 2021 compared to Q1, including a 5.3 percent increase for San Francisco. With life in the Bay Area getting back to “normal,” there is no reason to think this won’t continue in the near term. This growing tendency implies that people are willing to return to big cities, and it could indicate that workers are returning to these locations.

San Francisco has seen some of the biggest pandemic-related disruptions. It is now the second most expensive city to rent after New York. It has fallen behind New York in median one-bedroom rent, with New York at $2,810 and San Francisco at $2,800.

As of September 19, 2021, the average rent for a 1-bedroom apartment in San Francisco, CA is $2,795. This is a 2% decrease compared to the previous year. Over the past month, the average rent for a studio apartment in San Francisco remained flat. The average rent for a 1-bedroom apartment remained flat, and the average rent for a 2-bedroom apartment increased by 1% to $3,900.

• The average rent for a 2-bedroom apartment in San Francisco, CA is currently $3,900. This is a 3% increase compared to the previous year.
• The average rent for a 3-bedroom apartment in San Francisco, CA is currently $4,800. This is a 0% decrease compared to the previous year.
• The average rent for a 4-bedroom apartment in San Francisco, CA is currently $5,380. This is a 10% decrease compared to the previous year.

San Francisco Condo/Townhomes Market Trends: A Big Growth in Sales

The high inventory levels for condos and townhomes in San Francisco county have made it favorable for condo buyers. The current unsold cond inventory index is 2.7 months and the sustained oversupply is finally lowering median prices of condos. People simply no longer wish to live in densely populated areas, especially apartment buildings where they have to share common areas. They want enough space for a home office or two and their own outdoor space as well.

The current median price for a San Francisco condo is $1,150,000, which is a decline of -9.8% from last year. The price is also down by -3.6% from last month. The good thing for SF condos was that lower prices were driving more sales. Condo sales in SF county have increased by a whopping 66.8% as compared to July of last year. A strong sales growth was seen in July 2021 as well (66.8% YTY). In June 2021, it was a massive growth of 216.2% year-over-year.

Such massive annual growth shows that condo sales are going extremely strong. There is a consistent demand for condos. The month-to-month sales growth could not match up to July's figure, so it declined by -7.7%. Higher levels of inventory, following a flood of new listings during the pandemic, are sitting on the market in the city proper, a significantly larger jump than the surrounding suburbs. In San Francisco, though, the softening is clear as sellers flood the market with their listings and buyers have not changed their pace to match.

San Francisco had an unusually low inventory relative to other large cities before the pandemic. You can expect more condo listings and prices could come down, even more in the second half of 2021. It could be an opportunity for those that have been wanting to buy a condo for a while and were previously priced out.

San Francisco Bay Area Housing Market Forecast 2021-2022

San Francisco Bay Area consistently ranks among the most expensive real estate markets in the world, and it is one of the most densely populated cities in the U.S. The Bay Area housing market consists of all nine counties (Alameda, Contra Costa, Marin, Napa, San Francisco, San Mateo, Santa Clara, Solano, and Sonoma) and 101 municipalities. The region is home to three major cities: San Francisco, Oakland, and, the largest, San Jose.

San Francisco's real estate market is shaping up to continue the trend of the last few years as one of the hottest markets in California. What are the San Francisco real estate market predictions for 2021 & 2022? Let us look at the price trends recorded by Zillow over the past few years. Since Sep 2011, the San Francisco County home values have appreciated by nearly 112% — Zillow Home Value Index.

As you can see in the graph given below, the San Francisco & Bay Area home values increased consistently, from 2012 through 2018. After that, it marked the beginning of a flattening out of prices which lasted for over a year. 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 San Francisco County is $1,504,553. It indicates that 50 percent of all housing stock in the area is worth more than $1,504,553 and 50 percent is worth less (adjusting for seasonal fluctuations and only includes the middle price tier of homes).

In September 2020, the typical value of homes in San Francisco County was around $1.42 million. Home values have gone up 6.3% over the last twelve months. The typical value of homes in San Francisco-Oakland-Hayward Metro (Bay Area) is $1,331,868, up 17.9% over the past year. Here are Zillow's latest home price projections for the Bay Area and its counties. The exact rate of appreciation for the counties for the next twelve months is not available as we write this.

However, you can gauge it by looking at the past trends shown in the graph. Due to supply-demand imbalance, property appreciation is certain in 2021. If mortgage rates remain lower than last year's average, it can play an important role in the price growth. For current homeowners and those looking to sell, there is a lot of money to be made as housing prices have increased in all the counties.

• Bay Area (San Francisco-Oakland-Hayward Metro) home values have gone up 17.9% over the past year and Zillow predicts they will rise 7.1% in the next twelve months.
• San Francisco County home values have gone up 6.3% over the past year but they are expected to increase in the next twelve months.
• Alameda County home values have gone up 25.1% over the past year and they will continue to rise in the next twelve months.
• Contra Costa County home values have gone up 25.8% over the past year and they will continue to rise at a similar pace in the next twelve months.
• Marin County home values have gone up 17.9% over the past year and they will continue to rise at a similar pace in the next twelve months.
• Napa County home values have gone up 21.7% over the past year and they will continue to rise at a similar pace in the next twelve months.
• San Mateo County home values have gone up only 12.8% over the past year and they are expected to rise at a faster pace in the next twelve months.
• Santa Clara County home values have gone up 19.0% over the past year and they will continue to rise at a similar pace in the next twelve months.
• Solano County home values have gone up 22.2% over the past year and they will continue to rise at a similar pace in the next twelve months.
• Sonoma County home values have gone up 17.7% over the past year and they are expected to rise at a similar pace in the next twelve months.

Here is the graphical representation of historical home prices in this region and their forecast until August 2022.

Despite the ongoing health and economic crisis caused by the COVID-19 pandemic, the San Francisco housing market made a large recovery in sales from the steep declines in March and April. The median sold price hit a new monthly high in June ($1,800,000). As affluent buyers are least affected by the economic downturn, they are seen to have been jumping back into the market to a greater degree than other segments. High-end luxury real estate has seen a very strong demand in virtually every housing market in the entire Bay Area.

The pandemic & economic shutdowns have not had much impact on this housing market. The buyer demand has been significantly high as is reflected in August's housing data. Despite high rates of unemployment and an economic downturn, housing has held onto its value in the San Francisco Bay Area. As the Bay Area employs a high number of skilled workers with college degrees, its unemployment rate is lower than other areas of the United States, and its housing market is holding strong.

The high-end buyer activity has pushed the median price to an all-time high. More affluent buyers having the greatest financial resources have been jumping back into the market to a greater degree than other segments. Nationally, the showing activity has notably increased from the depressed levels in recent months, reflecting pent-up demand by prospective home buyers. The fall season has become as active as the summer buying season.

Despite the ongoing health and economic crisis precipitated by COVID-19, the SF Bay Area real estate market made a large recovery from the steep declines in March and April. SF median house sales prices are as high as they’ve ever been. The median condo sales price has also been running higher than the highs of last year. It recorded an increase of 10.6% YTY in Aug 2021. Condo sales are surged by 31.7% YTY. The condo market is seeing growth in new listings, especially in San Francisco County, where we're seeing a softening of prices.

While the annual price growth declined by -7.7% in August, the condo sales posted a positive growth of 65% from a year ago. In a balanced real estate market, it would take about five to six months for the supply to dwindle to zero. In terms of months of supply, San Francisco, or the entire Bay Area housing market can become a buyer’s real estate market if the supply increases to more than five months of inventory. And that’s not going to happen.

Because of a persistent imbalance in supply and demand, the entire Bay Area region is heavily skewed toward sellers. In August, the inventory of available single-family homes remained at 1.5 months, indicating that buyer demand had risen to a new high. This will cause property prices to rise at a moderate rate in the coming months. The supply of listings in San Francisco County was at its highest point in 8 years in August 2020. Correct pricing becomes increasingly important for sellers as the market softens. When this occurs, the sellers will be forced to compete for buyers.

The good news for buyers in San Francisco and the rest of the Bay Area is that mortgage rates are still low (around 2.87 percent) when compared to last year's average rate. As a result, now is a good time for them to enter the market and seize their favorite deals, as rising San Francisco home prices have reduced housing affordability.

Real estate market forecasts given in this article are just an educated guess and should not be considered financial advice. Real estate prices are deeply cyclical and much of it is dependent on factors you can’t control. Many variables could potentially impact the value of a home in San Francisco in 2021 (or any other market) such as big changes in the distressed, new-construction, or luxury home segments. There are also a wide variety of economic and political factors that can and do impact real estate markets. Most of these variables are difficult to predict in advance. 

San Francisco Real Estate Investment Overview

Should you consider San Francisco real estate investment? Many real estate investors have asked themselves if buying a property in San Francisco is a good investment as the median price for a two-bedroom sits at $1.35 million. The high cost of real estate in San Francisco is impossible for most families to manage. Exodus is yet another problem and a new report confirms that the numbers are staggering. Online real estate company Zillow released new statistics shining a stark light on the issue this week.

Their “2020 Urban-Suburban Market Report” reveals that inventory has risen a whopping 96% year on year, as empty homes in the city flood the market like nowhere else in the country. Although this article alone is not a comprehensive source to make a final investment decision for San Francisco, we have collected some evidence-based positive things for those who are keen to invest in the San Francisco real estate market. If you can afford it, then it’s an investment that will continue to increase in value over time.

Amid low-interest rates, there has been an influx of high-end luxury buyers, with certain instances where homes have been sold for $1 million over asking. Let’s talk a bit about San Francisco and the surrounding bay area before we discuss what lies ahead for investors and homebuyers. San Francisco is home to nearly 900,000 people. It is the hub of the San Jose-San Francisco-Oakland area; this larger metro area is home to nearly nine million people.

The city alternately makes the news for people paying incredibly high rents to live in boxes, the homeless problem, and the tech industry. This makes many think about why or how anyone could live there. Others would think why you’d want to buy a property now in such an overvalued real estate market. Yet we can give you ten positive signs about the San Francisco housing market 2020. Keep on reading to find out more. Why is housing so expensive in San Francisco?

First of all, the entire state of California has a consistent housing shortage due to limited land. Most of the cities including San Francisco are failing to meet the regional housing needs. New construction permits in all cities often lag due to community resistance which blocks new housing. Jobs are increasing and the economy is strongest in 50 years. But due to the tight supply of homes, San Francisco home prices have grown much faster than incomes.

The minimum annual income required for owning a house in the San Francisco bay area in 2019 was $197,970. That's an increase of 119.1% since 2012 when affordability was at its peak. Homeownership is not rebounding anytime soon in San Francisco. By 2025 more than 60% of the population is estimated to rent. Housing affordability has been a consistent issue for first-time buyers over the last few years. They have limited options in the San Francisco housing market.

Although mortgage rates have decreased, big down payments & all-time high home prices aren't spurring more sales. Many simply can’t afford to buy a house due to these factors. Despite Covid-19, in the latest quarter, the San Francisco real estate appreciation rate has been around 0.21%, which amounts to an annual rate of 0.84%. Some experts feel that home prices may drop by 1 to 2% in the next twelve months.

This is a good sign for new homebuyers and investors as far as affordability is concerned as many of them can’t afford to buy a median-priced home in San Francisco. We shall discuss some more important reasons why you may want to consider buying San Francisco investment properties for the long-term buy and hold.

San Francisco's Strong Economy Propels Real Estate

Why doesn’t everyone just move out of the San Francisco housing market? Some do move, but they have a one and a half to two-hour commute each way to work because they still want to work there. They just can’t afford to live there. Moreover, it is the high-tech job market that draws so many people to San Francisco and leaves many others struggling to pay the bills. San Francisco is turning into a major international city. It is a white-collar city, with fully 90.74% of the workforce employed in white-collar jobs, well above the national average.

In a report published by Google in June 2019, it announced one billion dollars of investment in housing across the Bay Area. A 10-year plan to add thousands of homes to the Bay Area. The company would be making this major investment in what it believes is the most important social issue in the bay area real estate market.

This proposition by Google will add thousands of new homes to the Bay Area real estate market over the next ten years. About $750 million would be used for repurposing Google's own commercial real estate for residential purposes. This will allow for 15,000 new homes at all income levels in the Bay area. Another $250 million investment fund would be utilized to provide incentives to enable developers to build at least 5,000 affordable housing units across the Bay area housing market.

As a move to support affordable housing initiatives these investments will help Google plans to give $50 million in grants through Google.org to nonprofits focused on the issues of homelessness and displacement of citizens. The company also plans to fund community spaces that provide free access to co-working areas for nonprofits, improving transit options for the community, and supporting programs for career development, education, and local businesses.

As it is the epicenter of the technology industry, there are a lot of people with an immense amount of wealth. Wealth isn’t just limited to the uber-wealthy founders of major tech companies or successful VCs but also the general workforce, whose salaries and incomes are among the highest in the world. Overall, San Francisco is a city of professionals, managers, and sales and office workers. Also of interest is that San Francisco has more people living here who work in computers and math than 95% of the places in the US.

The predicted 2020 job market slowdown won’t result in layoffs, just a drop in job growth to 1.5 to 2 percent a year. Note that the area already has an unemployment rate of 1.2 percent below the national average. The unemployment rate in the San Francisco-Redwood City-South San Francisco MD was 1.8 percent in December 2019, down from a revised 1.9 percent in November 2019, and below the year-ago estimate of 2.1 percent.

This compares with an unadjusted unemployment rate of 3.7 percent for California and 3.4 percent for the nation during the same period. An upcoming recession is likely to have a limited effect on the SF Bay Area’s housing market. It will only temper housing price appreciation but not reduce it. These solid economic fundamentals are integral to maintaining high rental property demand and ensuring a good return on investment.

San Francisco Rental Market

You may read about the growth of Portland and other Pacific Northwest cities as talent and businesses flee the expensive San Francisco real estate market. That’s hardly impacted the San Francisco housing market, though. However, San Francisco has several advantages over its Oregon rivals, and that’s the fact that you aren’t in Oregon. Oregon passed a state-wide rent control law in 2019. This is in addition to many city regulations regarding affordable housing. In Oregon, your ability to raise rents is limited by the state.

Making matters worse, there are many more renters than property owners, so they’ll tighten the allowable rental increases and continue to hamper owners until they’re losing money. And then there is California. You can find a variety of rent control laws in the San Francisco housing market because every city takes its approach to the problem. This means that you can find suburban San Francisco rental properties where you could raise rental rates to match the market. Furthermore, rent control laws typically don’t apply to newer single-family homes.

California, on the whole, is unfriendly to landlords. It is challenging to evict people. It can take a long time to evict someone who occasionally pays the rent. Taxes are high. What does this do to the San Francisco housing market? It leaves open the possibility that you could snap up San Francisco rental properties at a relative bargain price by people who just want to quit, whether they want to sell the properties or leave the state. For example, the laws governing the San Francisco real estate market allow you to buy San Francisco rental properties and evict the tenants to turn the units into condos for sale.

SF Rental Statistics

San Francisco holds the position of the priciest rental market. It is still #1 among the top 5 rental markets in the nation. The average rental income for traditional San Francisco investment properties is well above the national average.  Like most of the Bay Area, the percentage of people renting in San Francisco is more than owners. San Francisco has around 56 percent of its residents living in rental homes.

If condo prices are going to drop or remain flat in 2021, people will see a good investment opportunity. They’ll be able to get in at a good price and there will be an increase in demand. If you’re in the market for a condo in San Francisco, that means you could get a great deal. According to several rent reports (discussed above), rental price declines have hit the bottom and are almost flat as compared to the previous month.

San Francisco's Geography & Zoning Restrictions Limits inventory

San Francisco real estate market is perpetually constrained in terms of inventory. Several factors contribute to this, but principally the strict zoning laws prevent new development and high-rise construction throughout the city. The strict zoning laws, coupled with the fact that the SF is only seven by seven miles, make it a very constrained market and keeps supply perpetually low. San Francisco sits on a peninsula, surrounded on three sides by water.

They cannot build to meet housing demand. The surrounding cities are densely built up, as well. The only way the San Francisco real estate market could meet demand is by ripping out large swaths of two and three-story buildings to build condo towers, but that’s almost impossible given local regulations. The ability to build up is limited in the surrounding suburbs because of the mountains.

The San Francisco real estate market is, for better or for worse, beholden to several competing interest groups. For those with money that own their homes and have the most influence, “not in my backyard” or NIMBY means that voters fight any proposal to replace a 2 or 3 story warehouse with a 20 story apartment or condo building. They want to protect the look and feel of the community, through high-rise construction could start to relieve the overcrowding in the San Francisco real estate market.

The horrific stories of developers going through four years of red tape to build multi-family San Francisco rental properties deter others from even trying. Ironically, this creates significant returns for those who buy up San Francisco rental properties and can convert them to multi-family housing.

San Francisco's Environmental Movement

The environmentalist movement and California are intertwined in the public’s mind and for good reason. This is the best demonstration of its impact in Marin County. An estimated 85 percent of the county is off-limits to development. This doesn’t mean there are no homes here. It means that there are large estates that cannot be turned into tract homes. Neighbors fight any such project. This is why George Lucas had to threaten to build hundreds of homes on Skywalker Ranch when they wouldn’t let him expand his studios there. This also explains why the San Francisco real estate market cannot solve its affordable housing crisis by building in the relatively open lands in Marin County.

Warehouses and factories have been converted to lofts in large, established cities around the world. They offer open spaces, high ceilings, and proximity to public transit and downtown amenities. San Francisco is no exception to this trend. The difference is the growth in high-density San Francisco rental properties as can only be found in co-living spaces. These can be considered high-end dorms.

People may rent a bunk bed and storage space for their possessions, gaining access to laundry, kitchen, and workout facilities. Several people may share a bedroom that rivals a cramped college dorm room. These facilities are booming because they cater to the new college graduates already used to living this way and willing to continue to do so to work for Big Tech firms in San Francisco.

San Francisco's Luxury Real Estate Market is Booming Despite Pandemic

Dealing in the luxury real estate market has its benefits. More affluent buyers are the demographic least affected by any economic crisis such as brought up by the Covid-19 pandemic as they have the greatest financial resources. Although home prices soaring there is an influx of wealthy buyers. A relatively high percentage of the buyers in the city are all cash (Around 40 to 60 percent of them). Those that aren’t paying all cash are putting at least 20 percent down with the ability to close fast, even with a loan.

In June, house values in California city reached a record monthly high of $1.8 million. Deep-pocketed home buyers across San Francisco bolstered the market’s rebound and pushing up transactions and house prices, according to a report Monday from Compass. The number of luxury single-family homes—defined by the report as those priced at $3 million and above—that accepted an offer in June surpassed 30, the highest level the metric has reached in two years, data from the brokerage showed.

The increase helped push San Francisco house values to a record monthly high of $1.8 million in June, 3% higher than the previous peak of $1.75 million in June 2019. You will find first-time homebuyers who are buying over $2.5 million or baby boomers looking for second homes in the $2 million range. New units are being built in the San Francisco housing market. However, the reality is that the pool of people who can afford to buy is smaller and smaller and the supply of housing is not growing with demand. They mostly consist of luxury condos and mega-mansions built for the elite of the Big Tech workforce.

Another unintended side effect of regulations on San Francisco rental properties is that it incentivizes the construction of high-end units. Investors could invest in these projects or buy properties in the hopes that they are torn down and redeveloped. This is why burned-out husks can sell for hundreds of thousands of dollars and ones with demolition permits can sell for a million or more.

San Francisco's Real Estate Appreciation Rate is High

Thanks to all the factors discussed above, the entire bay area has one of the highest appreciation rates. A major reason San Francisco’s housing prices have climbed so high over the past decade is the city’s vibrant tech industry, which started booming in 2012 (thanks, in part, to a tax incentive aimed at attracting tech companies to the city over Silicon Valley). It now attracts a skilled workforce to the city while also driving up the demand for housing and the cost of living.

The data from NeighborhoodScout reveals that San Francisco real estate appreciated 91.99% over the last ten years, which is an average annual home appreciation rate of 6.74%. This figure puts San Francisco in the top 10% nationally for real estate appreciation. And within San Francisco, some individual neighborhoods’ home values have jumped by more than 100%, according to Trulia & Zillow. Here are the five San Francisco neighborhoods that have had the biggest jump.

• Bayview: Bayview had a $424,900 median home value in April 2009, which went to $1.07 million in Jan 2020. The current value is $977,871 (Zillow Home Value Index).
• The Forest Knolls: In April 2009, the neighborhood’s median home value was $811,800, and it topped $1.8 million in Aug 2018. The current value is $1,727,751.
• Bernal Heights: This neighborhood went from a median home value of $715,000 in April 2009 to $1.66 million in Aug 2018. The current value is $1,628,977.
• Mission: This East of The Castro neighborhood is in central San Francisco. The median home value was $699,900 in April 2009 and $1.53 million in Dec 2019. The current value is $1,397,554.
• Potrero Hill: This neighborhood lies in the East of the Mission District. It has a median home value of $734,200 in April 2009 and it topped $1.59 million in Sep 2020. The current value is $1,540,493.

The good news is that if you are a home buyer or real estate investor, San Francisco has a track record of being one of the best long-term real estate investments in the nation through the last ten years. So if you bought a home in San Francisco 10 years ago, it’s very likely you’d have profited on the deal by now — in fact, in several neighborhoods, you would have a good chance at doubling your money. All the variables that contribute to real estate appreciation continue to trend upwards which makes investing in SF real estate a sound decision.

Where To Invest In San Francisco Real Estate Market?

Are you looking to buy an investment property in the San Francisco real estate market? California has the 6th largest economy in the entire world. This is largely driven by its innovative production, the heavy tech sectors in the state, and more. The San Francisco market is expensive, but that doesn’t mean it is overpriced. There are opportunities, though they come with risks. If the city had better leadership and more people willing to allow redevelopment on a large scale, the city could blossom.

Good cash flow from San Francisco investment property means the investment is, needless to say, profitable. A bad cash flow, on the other hand, means you won’t have money on hand to repay your debt. Therefore, finding the best investment property in San Francisco in a growing neighborhood would be key to your success.

If you invest wisely in San Francisco real estate, you could secure your future. If you are a beginner in the business of cash flow real estate investing, it is very important to read good books on real estate. The less expensive the San Francisco investment property is, the lower your ongoing expenses will be.

When looking for the best real estate investments in San Francisco, you should focus on neighborhoods with relatively high population density and employment growth. Both of them translate into high demand for housing. San Francisco home prices are not only among the most expensive in the state of California but they are also some of the most expensive in all of the United States. According to Realtor.com, Dolores Heights has a median listing price of $2.5M, making it the most expensive neighborhood.

Some of the popular neighborhoods in and around San Francisco are South Beach, Pacific Heights, Mission District, Presidio Heights, Excelsior, St. Francis Wood, North Beach, West Portal, Outer Sunset, Hayes Valley, Portola, Dogpatch, Bernal Heights, Noe Valley, and Russian Hill.

According to Financialsamurai.com, the best neighborhood to buy property in San Francisco is Golden Gate Heights. This neighborhood has many homes with ocean view properties (under $1,000/Sq Ft), and some of the best schools in SF. Golden Gate Heights consists of mainly single-family homes instead of condos. As a result, the neighborhood is family-friendly and much less dense than other areas of San Francisco. The neighborhood is relatively inexpensive. At an average price per square foot of $850 – $980, Golden Gate Heights is an absolute steal compared to other neighborhoods in San Francisco.

Other best neighborhoods to buy investment properties in San Francisco are:

• Inner Parkside, Parkside
• Inner Sunset, Outer Sunset
• Inner Richmond, Outer Richmond
• Diamond Heights

All of these neighborhoods are safe, relatively inexpensive, and offer single-family homes for working-class people in the SF Bay Area. Single-family homes are defensive during downturns and tend to outperform during upturns.

Bernal Heights is considered an ideally located yet still moderately affordable place to raise a family. It’s on the south side of San Francisco, so it’s very easy to commute. The median home value in Bernal Heights is $1,587,365. Bernal Heights home values have gone up 1.5% over the past year and this neighborhood will continue to rise in value.

Tenderloin is an affordable neighborhood for those who can afford to buy a home in the median price range of $570K. As of June 2020, the Tenderloin was a balanced real estate market, which means there was a healthy balance of buyers and sellers in the market. When housing supply meets housing demand, real estate investors should not miss the opportunity since entry prices of homes remain affordable.

Bayview is one of the most affordable neighborhoods, with a median listing price of $944K (on Realtor.com). Bayview saw an astounding 136% appreciation from 2000 to 2006, followed by a huge 50% drop from 2006 to 2010/2011. From 2012 onward the recovery has been consistent. From Jan 2012 ($428,000) to June 2020 ($1.01M), the median home price has appreciated by a whopping 133% (As on Zillow's home price index). Bayview home values have gone up 4.7% over the past year alone.

Median housing prices in Bayview are also still among the lowest of any neighborhood in the city, which attracts buyers looking to get a foothold in the rapidly appreciating Bay Area housing market. The markets in Bayview and nearby neighborhoods are quite strong because they contain the most affordable houses in the city. It has one of the highest appreciation rates in the SF Bay Area region. During the downturn, its housing market became dominated by distressed sales and it fell so far that now, with the disappearance of the subprime effect, its recovery has been equally dramatic.

Stoneridge Park is a neighborhood in Pleasanton, California. It lies in Alameda County—one of the nine counties of the Bay Area region. According to Niche.com, it is a family-friendly neighborhood and one of the best places to live in California. Living in Stoneridge Park offers residents an urban-suburban mix feel and most residents own their homes. In Stoneridge Park, there are a lot of restaurants, coffee shops, and parks. The public schools in Stoneridge Park are highly rated (A+). The median home value is $911,000 and the median rent is $2,572.

Parkside receives an overall grade of A from Niche.com. It is a neighborhood in San Francisco County and is also considered one of California's best places to live. Living here offers residents an urban-suburban mix feel and most residents own their homes. The public schools in Parkside are highly rated. It is an expensive neighborhood with a median home value of $1,010,820. The median rent is $2,322. Parkside home values have gone up 4.9% over the past year and Zillow predicts they will fall -2.1% within the next year.

Here are the top neighborhoods in San Francisco having the highest real estate appreciation rates since 2000—List by Neigborhoodscout.com.

1. Pacific Ave / Divisadero St
2. California St / Presidio Ave
3. California St / Baker St
4. Lake St / El Camino Del Mar
5. Bay St / Laguna St
6. Divisadero St / Lombard St
7. Western Addition
8. Laguna St / Union St
9. Dolores St / 23rd St
10. Fort Winfield Scott

California Real Estate Investment Markets

Apart from San Francisco, you can also invest in many other real estate markets in California. California's real estate market is the focus of many U.S. and foreign real estate investors.

Another market to buy rental properties in California is San Jose. San Jose is part of Silicon Valley, a place where $100,000 a year or higher salaries from competing for tech firms has driven up the cost of real estate. But what about the San Jose housing market itself? San Jose is the third-largest city in California, home to roughly a million people. It has the highest cost of living in any area in the U.S., and it is one of the most expensive housing markets in the country.

If you want to invest in the San Jose rental properties, you may not need to buy and renovate. Instead, if you know of industrial or commercial properties near major employers they may need to convert to employee housing, which you could buy now and hold until it sells. If that doesn’t happen, you could still turn it into a co-working space.

The San Diego real estate market offers an ideal mix of limited supply, high demand, and excellent income potential. If you’re going to invest in California, it needs to be in San Diego. The San Diego real estate market has been ranked among the ten most expensive real estate markets in the country, though it ranks below several other West Coast cities. This creates massive demand for San Diego rental properties by those who simply cannot afford to buy homes. The rental market will continue to grow as the city grows an estimated 500,000 by 2050, adding tens of thousands each year.

Another expensive market like San Francisco is LA. The numbers may not make sense for many investors but if you ask savvy investors based in LA they would like to bet anytime on this expensive real estate market. The Los Angeles real estate market has many points in its favor beyond its sheer size. The strong market fundamentals make the Los Angeles housing market a good place to invest if you’re looking at buying real estate in California.

Los Angeles has an unemployment rate of around 4%. What makes Los Angeles unique is the employment market. Want to work in Hollywood? Move to L.A. Want to work for a production company or in fashion? Come to L.A. If rent is too high, share an apartment or single-family home with friends. The Los Angeles housing market has seen a bump in residential construction. This has helped to satisfy some demand from renters. However, due to increasing demand, the new supply hasn’t brought prices down.

The Oakland real estate market is a cheaper version of the San Francisco real estate market with similar rental rates and a slightly friendly legal climate. It presents a good opportunity for real estate investors. The Oakland real estate market is second only to San Francisco in terms of rental rates. It is rivaling New York City, Boston, and San Francisco in terms of rental prices. One-bedroom apartments are averaging $2400 a month. Yet Oakland housing units remain two hundred to five hundred thousand dollars cheaper than San Francisco properties. This means you’ll see far better ROI on Oakland rental properties than San Francisco properties.

For most investors, buying or selling real estate is one of the most important decisions they will make. Choosing a real estate professional/counselor continues to be a vital part of this process. They are well-informed about critical factors that affect your specific market areas, such as changes in market conditions, market forecasts, consumer attitudes, best locations, timing, and interest rates.

NORADA REAL ESTATE INVESTMENTS has extensive experience investing in turnkey real estate and cash-flow properties. We strive to set the standard for our industry and inspire others by raising the bar on providing exceptional real estate investment opportunities in many other growth markets in the United States. We can help you succeed by minimizing risk and maximizing the profitability of your investment property in San Francisco.

Consult with one of the investment counselors who can help build you a custom portfolio of San Francisco turnkey investment properties in some of the best neighborhoods. All you have to do is fill up this form and schedule a consultation at your convenience. We’re standing by to help you take the guesswork out of real estate investing. By researching and structuring complete San Francisco turnkey real estate investments, we help you succeed by minimizing risk and maximizing profitability.

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Please do not make any real estate or financial decisions based solely on the information found within this article. Some of the information contained in this article was pulled from third-party sites mentioned under references. Although the information is believed to be reliable, Norada Real Estate Investments makes no representations, warranties, or guarantees, either express or implied, as to whether the information presented is accurate, reliable, or current. All information presented should be independently verified through the references given below. As a general policy, Norada Real Estate Investments makes no claims or assertions about the future housing market conditions across the US.

References:

Market Data, Reports & Forecasts
https://www.car.org/en/marketdata/data
https://www.zillow.com/sanfrancisco-ca/home-values
https://www.zillow.com/research/2020-urb-suburb-market-report-27712/
https://www.littlebighomes.com/real-estate-san-francisco.html
https://www.realtor.com/realestateandhomes-search/SanFrancisco_CA/overview
https://www.bayareamarketreports.com/trend/san-francisco-home-prices-market-trends-news

San Franciso (City) Cooling-off
https://www.cnbc.com/2020/09/27/san-francisco-housing-suburbs-red-hot-but-city-still-in-demand.html

City details
http://worldpopulationreview.com/us-cities/san-francisco-population

Best Neighborhoods
https://www.neighborhoodscout.com/ca/san-francisco/real-estate
https://www.helena7x7.com/san-francisco-neighborhood-appreciation-rates/
https://www.financialsamurai.com/best-san-francisco-neighborhoods-to-buy-property-for-price-appreciation
https://www.niche.com/places-to-live/search/best-neighborhoods-to-buy-a-house/m/san-francisco-metro-area/

Rental Market Statistics
https://www.rentcafe.com/average-rent-market-trends/us/ca/san-francisco/
https://www.rentjungle.com/average-rent-in-san-francisco-rent-trends/
https://www.zumper.com/blog/rental-price-data/
https://www.nolo.com/legal-encyclopedia/california-rent-control-law.html
https://homeguides.sfgate.com/tenants-rights-landlord-sells-house-53734.html
https://www.npr.org/2019/02/27/698509957/oregon-set-to-pass-the-first-statewide-rent-control-bill

Should You Invest in SF
https://realestate.usnews.com/places/california/san-francisco/jobs
https://sf.curbed.com/2020/3/11/21155283/buying-a-house-san-francisco-2020
https://reason.com/2018/02/21/san-francisco-man-has-spent-4-years-1-mi
https://www.nytimes.com/2017/01/21/us/san-francisco-children.html
https://www.latimes.com/politics/la-pol-ca-marin-county-affordable-housing-20170107-story.html
https://www.citylab.com/equity/2016/04/blame-geography-for-high-housing-prices/478680
https://www.theguardian.com/business/2016/aug/05/high-house-prices-san-francisco-tech-boom-inequality
https://www.mercurynews.com/2019/03/14/bay-area-job-market-slowdown-experts-predict-google-apple-amazon-facebook
https://www.washingtonpost.com/news/morning-mix/wp/2015/04/17/george-lucas-wants-to-build-affordable-housing-on-his-land-because-weve-got-enough-millionaires

Luxury market
https://www.mercurynews.com/2014/03/05/in-the-bay-area-million-dollar-homes-are-torn-down-to-start-fresh
https://www.sfgate.com/realestate/article/863-carolina-street-potrero-hill-tear-down-listing-13844146.php
https://www.housingwire.com/articles/36691-la-demolishing-affordable-housing-building-luxury-housing-instead

The California housing market moderated for the fourth month in a row in August 2021. After a busy summer, the state's housing market continues to stabilize, with sales declining as we go into the fall. August’s sales pace was down 3.3 percent on a monthly basis from 428,980 in July and down 10.9 percent from a year ago when 465,400 homes were sold on an annualized basis. August’s sales level was the lowest in 14 months.

Despite the monthly and annual sales drop, California home sales remained strong by pre-pandemic standards, maintaining a solid year-to-date increase of 21.3 percent, according to the California Association of Realtors (C.A.R.). The supply-demand imbalance continues to heat the market, with many buyers offering sales bids that are higher than the asking price. Over 67% of homes sold above the asking price in August, marking the eleventh consecutive month since September 2020 that more than half of homes sold above the asking price.

The California housing market continues to gain traction, as home prices grow steadily from last year. Having taken a brief respite in July, California's median home price hit a new high of $827,940 in August, becoming the state's fifth all-time high in less than six months. The price in August was 2.1 percent higher than the price of $811,170 in July and 17.1 percent higher than the price of $706,900 in August of last year. The median price of a home in California has remained above the $800,000 mark for the fifth month in succession. Despite the improvement in housing availability, the market is still competitive, with homes flying off the shelves in record time.

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, fixed-rate loan would be $3,770 assuming a 20 percent down payment. 

In August 2021, the median price in all major regions continued to increase by double-digits but none set a new record high. Home prices continued to rise steadily from the previous year, with all but two of the 51 counties tracked by C.A.R. reporting an increase in value from August of last year to the current month.

• The Far North had a year-over-year gain of 19.1 percent, with the median price being $387,000.
• Southern California had a year-over-year price gain of 18.8 percent, with the median price being $760,000.
• The San Francisco Bay Area had a year-over-year price gain of 18.4 percent, with the median price being $1,265,000.
• The Central Valley had a year-over-year price gain of 16.9 percent, with the median price being $450,000.
• The Central Coast had a year-over-year price gain of 11.4 percent, with the median price being $905,000.
• The Los Angeles Metro Area had a year-over-year price gain of 18.9 percent, with the median price being $731,000.
• Inland Empire had a year-over-year price gain of 19.5 percent, with the median price being $520,000.

California is still a seller’s market and home prices have reached new record-highs across all the regions due to tight supply. Homes are moving nearly 44% faster than a year ago; the median time on the market was 9 days in August. Nearly 67% of homes sold above the asking price in July. 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 by double digits 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 102.8 percent in August. 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. Typically, the housing supply rises during this time of year and continues to rise until late July/early August. California’s housing supply leveled off in August as the market transitioned into the off-season.

The number of for-sale properties dipped slightly from July by 2.6 percent and continued to fall from last year by 10.9 percent. C.A.R.’s Unsold Inventory Index (UII) was unchanged from 1.9 months in July and was slightly below last year’s level of 2.1 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 August 2021, the overall housing sentiment index reached 72 (+1 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 August 2021 found that only 18% of consumers believe that now is the good time to buy a home, and 82% think this is not a good time to buy. 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 31% of the consumers feel that it will be easier to find a home over the next twelve months (+4 from last month's survey). 69% 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, one-third (72 percent) of Californians believe now is a good time to sell a home. That’s an increase of +2 over the July 2021 poll. More than half of the consumers (54%) who participated in the survey still feel that home prices will continue to rise in the 12 months. That’s a decrease of -4% from the previous month. Less than half of the people are optimistic about the economy's recovery. Only 42% (+2 from last month) believe that economic conditions will improve in the state over the next 12 months while 58% still have a gloomy outlook.

California Housing Market Trends 2021 (Describes August)

Here are some of the key points of the California housing market report for August 2021, according to the September 16 release by C.A.R.

Existing-Home Sales

• August's sales pace was down 3.3 percent from July's 428,980 and 10.9 percent from a year ago when 465,400 homes were sold.
• August saw the lowest sales in 14 months.
• Despite the monthly and annual declines, California home sales remain strong by pre-pandemic standards, up 21.3 percent year-to-date.
• At the regional level, sales in three of the five major regions dipped from a year ago.
• The Far North region had the biggest year-over-year sales decline (-21.9 percent) in August.
• Southern California (-4.1 percent) and the Central Valley (-2.0 percent) also saw a decline in sales year over year, but the declines were more moderate.
• Within the regions, however, sales in some counties dropped more significantly on a year-over-year basis.
• Riverside (-13.6%), San Bernardino (-15.6%), Madera (-32.7%) and Placer (-13.5%) all saw double-digit declines in August.
• The San Francisco Bay Area (2.5 percent) and Central Coast (0.8 percent) were the only regions that sales increased from last year.
• Nearly three-quarters of all counties — 37 of 51 — tracked by C.A.R. posted year-over-year decreases in closed sales in August, with 23 counties declining by more than 10 percent from last year.
• Plumas recorded the sharpest sales decline from a year ago at -62 percent.
• The number of counties with increased sales year-over-year remained at 13.
• Santa Cruz had the biggest increase (41.4%).

California Median Home Price

• Median prices in all major regions continued to increase by double-digits but none set a new record high in August.
• The Far North had the largest jump (19.1 percent) year-over-year.
• Southern California was the second strongest growing at 18.8 percent.
• It was followed by the San Francisco Bay Area (18.4 percent).
• The Central Valley had the fourth-highest price growth rate of all regions with its median price increasing 16.9% year-over-year.
• The Central Coast region posted a growth of 11.4 percent.
• In August, all but two of the 51 counties tracked by C.A.R. showed year-over-year gains.
• Calaveras had the largest price growth at 27.3 percent.
• Four counties set new record high median prices in August compared to 13 counties in the prior month.
• Only Lassen (-17.9%) and Monterey (-0.6%) saw a decrease in price from a year ago.

California Housing Supply

• After rising for six months in a row, California's housing supply slowed in August as the market entered its slow season.
• The number of for-sale properties fell by 2.6 percent from July and by 10.9 percent from last year.
• It was the smallest year-over-year decline in two years.
• For the second consecutive month, new active listings fell from a year ago, after growing for four consecutive months from March to June.
• Two-thirds of all counties reported by C.A.R. experienced a drop in active listings from last August, with 27 of them falling more than 10 percent year over year.
•  Mono had the largest decline in supply from a year ago, falling 44.2 percent from August 2020.
• However, 17 counties experienced an increase in active listings in August, with 11 counties surging by double-digits from a year ago.
• Merced had the biggest jump (43.9 percent) of all counties.
• August’s Unsold Inventory Index (UII) was unchanged from 1.9 months in July and was slightly below last year’s level of 2.1 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 required to sell a single-family home in California increased from 8 to 9 in August but remained lower than the 13 days required in August 2020.
• C.A.R.’s statewide sales-price-to-list-price ratio was 102.8 percent in August and 100 percent in August 2020.
• 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.
• The price per square foot in August was $395, an all-time high.
• In August of last year, the price per square foot was $315.

Mortgage Interest Rate

• The 30-year, fixed-mortgage interest rate averaged 2.84 percent in August, down from 2.94 percent in August 2020, according to Freddie Mac.
• The five-year, adjustable mortgage interest rate was an average of 2.42 percent, compared to 2.91 percent in August 2020.

California Housing Market – Regional Sales and Price Trends – August 2021

Sales decreased in three of the five major regions compared to the same period last year, according to regional data. Median prices in all major regions continued to rise by double digits in August, but none of them broke a new record in the month.  The Far North had the largest jump (19.1 percent) year-over-year, followed by Southern California (18.8 percent).

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 by double-digits but none set a new record high in August 2021. All but two of 51 counties tracked by C.A.R. showing a year-over-year gain from last August. 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 102.8% in August 2021. 67% 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 2.84 percent in August, down from 2.94 percent in August 2020, 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.

Six California Metros Feature in The Top 20 Hottest Housing Markets 

Realtor.com takes into account market demand and the pace of the market to determine an area’s hotness. That is determined by the number of unique viewers per property and the number of days a listing is active on Realtor.com’s website. In their latest hottest housing markets report for March 2021, California had six in the top 20, more than any other state.

These hottest markets saw median listing prices 18.9% higher, on average than the national price in March. The report shows that spillover and secondary markets continue to dominate the list as buyers prioritize space while remaining close to major hubs.

Vallejo-Fairfield metro area was no. 3, with the median listing price of $550,000. It had the lowest median number of days on the market, at 11. It has been on the company’s top 20 list for the last several years. Other Northern California cities in the top 20 include Yuba City in Sutter County, which came in seventh place with a median listing price of $427,000.

The Santa Cruz-Watsonville metro area was No. 8, with a median listing price of $1.2 million, and the Stockton-Lodi metro area followed at No. 9 with a median listing price of $468,000. The Modesto area came in at No. 12, with a median listing price of $499,000. And in the far northwest corner of the state, the Eureka-Arcata-Fortuna area came in at No. 18, with a median listing price of $439,000.

California Housing Market Forecast 2021-2022 (Latest Projections)

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. The median price of an existing single-family house in 2021 is expected to be $795,600, up 20.7 percent from the 2020 median. That is a $136,000 increase from last year – and an almost $300,000 increase over the last five years.

This year's home sales are expected to total 444,500, representing a 7.9 percent increase over last year's total and the biggest total in 12 years. As a result, despite some slowdown in sales in the second half of the year, CAR Deputy Chief Economist Oscar Wei predicts that prices will continue to rise. Active listings were down by at least 40% in the first five months of the year, but they are expected to grow in the summer and fall when home buying slows and housing inventory rises. This will result in “normal” price and sales growth in the future.

Let us look at the price trends recorded by Zillow over the past few years. Since 2012, the California home values have appreciated by nearly 114% — 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 $654,629. It indicates that 50 percent of all housing stock in the area is worth more than $654,629 and 50 percent is worth less (adjusting for seasonal fluctuations and only includes the middle price tier of homes).

In May 2020, the typical value of homes in California was around $583,000. Home values have gone up 12.5% 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. Although the latest price forecast is not available earlier Zillow had predicted a growth of 10.6% in ZHVI by November 2021.

Courtesy of Zillow.com

Latest Weekly Trends & Forecast From California REALTORS®

CAR's latest weekly housing data for the week ending September 11, 2021, shows that 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. In recent weeks, REALTOR® optimism in California has also moderated. Nonetheless, home sales remain higher than pre-crisis levels, and buyer demand remains strong—even as the level continues to normalize after reaching 15-year highs last winter.

The percentage of REALTORS® who expected listings and prices to rise was 38.1 percent and 21.9 percent respectively. More members expected an increase in sales next week, but overall, optimism in these three metrics is roughly half of what it was in April.

California REALTORS® are not quite positive about the market as we move into the 8th month of the summer homebuying season. Only 25.2% (+0.6% from the previous week) of them expect sales to improve in the upcoming week, while nearly 22% believe prices will increase from the prior week.

Tight supply, however, remains a concern as it continues to hold back demand and continues to put pressure on affordability. Although the amount of new listings entering the MLS is still below normal levels, more sellers are putting their homes on the market, providing potential homebuyers with more options. The total number of active listings available for sale on the MLS has been steadily increasing over the last few weeks. This means that homebuyers will have more options when conducting their home search, and this trend is likely to be responsible for the slight increase in time on the market and the very slight decrease in competitiveness we've seen in recent weeks.

Uncertainty about the virus and future economic conditions, particularly in light of the expiration of several key government stimulus programs, such as forbearance and pandemic unemployment assistance, keeps interest rates near historic low levels. This is preventing a stronger seasonal cooldown after a strong home-buying season earlier this year. CAR's Housing Sentiment Survey showed a slight improvement in consumer sentiment.

With slightly more inventory on the market and an economy that is expected to gradually recover, buyer demand should begin to respond to the increase in purchasing power—especially if inflation fears cause would-be homeowners to fear higher interest rates in the future. In the short term, the 10-year Treasury note continues to support downward pressure on mortgage rates.

Despite an increase in homebuyer confidence in August, mortgage applications fell for the 16th consecutive week last week. The overall index is following the seasonal slowing pattern seen in the weekly California home sales data, but the sales figures have avoided more significant declines. The market remains competitive, and buyers are faced with rising prices and a lack of available units.

Survey results also suggest that supply will remain tight as only 38.1% of those who responded to the survey believed listings will increase in the following week. Therefore, price growth will not ease up until some balance between supply and demand is restored. Low interest rates, which are still low, could give buyers the purchasing power and home prices a boost.

California’s housing market forecast for 2021 is on the positive side but things could vary a bit, given the seriousness of the ongoing pandemic. Here's a rundown of the latest market trends.

• All parties involved – buyers, sellers, and agents – agreed that home prices will likely remain on their upward trend in the short term.
• 21.9% (-17.1%) of California Realtors® feel prices will rise in the coming weeks.
• 25.2% (-0.6%) think that sales will grow in the coming weeks.
• An average of 666 daily closed transactions was reported in the past week, down 34.8% week-over-week.
• An average of 803 contracts was signed per day in the past week,  down 19.7% week-over-week.
• Seller's optimism continues to dip in the latest weekly trends.
• An average of 870 new listings per day was reported in the past week, which represents a decline of -5.7%.
• About 38.1% (+43.9%) of California Realtors® think listings will be up next week.
• Interest rates always fluctuate, just as the real estate market does.
• 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.
• A few months back, Zillow had predicted that home prices will rise by 10.6% until November 2021.
• Most California sub-markets saw big home-price gains in 2020.
• The same trend is being seen 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.

Here's a rundown of the forecast released by CAR on April 27, 2021. 

This year, the California Association of Realtors’ economic forecast looks at several scenarios in predicting whether home prices and sales will rise or fall in 2021. Low mortgage interest rates and pent-up demand will bolster California home sales in 2021.

• The housing market still doing unseasonably well in 2021.
• Lots of buyer demand amidst all-time low rates.
• Time to get serious about supply & new construction impacting much more than just the real estate market.
• 2nd worst Jobs-to-Construction ratio in the nation.
• 2nd worst state for overcrowded housing.
• Ominous trends for the population and economy.
• In the previous forecast released in October 2020, the sales figure was projected to be 4.5 percent lower compared with the pace of 397,960 homes sold in 2019.
• However, the California housing market data closed unexpectedly above 2019's figures.
• Existing sales YTD were +3.5% above 2019.
• $717,930 record-setting median price in December.
• The CAR's latest forecast points towards an increase in existing single-family home sales by 11.2 percent in 2021.
• The California median home price is forecasted to edge up 8.0 percent in 2021, following an 11.3 percent increase in 2020.
• Low mortgage rates are expected to continue to fuel price growth.
• The average 2021 rate for a 30-year fixed-rate mortgage will be 3.0%, down from 3.1% in 2020.
• Housing Affordability Index is projected to be 27%, down from last year when it was 32%.
• Affordability will prevent many from achieving ownership.

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 breaking 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 dropping 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.

Conclusion

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.

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References/Data Sources

• https://www.car.org/
• https://www.car.org/aboutus/mediacenter/newsreleases
• https://www.car.org/marketdata/data/countysalesactivity
• https://www.car.org/marketdata/marketforecast
• https://www.car.org/marketdata/marketminute
• https://www.car.org/marketdata/interactive/housingmarketoverview
• https://www.zillow.com/ca/home-values
• https://lao.ca.gov/LAOEconTax/Article/Detail/265
• https://sf.curbed.com/2020/3/23/21188781/sf-housing-market-coronavirus-covid-19
• https://www.ppic.org/publication/new-patterns-of-immigrant-settlement-in-california
• https://fox40.com/news/business/local-real-estate-market-slows-amid-covid-19-pandemic
• https://www.point2homes.com/news/us-real-estate-news/experts-california-real-estate-2020.html
• https://www.washingtonpost.com/business/2020/02/27/mortgage-rates-head-back-down-coronavirus-fears
• https://www.cnbc.com/2020/03/18/weekly-mortgage-applications-drop-over-8percent-as-interest-rates-jump.html
• https://www.usnews.com/news/business/articles/2020-03-25/business-fallout-companies-in-china-see-delays-in-reopening
• https://www.dallasnews.com/business/real-estate/2020/03/25/homeowners-who-cant-pay-their-mortgages-are-getting-help
• https://www.wfsb.com/news/businesses-considered-essential-under-stay-safe-stay-home-policy/article_53f8e0d0-6d17-11ea-a04d-57ecbb72c518.html

If you want to invest in the heartland, Chicago is often the default choice because it is so big. Texas gets attention as the home to several of the fastest-growing and appreciating markets in the country. However, it is worth your time to look at smaller metropolitan areas that have similar potential without the same degree of risk. Let’s look at the Oklahoma City real estate market trends and forecast before discussing why you should consider investing there.

Oklahoma is one of the hottest housing markets in the nation. In the most recent annual population estimates released by the U.S. Census, Oklahoma City is now the 25th largest city in the United States, according to the latest annual population estimates released by the U.S. Census Bureau. Since 2010, it has grown by more than 12%. There was already a shortage of housing supply, then when the pandemic showed up in March, many sellers decided to take their properties off the market.

This drove supply down even more, but the demand remained high in the Oklahoma City housing market. According to Zillow, home values are up 12% year over year in Oklahoma while in Oklahoma City they have gone up 14%. Despite the rising prices, Oklahoma real estate is still highly affordable relative to most housing markets in the U.S.

If you've been thinking of investing or buying your first home in OKC, now could be a great time to act. Homeownership in Oklahoma is very affordable, as the median home price is still among the lowest in the nation. The typical home value in the Oklahoma City metro area is around $188K. There is no better time to enter the market to buy a home than there is right now as home prices are very low compared to other parts of the country.

Although home price gains continue to accelerate low mortgage rates are giving buyers much-needed help. Last year, LendingTree analysts looked at the mortgage payments that were offered through 2019 to LendingTree users in all 50 states. The State of Oklahoma also ranked No. 7 for the lowest average monthly mortgage payments in all 50 states.

According to SmartAsset, Oklahoma City has the most affordable housing market in the U.S. Oklahoma City homeowners and renters pay $916/month and median annual housing costs are only 19.81% of Oklahoma City’s median household income, which is the lowest percentage of income on housing costs in their study.

According to Demographia’s 16th International Annual Housing Affordability Survey (2020), the 10 most affordable major housing
markets are all in the United States. Rochester is the most affordable, and Oklahoma City & Cleveland are the second-most affordable housing markets. The survey includes housing markets of eight countries across four continents.

Oklahoma City Housing Prices & Forecast 2021-2022 (Most Recent)

According to the national property broker, Redfin, the Oklahoma City housing market is very competitive.

• Homes in Oklahoma City receive 4 offers on average and sell in around 5 days.
• The median sale price of a home in Oklahoma City was $225K last month, up 4.7% since last year.
• The average sale price per square foot in Oklahoma City is $129, up 11.2% since last year.
• The average homes sell for about 1% above the list price and go pending in around 5 days.
• Hot Homes can sell for about 4% above the list price and go pending in around 2 days.

Realtor.com's August 2021 data shows that Oklahoma City is a seller's real estate market, which means that more people are looking to buy than there are homes available. The sale-to-List Price Ratio was 100%, which means homes in Oklahoma City sold for approximately the asking price on average in August. The median list price of homes in Oklahoma City, OK was $235K, flat year-over-year. The median listing price per square foot was $131. The median sale price was $221.1K.

The following real estate statistics were collected by MLSOK, Inc., for the time frame August 1 through August 31, 2021. While information is deemed reliable it is not guaranteed. Looking at these trends, it's a seller's market in the Oklahoma City Metro Area.

August 2021 Residential Sales

HOUSING SUPPLY: New listings increased 18.4 percent for Single Family homes and 14.3 Percent for townhouse-condo homes. Inventory decreased 11.1 percent for Single Family homes and 37.7 percent for Townhouse-Condo homes. Month’s Supply of Inventory decreased 23.5 percent for Single Family homes and 46.4 percent for Townhouse-Condo homes.

HOUISNG SALES: Pending Sales increased 8.1 percent for Single Family homes and 37.9 percent for Townhouse-Condo homes. Closed sales decreased 1.4 percent for all properties.

MEDIAN PRICE: Median Sales Price increased 4.8 percent to $220,000 for Single Family homes but decreased 5.3 percent to $133,000 for townhouse-condo homes. The price forecast for 2021 is also positive.

DOM: Days on Market decreased 56.8 percent for Single Family homes but increased 30.8 percent for Townhouse-Condo homes.

NATIONWIDE NEW CONSTRUCTION TRENDS: Homebuilders continue to struggle to meet buyer demand in new construction, as housing starts nationwide fell 7% last month, according to the Commerce Department. Single-family housing construction fell by 4.5 percent, while multifamily housing construction, which includes condominiums and apartment buildings, fell by 13%. Builders continue to face difficulties due to labor shortages, rising material costs, and supply-chain disruptions, with some projects experiencing delays. Temporarily halted due to material availability and cost.

Listed below are the Oklahoma City Metropolitan housing statistics for August 2021 as compared to July 2021 and August 2020. These statistics are also supplied by MLSOK, Inc.

Key Housing Metrics	August 2021	July 2021	August 2020
TOTAL CLOSED	2823	2644	2768
TOTAL $ VOLUME	$729,313,831	$673,813,504	$665,988,543
AVERAGE PRICE	$258,347	$254,846	$240,603
MEDIAN PRICE	$217,500	$218,550	$208,000
% SELLING PRICE TO LIST PRICE	99%	100%	98%
DAYS ON MARKET	17	17	37
NUMBER OF LISTINGS	3298	3167	6909

Oklahoma City Real Estate Market Forecast 2021-2022

What are the Oklahoma City real estate market predictions for 2021 & 2022? According to Zillow, a leading real estate marketplace, the typical value of homes in Oklahoma City is $171,910, and in Sep 2011 it was $111,000. Since then, home values have appreciated by nearly 54.8%. Oklahoma City home values have also gone up 14.5% over the last twelve months.

According to NeighborhoodScout's data, appreciation rates for homes in Oklahoma City have been tracking above average for the last ten years. The cumulative appreciation rate over the ten years has been 43.98%, which equates to an annual average appreciation rate of 3.71%. During the latest twelve months, Oklahoma City's appreciation rate has been 6.74%, and in the latest quarter, it's been 2.28%, which annualizes to a rate of 9.42%.

Here's a short and crisp housing market forecast by Zillow for Oklahoma, Oklahoma City, and the Oklahoma City Metro. Housing inventory remains low in many major cities across the nation, and Oklahoma is no exception to that. According to their forecast, the supply and demand dynamics will likely push prices north again over the next 12 months.

This shows that Oklahoma City Area is a hot seller's real estate market. There exists a limited supply of homes, and buyers are forced to compete often resulting in higher prices and/or quicker sales that tend to benefit sellers.

• Oklahoma City Metro or Greater Oklahoma City is the largest metropolitan area in the state of Oklahoma, and it includes Canadian, Cleveland, Grady, Lincoln, Logan, McClain, and Oklahoma counties.
• In the metro region, home values have gone up 13% over the past year and the latest forecast is that they will rise 10.2% over the next 12 months.
• Oklahoma City home values have gone up 14.5% over the past year and the latest forecast is that they will continue to rise over the next 12 months. However, Oklahoma City real estate is still very affordable.
• Oklahoma home values (statewide) have gone up 11.9% over the past year and will continue to rise over the next 12 months.

The chart below, created by Zillow, shows the growth of median home values since 2011 and their forecast until August 2022 (the green area).

Oklahoma City Real Estate Investment Overview

Should you consider Oklahoma City real estate investment? Many real estate investors have asked themselves if buying an Oklahoma investment property is a sound investment decision? You need to drill deeper into local trends if you want to know what the market holds for real estate investors and buyers in 2021 & 2022. We've already discussed the latest market insights and forecasts for 2021. They show a positive growth trend for next year and it is the right time to invest and lock in low mortgage payments.

Oklahoma City is home to just over 600,000 people. The metropolitan area is home to over a million people. The Oklahoma City housing market is stable to strong because it is slowly growing. In 2019, about 1.41 million people lived in the Oklahoma City metropolitan area. Here are the top reasons to invest in the Oklahoma City real estate market in 2021.

Steady Growth in Oklahoma City & Its Property Values

The Oklahoma City real estate market is bolstered by steady population growth of 1% to 2% a year, both within Oklahoma City itself and the surrounding suburbs. This keeps housing prices and rental rates going with the rate of inflation if not better. However, it doesn’t create the boom or bust cycles that risk landlords losing all their equity when a hot market cools.

The Oklahoma City real estate market is bolstered over the long term by its excellent long-term demographic trends. The median age is in the mid-thirties, several years younger than the rest of the country. A quarter of the population is under age 18, and because of the strong local economy, they don’t have to move away to find work. Expect locals to stay and raise their families here, keeping the local Oklahoma City housing market stable.

The Oklahoma City real estate market is notable for how affordable real estate is. The median home value in the Oklahoma City metro area is $187,885 (Zillow). Oklahoma has the country's fourth-lowest median home values and its condos have the lowest. Despite steady price appreciation, you can buy single-family homes to rent out at a fraction of the cost of a California condo.

OKC also ranks among the top cities in a small business environment. Justbusiness.com ranked Oklahoma City as the fourth-best city to work for a small business. The business website used a combination of factors including establishment rate, growth rate, employees, average payroll, and housing costs into the equation. Oklahoma City’s 61.96 index score only trailed first-place New Orleans (74.20), Cleveland (67.27), and Buffalo, N.Y. (63.37).

According to the “Doing Business North America Report” released by ASU Center for the Study of Economic Liberty, OKC is the easiest place in North America to do business. The report looked at a variety of business factors with OKC scoring high in employing workers, low taxes, and ease of registering property.

Housing Stock Growth Is Slow

Oklahoma City is issuing building permits for single-family housing slowly. The new multi-family housing stock is slow to nonexistent. The Core to Shore redevelopment of downtown Oklahoma City will bring new commercial buildings to accompany the new convention center. However, this urban redevelopment plan does not include condo towers and apartment buildings that would lower the demand for rental units in the surrounding area.

Homebuilders started more houses in the first half of this year than last, despite the coronavirus pandemic and accompanying business shutdowns. With a shortage of housing inventory, mostly at entry-level price ranges, and persistent, historically low mortgage interest rates, builders roared into 2020 with 491 starts in January — an increase of 63.1% over January 2019 — then a 28.5% year-over-year increase in February.

The 2,674 homes permitted through June was an increase of 6.5% compared with the first six months of 2019, according to Norman-based Dharma Inc.'s Builder Report, which tracks home construction in Oklahoma City, unincorporated Oklahoma County, Bethany, Blanchard, Choctaw, Edmond, Midwest City, Moore, Mustang, Newcastle, Noble, Norman, Shawnee and Yukon.

Good Rental Market

Oklahoma City is notable for the relatively large number of colleges and universities in the area. There are five public universities in Oklahoma City and its suburbs. There are fifteen more private universities in and around the city. If you want to invest in the Oklahoma City housing market while catering to students, this diversity is a plus because the value of the housing isn’t tied to the rise and fall of one particular university.

According to Census.gov, the median gross rent between 2012 and 2016 in Oklahoma City was around $800. According to RENTCafe, 38% of the households in Oklahoma City, OK are renter-occupied while 61% are owner-occupied. Before the pandemic, average rent prices were growing at 2% annually.

As of September 18, 2021, the average rent for a 1-bedroom apartment in Oklahoma City, OK is currently $800. This is a 6% increase compared to the previous year. Over the past month, the average rent for a studio apartment in Oklahoma City decreased by -3% to $730. The average rent for a 1-bedroom apartment increased by 1% to $800, and the average rent for a 2-bedroom apartment increased by 4% to $938.

• Two-bedroom apartment rents average $938 (a 7% increase from last year).
• Three-bedroom apartment rents average $1,300 (an 8% increase from last year).
• Four-bedroom apartment rents average $1,695 (a 21% increase from last year).

However, the rental rate depends on where you live and how large the place is. For example, a one-bedroom apartment downtown costs around $1,393 a month to rent whereas you’d pay about $959 a month in Harvest Hills. Many residents would pay this amount or a little more to rent a single-family home, while the mortgage and property taxes on the property would let the landlord clear several hundred dollars a month.

Overall Market Stability

We touched on the topic of not wanting to end up buying at the peak of a housing bubble before the collapse. For those who want to know their investment will retain its value, you’ll appreciate knowing that Oklahoma City is one of the least volatile housing markets in the country. The FHFA home price index only showed year-over-year declines in four quarters between 2011 and 2016. While these years aren’t the worst for real estate (see the 2007-2008 housing collapse), they reflect a large part of the recession where housing fluctuated wildly before beginning to recover. As of 2021 Q2, Oklahoma City metro ranks #86 in the FHFA home price index. House prices rose 14% over the past year and rose 6.3% over the last quarter. The cumulative change since 2007 has been 63.2%.

It Is Better Than Tulsa in General

We think the Oklahoma City real estate market is a better choice for real estate investors than neighboring Tulsa for several reasons. Tulsa keeps showing up in lists for first-time home buyers because it is more affordable than Oklahoma City. That means some fewer potential renters would pay well to rent a good single-family home or apartment.

Tulsa has twice the population density. That makes single-family homes for rent more expensive and harder to find for potential landlords. The smaller average household size in Tulsa reduces the share of the population that wants to rent a larger residence, as well. Oklahoma City has a slightly lower cost of living than Tulsa, as well, attracting more residents from out of state and improving profit margins for property owners.

It Is Landlord Friendly

Oklahoma in general is landlord-friendly. In general, you don’t need a rental license to be a landlord in the state. There is no payment grace period law. Interest isn’t owed on security deposits. Rental agreements longer than 12 months must be written; any agreement shorter than 12 months is valid whether oral or written. Landlords can evict a tenant in Oklahoma City for failure to pay rent, criminal activity, and material breaches of the lease. If the landlord wants to evict them for a breach of lease, a ten-day written notice is required in which the tenant has to solve the issue.

If they don’t, they can be given 15 days to leave. If a landlord wants to evict a tenant for nonpayment of rent, he or she must first give the tenant a 5-day written notice for payment of rent. If the tenant does not pay rent within 5 days, the landlord may proceed with the eviction of the tenant. The only exception is a criminal activity that poses a health or safety threat to tenants and those around them – you can evict someone immediately for that. This includes illegal drug activity in a unit. Eviction can proceed five days after failing to pay the rent.

Conclusion

The Oklahoma City real estate market is an ultra-stable market with slow but steady increases in property valuations. There are pockets where you could tap into a large pool of renters such as around one of the many universities, though other neighborhoods are dominated by families that want more space but cannot afford to buy a home.

Buying or selling real estate, for a majority of investors, is one of the most important decisions they will make. Choosing a real estate professional/counselor continues to be a vital part of this process. They are well-informed about critical factors that affect your specific market areas, such as changes in market conditions, market forecasts, consumer attitudes, best locations, timing, and interest rates.

NORADA REAL ESTATE INVESTMENTS has extensive experience investing in turnkey real estate and cash-flow properties. We strive to set the standard for our industry and inspire others by raising the bar on providing exceptional real estate investment opportunities in many other growth markets in the United States. We can help you succeed by minimizing risk and maximizing the profitability of your investment property in Oklahoma City.

Consult with one of the investment counselors who can help build you a custom portfolio of Oklahoma City turnkey properties. These are “Cash-Flow Rental Properties” located in some of the best neighborhoods of Oklahoma City.

Not just limited to Oklahoma but you can also invest in some of the best real estate markets in the United States. All you have to do is fill up this form and schedule a consultation at your convenience. We’re standing by to help you take the guesswork out of real estate investing. By researching and structuring complete Oklahoma City turnkey real estate investments, we help you succeed by minimizing risk and maximizing profitability.

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Please do not make any real estate or financial decisions based solely on the information found within this article. Some of the information contained in this article was pulled from third-party sites mentioned under references. Although the information is believed to be reliable, Norada Real Estate Investments makes no representations, warranties, or guarantees, either express or implied, as to whether the information presented is accurate, reliable, or current. All information presented should be independently verified through the references given below. As a general policy, Norada Real Estate Investments makes no claims or assertions about the future housing market conditions across the US. This article aimed to educate investors who are keen to invest in Oklahoma real estate. Purchasing an investment property requires a lot of studies, planning, and budgeting. Not all deals are solid investments. We always recommend doing your research and take the help of a real estate investment counselor.

References

Market Data, Reports & Forecasts
https://okcmar.org/
https://okcmar.org/mls-dept-info/mls-statistics/
https://www.zillow.com/oklahoma-city-ok/home-values/
https://www.littlebighomes.com/real-estate-oklahoma-city.html
https://www.redfin.com/city/14237/OK/Oklahoma-City/housing-market
https://www.realtor.com/realestateandhomes-search/oklahoma-city_OK/overview
https://www.neighborhoodscout.com/ok/oklahoma-city/real-estate#description
https://okcfox.com/news/local/oklahoma-forward-riding-the-housing-market-roller-coaster-during-the-pandemic

Rental Trends
https://www.rentcafe.com/average-rent-market-trends/us/ok/oklahoma-city/
https://www.rentjungle.com/average-rent-in-oklahoma-city-rent-trends/

Low volatility
https://smartasset.com/mortgage/best-cities-first-time-homebuyers-2017
https://www.bestplaces.net/compare-cities/tulsa_ok/oklahoma_city_ok/people

Cost of living, including rents
https://www.numbeo.com/cost-of-living/compare_cities.jsp?country1=United+States&city1=Tulsa%2C+OK&country2=United+States&city2=Oklahoma+City%2C+OK

Landlord friendly
https://www.avail.co/education/laws/oklahoma-landlord-tenant-law

Core to Shore downtown redevelopment
https://newsok.com/article/5571657/major-players-in-oklahoma-citys-downtown-development-to-speak-dec.-4
https://www.okc.gov/government/maps-3/projects/downtown-convention-center

Slow multifamily housing permits
https://www.greateroklahomacity.com/subresources/economic-indicators/

The Portland housing market is still hot. Despite the economic slowdown caused by the pandemic, the Portland real estate market continues to connect buyers to sellers. Closed sales in 2021 have been on par with or higher than in the previous four years. In August 2021, over 3200 residential homes in Portland metro area changed hands, according to the latest report by the Portland Metropolitan Association of Realtors®. The median sale price increased by 17.4% from last year to $505,000. There’s a lot of competition among real estate buyers in Portland due to the extreme shortage of available homes for sale.

However, the most recent data shows that month-to-month price increases are decreasing. According to the most recent Regional Multiple Listing Service (RMLS) report, the median sale price in the Portland metro area decreased by $17,000, from $522,000 in July to $505,000 last month. That is a significant decrease. Although the Portland market remains competitive, buyers can take solace in the fact that there are fewer offers to contend with than there were earlier this year.

The new listings are coming up on the market but there are still fewer homes for sale in the Portland metro area. In a tight housing market like Portland, it can take some time to find a property that meets all of your criteria. If sales continue at the current pace, the 1.0 month of inventory of homes for sale reported in August indicates that it would take approximately four weeks to sell all available homes. When there are four to six months of inventory, a market is considered to be balanced between buyers and sellers.

According to Realtor.com, in August 2021, the median list price of homes in Portland, OR was $539K, trending up 6.8% year-over-year. The median listing price per square foot was $304. The median sale price was $539,800. Ideally, a buyer would prefer a sale to list price ratio that’s closer to 90% but homes sold for approximately the asking price on average (Sale-to-List Price Ratio: 100%).

This proves that Portland is a seller's market, which means that there are roughly more buyers than active homes for sale. Sellers benefit from higher buyer turnout and low inventory. Homes in Portland, OR sell after 42 days on the market on average. The trend for median days on market in Portland, OR has gone up since last month, and slightly down since last year. With housing inventory and interest rates at historic lows, both buyers and sellers can benefit from making the move in 2021.

Portland Housing Market Trends 2021 (Most Recent)

The Portland Metropolitan Association of Realtors® has released housing data for the Portland Metropolitan Area for August 2021. Portland is a seller's market, as evidenced by rising prices and declining inventory. Inventory of available residential homes is enough to last for 1.0 months at the current pace of sales. Despite reports of a slowdown, the average time for Portland metro residential properties to be on the market before receiving an acceptable offer dropped to 23 days last month. In August 2020, the average DOM was 41 days.

• The median sales price was $505,000, a decrease from the previous month ($522,000).
• The average sales price was $570,100, a decrease from the previous month ($593,100).
• No. of closed sales was 3,219, a decrease from the previous month (3,439).
• No. pending sales were 3,535, an increase from the previous month (3,354).
• New listings were 3,698, a decrease from the previous month (4,267).
• Months of inventory equaled 1.0, an increase from the previous month (0.9).
• The average no. of days on the market was 23, an increase from the previous month (20).

Portland Real Estate Market Forecast 2021-2022 (Latest Projection)

What are the Portland real estate market predictions for 2021 & 2022? In 2003, home prices began to grow at a significantly faster annual clip of 14.09% through mid-2006. This incredible growth ultimately proved unsustainable as home prices crashed in 2007, eventually bottoming out in 2012. Since then the Portland MSA has seen a strong average annual growth rate of 9.85%. The hot Portland housing market did cool dramatically for two years. Home price gains have been slowing since 2017. Two years back it saw an annual home price appreciation of nearly 10%. The pandemic has heated the Portland housing market gain.

As of now, Portland is a “seller's market” which means that there exists a limited supply of homes, and buyers are forced to compete often resulting in higher prices and/or quicker sales that tend to benefit sellers. That's the reason why Portland metro home values have gone up 19.9% over the 12 months and Zillow predicts they will continue to rise at the same pace in the next twelve months. If we look at Zillow's data since Sep 2011, the Portland metro home values have increased by nearly 122.8% and that's despite the market cooling off from 2017 to 2019.

Similar growth has been recorded by NeighborhoodScout.com. Their data also shows that Portland real estate appreciated by nearly 99.42% over the last ten years. Its annual appreciation rate has been averaging at 7.15%. This figure puts Portland in the top 10% nationally for real estate appreciation. During the latest twelve months, the Portland appreciation rate was nearly 10.07%, and in the latest quarter, the appreciation rate was 3.76%, which annualizes to a rate of 15.90%. These figures also predict that home prices in this region are expected to increase in the next twelve months.

Here is Zillow's home price forecast for Portland, Multnomah County, and Portland Metropolitan Area. The forecast is until August of 2022 and you can expect to see very strong home price gains.

• Portland-Vancouver-Hillsboro Metro home values have gone up 19.9% over the past year (current = $523,642) and the latest forecast is that they will rise 13.3%in the next twelve months.
• Portland home values have gone up 17.1% over the past year (current = $557,854) and the latest forecast is that they will continue to rise in the next twelve months.
• Multnomah County home values have gone up 17.3% over the past year (current = $521,728) and the latest forecast is that they will continue to rise in the next twelve months.

These numbers can be positive or negative depending on which side of the fence you are — Buyer or Seller? The Portland real estate market had strong economic support coming into 2021 from nearly every angle. “Portland does better than average in booms, worse in recessions,” says Portland City Economist Josh Harwood. He expects this to be no different given Portland's exposure to Asia, as they manufacture more things here and are, thus, more dependent on global markets.

While buyer activity continues to be robust, the decrease in the number of active listings indicates that new sellers are still not willing to put their homes on the market until the pandemic or its threat is completely over. Home sales have rebounded since June 2020 but inventory has decreased. With sellers taking their homes off the market, it has led to an inventory crisis. The demand is rising again and the market is going to remain heated in 2021.

In a balanced real estate market, it would take about five to six months for the supply to dwindle to zero. In terms of months of supply, the Portland housing market can become a buyer’s real estate market if the supply increases to more than five months of inventory. And that’s not going to happen. In August 2021, the month's supply of inventory for the Portland metro area dropped to 1.0 Months. Due to an unprecedented pandemic situation, the Portland housing market would remain a seller's real estate market. This is also confirmed by the recent forecast given by Zillow which favors sellers.

But do buyers have any advantage? For buyers in Portland, mortgage rates are at their lowest. Therefore, this is a good time for them to enter the market. If buyer demand eases in the coming winter season, we could see a positive influence on the low houisng inventory while at the same time seeing a negative impact on sales. Also, if listings linger on the market for longer, buyers have a special edge in negotiating sales prices.

As a result, Portland homebuyers who enter the market at this should have more options than usual when it comes to choosing a property. So they should take advantage of scooping up their favorite deals which otherwise are taken away by seasoned investors in the bidding wars. Whether you’re looking to buy or sell, timing your local market is an important part of real estate investment.

Real estate market forecasts given in this article are just an educated guess and should not be considered financial advice. Real estate prices are deeply cyclical and much of it is dependent on factors you can’t control. Many variables could potentially impact the value of a home in Portland in 2021 (or any other market) such as big changes in the distressed, new-construction, or luxury home segments. There are also a wide variety of economic and political factors that can and do impact real estate markets. Most of these variables are difficult to predict in advance. 

COVID-19 Pandemic Heated Up The Portland Housing Market

The real estate trends from last year show us that Portland's hot housing market was cooling off before the pandemic. The supply of homes remains low by historic standards. Despite the slowdown or cooling off, the home prices are still rising but not like two years back. The price rise has mainly been supported by rising incomes as Portland has seen a lot of job growth. The Portland housing market in Jan. and Feb. of 2020 was very strong, stronger than most had predicted.

We saw an increase in inventory and an even great increase of buyers to purchase. All signs pointed to a Portland real estate market surpassing expectations in 2020 and the first potential signs that the Portland housing market would (soon) end its cooling-off session. The median home prices fell for the first time in nearly 7 years. The year-over-year median home sale price dropped in January 2020 for the first time since February 2012 in metro Portland.

The month’s median sale price of $384,900 represented a 1.3 percent decline from a year earlier. It’s been nearly seven years since they fell on an annualized basis. The pandemic affected the Portland real estate market as well but the impact was much lesser, and it is on the recovery. Portland's strong economy kept it from crashing in the crisis. When COVID19 hit Oregon hard in March of 2020 the homebuyer turnout decreased massively. Starting in March, people began losing jobs at an alarming rate. Fewer homes went on the market.

In April 2020, things improved a bit. Buyer activity increased backed by about 40% over the previous month. Portland buyer traffic increased about 40% from March but it was still down about 30% from April of the previous year. Things improved further in May when pending sales and new listings surged in the Portland housing market. The average sale price in the Portland area dipped by a mere 0.8% to $467,500 in May compared to April 2020′s $477,400. The median sale price held steady from April ($424,000) to May ($425,000).

In May 2020, there was a 2.3 month supply of homes for sale, which was steady with April 2020′s 2.4 month supply but an increase from March 2020′s 1.8 month supply. Housing prices remained nearly stable but there was a massive drop in homebuyers and available inventory (homes for sale). Both sellers and buyers remained out of the market which led to a decrease in overall real estate activity in the spring season.

The latest report for May 2021 (give at the top) shows that prices are rising and inventory is declining. There aren't enough homes on the market to meet the demand increased by the pandemic.

Portland Real Estate Investment: Should You Invest in Portland?

Should you consider Portland real estate investment? Many real estate investors have asked themselves if buying a property in Portland is a good investment? You need to drill deeper into local trends if you want to know what the market holds for the year ahead. For a long time, we’ve been hearing how the major housing markets in the Pacific Northwest (like Seattle and Portland) have been on fire with fierce competition and a limited supply of properties.  The question is whether Portland would continue to be one of the hottest markets in the U.S. for real estate investment?

Well, the Portland housing market is currently undergoing some changes. Property appreciation had slowed considerably since 2017 but the pandemic has turned things back to the fast pace of appreciation. Portland is a very ethnically diverse large city and home to around 600,000 people. However, the Portland housing market, in reality, includes more than two million people who live in the Portland Metropolitan Area or Greater Portland—comprising Clackamas, Columbia, Multnomah, Washington, and Yamhill Counties in Oregon, and Clark and Skamania Counties in Washington.

The Oregon portion of the metropolitan area is the state's largest urban center. That makes Portland the second largest city in the Pacific Northwest. The real estate trends from 2017 show us that Portland's hot housing market has been cooling off. Despite the slowdown or cooling off, the home prices were still rising but not like three years back. The price rise has mainly been supported by rising incomes as Portland has seen a lot of job growth.

The pandemic has heated the market again. The supply of homes remains low by historic standards. It has reached critically low levels in 2021 leading to a price appreciation forecast of 18% for the next twelve months. Although this article alone is not a comprehensive source to make a final investment decision for Portland, we have collected evidence-based positive things for those who are keen to invest in the Portland real estate market in 2021 or 2022.

Let’s take a look at the number of positive things going on in the Portland real estate market which can help investors who are keen to buy an investment property in this city. And no, we’re not going to cite things like the TV show “Portlandia” or vague things like “it’s hip and diverse!”

Portland is a “Hot” Real Estate Market for Millennials

One of the major factors driving the Portland real estate market is the fact that the city is hot with Millennials. Nor is it just students coming to Portland driving up prices in the Portland housing market. They want to buy homes in a family-friendly, cultural city, something many cannot afford to do in California.

When a city sees people move there for work, this could include everyone from 25-year-old grads to 50-year-old mid-career professionals. The fact that the Portland real estate market is especially attractive to young adults trying to buy houses, means there will be a strong demographic momentum into the future as they start families, increasing the local population and the odds they’ll stay.

Portland Lacks Room to Grow Which Drives The Home Prices Up

One of the beautiful things about Portland is its proximity to the ocean and the mountains, while much of the area is covered in protected forests. The downside of this is that the city lacks room to grow the way many inland real estate markets do. Developers could tear down older buildings and build skyscrapers, but that’s expensive compared to going five miles down the highway and building a new suburban neighborhood.

Relative to the strong migration and income-driven demand, the supply is lagging in the entire Portland MSA. New housing permits have been among the slowest recovering economic indicators in the Portland MSA after bottoming out in 2012. Not only is the Portland MSA producing new buildings at a relatively slow rate, but also fewer homes are
available for sale than ever before.

The relative lack of room to grow keeps rents high in the Portland real estate market for both residents and commercial firms. While Portland residents complain about the rent, Silicon Valley’s insane rents are pricing firms out of San Francisco Bay Area, and enough have moved north to get the area called Silicon Forest. Google’s moved both people and jobs here.

Other tech firms followed suit, opening offices here, or simply relocated. Increased demand for housing guarantees higher rental rates and property values. Considering the affordability problems in San Francisco and Seattle, Portland’s relative cheapness is leading people to migrate from those cities—which has contributed to the population growth of Portland MSA.

Portland’s Relatively Affordable Housing Market

Work-life balance is better in Portland. An estimated 7% of the population in Portland telecommutes compared to 2.6% nationally. The city’s high walkability score and somewhat better traffic than California’s cities are other pluses, though many love the fact you can bike to work. Despite the recent surge in home prices, Portland remains among the cheapest major West Coast cities to buy a house. This is partly because home price levels have historically been lower in Portland than its neighbors, but also because Portland’s growth in home prices is average for these cities since 2010.

Places like San Francisco have had significantly higher rates of growth until 2015. With the combination of a strong job market with relatively lower house prices, Oregon, and the Portland MSA has among the nation’s highest rates of in-migration – which in turn increases the demand for housing. And the music scene and art museums – and the time and money to visit them – and it is no wonder so many Silicon Valley refugees move to Portland. That’s driving up rents and property prices in the Portland real estate market.

Portland's Strong Economic Factors

Two of the most fundamental economic indicators are employment and income. In terms of home prices, income, and employment indicate whether people can afford current and future increases. A report by Northwest Economic Research Center (NERC) forecasts employment in the Portland MSA will continue its strong recovery until reaching the rate of full employment indicating that buyers will continue to enter the housing market (assuming home prices are correctly valued).

Portland may have a growing tech sector, but the overall job market is growing rather quickly, too. Oregon experienced the fifth fastest-growing job market in the country between 2017 and 2018. When you look at only private employers, it came in second. Furthermore, most of those jobs are in big cities like Portland.

For example, when you look at logging and mining – traditional rural employers – Oregon only came in 9th in the U.S. This means many people are moving to Portland for work, whether or not they’re in the tech pool. In short, the wide range of jobs and growth in demand for labor are powering the Portland real estate market.

Portland's Massive Student Market For Rental Property Investment

There are more than three dozen private and public universities within 150 miles of Portland. The University of Oregon and Oregon Institute of Technology both have massive campuses here. Student enrollment for the STEM and IT programs is exploding because graduates are entering the hot tech market created by Silicon Valley refugee firms. This means there is a strong Portland housing market for students in the vicinity of multiple campuses. Compare that to places like College Station, Texas – your property values and rents depend on the attractiveness of the one main school to students.

Portland Rental Market Statistics: The average size for a Portland, OR apartment is 765 square feet. Studio apartments are the smallest and most affordable, 1-bedroom apartments are closer to the average, while 2-bedroom apartments and 3-bedroom apartments offer more generous square footage. The decreasing rents are due to a sudden economic slowdown caused by the pandemic this year. Before the impact of the pandemic, the average rent for an apartment in Portland was $1,499, a 1% increase compared to the previous year, according to RENTCafé.

More than 50% of the apartments can be rented for $1,500 or less while about 26% fall in the range of $1,500 t0 $2,000. 48% of the households in Portland, OR are renter-occupied while 51% are owner-occupied. That makes a huge population of renters. The median rent is close to $2,000 but only 12% of the apartments fall in that price range. The most expensive Portland neighborhoods to rent apartments in are Pearl District, Downtown, and Corbett-Terwilliger-Lair Hill.

As of September 16, 2021, the average rent for an apartment in Portland, OR is currently $1,425. This is a 2% increase compared to the previous year. Over the past month, the average rent for a studio apartment in Portland remained flat. The average rent for a 1-bedroom apartment increased by 2% to $1,425, and the average rent for a 2-bedroom apartment increased by 1% to $1,790.

• Two-bedroom apartment rents average $1,790 (a 5% increase from last year).
• Three-bedroom apartment rents average $2,495 (a 12% increase from last year).
• Four-bedroom apartment rents average $3,195 (a 10% increase from last year).

Portland's Better Business Climate

If you ask people and businesses why they relocated to Portland, one answer is the lower cost of living. Oregon is one of only five states in the nation that levies no sales or use tax. State government receipts of personal income and corporate excise taxes are contributed to the State's General Fund budget, the growth of which is controlled by State law. Oregon has property tax rates that are nearly in line with national averages. The effective property tax rate in Oregon is 1.04%, while the U.S. average currently stands at 1.08%.

Oregon is ranked number fifteen out of the fifty states, in order of the average amount of property taxes collected. It is ranked 16th of the 50 states for property taxes as a percentage of median income. Oregon's median income is $73,097 per year. The average home price in Portland Oregon is much lower than the average house costs in nearby cities like Seattle. The median property tax in Oregon is $2,241.00 per year for a home worth the median value of $257,400.00. Counties in Oregon collect an average of 0.87% of a property's assessed fair market value as property tax per year.

The exact property tax levied depends on the county in Oregon the property is located in. Oregon's Multnomah County, which encompasses most of the city of Portland, has property taxes near the state average. The county's average effective tax rate is 1.07%. To understand why Portland property taxes go up every year nearly regardless of real estate values, let’s take a quick look at how taxes are usually calculated. The standard way is to multiply the value of your home by the property tax rate for your area of the county—which is estimated by county assessors through in-person inspections and comparisons to similar, recently sold homes.

But Oregon’s system of property taxes was modified by a 1997 bill that uncoupled property taxes from the actual value of homes. Now, Oregon pegs the taxable value of a property to its 1995 property values, plus 3 percent a year thereafter. In 2019, we had a cooling real estate market but now the market conditions are neutral amid the pandemic. That means that your home’s value may stay the same this year, or even go down a little bit, as per the Oregon property taxation system, the value is still going up 3%.

In many areas, real home values have risen much faster but the assessed property value still has a long way to go to catch up to them. The caps have succeeded in keeping property taxes relatively predictable and far lower than if they rose in sync with their home value — the price homeowners could fetch for their house. According to Metro, the current average assessed value of a Portland home is just $231,000. 

In 2019, Oregonlive.com ranked Oregon counties by their effective tax rates — the amount of tax imposed per $1,000 of real market value across the entire county. This is an average, and individual homeowners within those counties might have dramatically different rates. Also, These numbers reflect the previous tax year (2018), the most recent for which figures were available from the Oregon Department of Revenue.

Portland metropolitan area comprises Clackamas, Columbia, Multnomah, Washington, and Yamhill Counties in Oregon, and Clark and Skamania Counties in Washington.

In Multnomah County, the average tax rate is $20.12 per $1,000 of assessed value, but the average homeowner is taxed $9.87 per $1,000 of real market value.

In Clackamas County, the average tax rate is $16.00 per $1,000 of assessed value, but the average homeowner is taxed $10.60 per $1,000 of real market value.

In Columbia County, the average tax rate is $13.32 per $1,000 of assessed value, but the average homeowner is taxed $9.40 per $1,000 of real market value.

In Washington County, the average tax rate is $17.07 per $1,000 of assessed value, but the average homeowner is taxed $10.88 per $1,000 of real market value.

In Yamhill County, the average tax rate is $15.21 per $1,000 of assessed value, but the average homeowner is taxed $10.52 per $1,000 of real market value.

Caveat: On Nov. 6, 2018, voters approved a million-dollar general obligation bond to create affordable housing for approximately 12,000 people in the greater Portland region. The total amount to be raised through property taxes is nearly $653 million over 30 years. Due to this property owners in the tri-county Portland area would pay the bond back through higher property taxes over the next 30 years.

In 2019, property taxes to pay for this bond went up by 24 cents per $1,000 in assessed value for Portland homes in each of the three counties. That comes out to about $60 for a home with an assessed value of $250,000. Although the region's average home market value is far higher than $250,000, the average home's assessed value was $231,000 in 2018.

Now coming to its business friendliness, various national surveys put Oregon in the middle of the pack. However, business friendliness is relative. Forbes Magazine came out with an article in mid-2018 describing how California is unsustainable. Infrastructure is crumbling, and they build trains to nowhere instead of roads and dams people need.

It is hard to run a water-dependent industry when they’re rationing water for homeowners soon. We already addressed taxes, but regulations are insane. The new California rule mandating that businesses have at least one woman on the board by the end of 2019 is merely the camel’s nose under the tent; they could start mandating ethnicity-based board membership, union, or employee representation on boards and board membership based on sexuality.

A business could try to solve this by going private, or they can move their headquarters to Oregon. It is certainly easier to move a business and team north to Portland where their salaries go further since the Portland real estate market is so much more affordable.

Portland is Relatively Landlord Friendly – For Small Landlords

There’s an interesting situation in the Portland real estate market. If you own a large apartment building, you’ll find the Portland area difficult to manage because it is so tenant-friendly. A small landlord with a single home for rent, though, is in a different category. People buying and renting out a single home in the Portland housing market will have a much easier time.

They don’t have to follow the same rules on renter protection like rental assistance payments if you evict someone without cause (like you’re going to rehab or sell the property). Rental rates for smaller landlords can go up more in accord with market rates instead of being capped at around 5%. Regardless of how many properties you own, Portland has only discussed rent control – and seen significant opposition to it.

Portland Investment Properties: Where To Invest?

In any property investment, cash flow is gold. The Portland real estate market is booming because the economy is doing well on its own and the area is head and shoulders above California’s deteriorating situation. The Portland housing market has experienced double-digit annual price growth in recent years. Home values rose 11.4% in 2016 alone, according to a report from the real estate data company Clear Capital. The home prices in the Portland, Oregon housing market have slowed considerably over the last few months. And that’s a good thing, from a sustainability standpoint.

Good cash flow from Portland investment property means the investment is, needless to say, profitable. A bad cash flow, on the other hand, means you won’t have money on hand to repay your debt. Therefore, finding the best investment property in Portland in a growing neighborhood would be key to your success. If you invest wisely in Portland's real estate, you could secure your future.

The less expensive the Portland investment property is, the lower your ongoing expenses will be. When looking for the best real estate investments in Portland, you should focus on neighborhoods with relatively high population density and employment growth. Both of them translate into high demand for housing.

The neighborhoods should be close to basic amenities, public services, schools, and shopping malls. A cheaper neighborhood in Portland might not be the best place to live in. A cheaper neighborhood should be determined by these factors – Overall Cost Of Living, Rent To Income Ratio, and Median Home Value To Income Ratio. It depends on how much you are looking to spend and if you are wanting smaller investment properties or larger deals in Class A neighborhoods.

Portland home prices are some of the most expensive in all of the United States. According to Realtor.com, there are 83 neighborhoods in Portland. Southwest Hills has a median listing price of $995K, making it the most expensive neighborhood. Powellhurst-Gilbert is the most affordable neighborhood, with a median listing price of $340K. Centennial is also an affordable neighborhood having a median listing price of $339,000.

Some of the most popular neighborhoods in Portland are Bethany, Southwest Hills, Hazelwood, Multnomah Village, Raleigh Hills, St. Johns, Eastmoreland, Lake Oswego, Laurelhurst, Downtown Portland, Tigard, Alameda, Cedar Hills, Montavilla, Hillsdale, Lents, Woodstock, and Kenton.

We recommend taking the help of the local real estate agents to find neighborhoods with an affordable entry price of homes, high appreciation forecast, and growing rent prices so that as an investor you can enjoy positive cash flow and nice profits. If housing supply meets housing demand, investors should not miss the opportunity since entry prices of homes remain affordable. Find neighborhoods that are most popular among renters.

Here are some of the best neighborhoods for buying Portland investment properties.

Portland’s Downtown is the most popular neighborhood for renters. Portland's compact, walkable downtown offers easy access to great food, green spaces, cultural offerings, and tax-free shopping. It has everything residents could need or want. According to RentCafe, downtown rents are lower than those in some of the more upscale neighborhoods in the city but the average apartment rate still hovers around $1,656, above Portland’s $1,431 average.

Goose Hollow is a neighborhood in southwest Portland, and it borders both the downtown area and Washington Park. Niche.com ranks it #6 in the list of “Best Neighborhoods to Live in Portland.” Living in Goose Hollow offers residents a dense urban feel and most residents rent their homes. There are a lot of bars, restaurants, coffee shops, and parks. Goose

It has a mixture of beautiful historic buildings and modern condos, plus a tried-and-true hub for sports fanatics and college students alike. The public schools are also highly rated. The median list price per square foot in Goose Hollow is $356, which is higher than the Portland average of $288. Apartments here go for $1,657 on average and the share of renters is about 67%.

University Park is another great neighborhood in Portland for investing in rental properties due to its large student population. It is located in North Portland and is bordered by Linton, Cathedral Park, and St. John's neighborhoods. University Park is home to one of the oldest schools in the area. There are beautiful homes and buildings and old-growth trees that make this a stunning neighborhood as well. It’s an excellent location for those looking to get away from the hustle and bustle of Portland.

According to Realestateagentpdx.com, homes in this neighborhood are more modest than in many other parts of the city, have fewer improvements, and are often cited as being among the least affordable locations in the city. Perfect for first-time homebuyers. The median home value in University Park is $474,950 (Zillow), and home values have gone up 1.4% over the past year.

Pearl District is expensive or a high-end area but the population of renters is more than 70%. It is Portland's most desirable neighborhood with virtually no crime. It features galleries and cultural institutions, as well as stylish shops and acclaimed eateries. It is Portland's top shopping destination. As the neighborhood is the priciest in the city, the apartments here rent for $1,911 on average, according to RentCafe. The median list price per square foot in Pearl District is $520 (Zillow), which is higher than the Portland average of $288.

St. Johns is one of the most popular neighborhoods in Portland for nature-lovers. It is a nature lover’s paradise, located in North Portland, on the western tip of the peninsula formed by the convergence of the Willamette and Columbia Rivers. St. Johns is described by locals as “extremely friendly.” It has several parks including Cathedral Park, Columbia Slough, Kelley Point Park, and Smith and Bybee Wetlands. All are within walking distance of residents. Like much of Portland, this is also an up-and-coming neighborhood that it’s still developing,

The median home value in St.Johns is $375,730 (Zillow), and home values have gone up 2.1% over the past year. The median list price per square foot in St.Johns is $258, which is lower than the Portland average of $288. The average rent in St. Johns is $1,359 (RentCafe), below both the national and city averages.

Here are the ten neighborhoods in Portland having the highest real estate appreciation rates since 2000—List by Neigborhoodscout.com.

1. N Williams Ave / N Alberta St
2. N Killingsworth St / N Interstate Ave
3. SW Naito Pky / W Burnside St
4. N Vancouver Ave / N Beech St
5. N Lombard St / N Interstate Ave
6. N Ainsworth St / N Interstate Ave
7. N Interstate Ave / N Going St
8. NE 15th Ave / NE Alberta St
9. Piedmont
10. N Vancouver Ave / N Lombard St

Buying or selling real estate, for a majority of investors, is one of the most important decisions they will make. Choosing a real estate professional/counselor continues to be a vital part of this process. They are well-informed about critical factors that affect your specific market areas, such as changes in market conditions, market forecasts, consumer attitudes, best locations, timing, and interest rates.

NORADA REAL ESTATE INVESTMENTS has extensive experience investing in turnkey real estate and cash-flow properties. We strive to set the standard for our industry and inspire others by raising the bar on providing exceptional real estate investment opportunities in many other growth markets in the United States. We can help you succeed by minimizing risk and maximizing the profitability of your investment property in Portland.

Consult with one of the investment counselors who can help build you a custom portfolio of Portland turnkey properties. These are “Cash-Flow Rental Properties” located in some of the best neighborhoods of Portland.

Not just limited to Portland or Oregon but you can also invest in some of the best real estate markets in the United States. All you have to do is fill up this form and schedule a consultation at your convenience. We’re standing by to help you take the guesswork out of real estate investing. By researching and structuring complete Portland turnkey real estate investments, we help you succeed by minimizing risk and maximizing profitability.

Apart from Portland, you can also invest in many other real estate markets which are equally good for investors. Bend is a small city in Oregon. It is nestled on the edge of the Cascade Range and the shore of the Deschutes River. It is a verdant spot in the High Desert. It sounds like a wonderful place to visit. Home prices in the Bend real estate market have gone up by 5.7% over the past year. The median home value is $475,132.

Oregon is bounded to the north by Washington state, from which it receives the waters of the Columbia River; to the east by Idaho, more than half the border with which is formed by the winding Snake River and Hells Canyon; to the south by Nevada and California.

If you head to the south, go for the Las Vegas real estate market. It is as hot as the desert heat in Nevada. Las Vegas is in the top 10% nationally for real estate appreciation. Las Vegas real estate has appreciated by 99.29% over the last 10 years. The Las Vegas real estate market is entirely brimming with new businesses. It isn’t just about casinos, medicine is a growing industry as well.

The University of Las Vegas and Zappo’s, the internet shoe store, is also based in Vegas. Its friendly business environment is propping up the economy and helping towards the positive Las Vegas real estate trends. The new businesses are propping up at a much faster rate than the national average.

Investing in a Las Vegas Property is a great option as Las Vegas has very low investment property taxes and no personal income tax. The average effective property tax in Las Vegas (Clark County) is 0.70%, slightly higher than the statewide average, but still significantly lower than the national average. The state’s average effective property tax rate is just 0.69%, which is well below the national average of 1.08%.

If you choose the nearby state of Washington, then we'd recommend the Spokane real estate market. Spokane is the second-largest city in Washington State. It is sited on the Spokane River in the foothills of the Rocky Mountains. The population of Spokane is around two hundred thousand. However, the Spokane real estate market includes the broader metropolitan area that is home to nearly 600,000 people. There is a high housing demand in the market and the current supply equals 1.2 months. The median home value in Spokane is $264,212 and home values have gone up 13.1% over the past year.

Let us know which housing markets you consider hot for real estate investing?

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Please do not make any real estate or financial decisions based solely on the information found within this article. Some of the information contained in this article was pulled from third-party sites mentioned under references. Although the information is believed to be reliable, Norada Real Estate Investments makes no representations, warranties, or guarantees, either express or implied, as to whether the information presented is accurate, reliable, or current. All information presented should be independently verified through the references given below. As a general policy, Norada Real Estate Investments makes no claims or assertions about the future housing market conditions across the US. This article aimed to educate investors who are keen to invest in Portland real estate. Purchasing an investment property requires a lot of studies, planning, and budgeting. Not all deals are solid investments. We always recommend doing your research and take the help of a real estate investment counselor.

References:

Market Data, Reports & Forecasts
https://pmar.org/shareables/
https://www.oregonlive.com/
https://realestateagentpdx.com/category/portland-real-estate-market-news
https://www.littlebighomes.com/real-estate-portland-or.html
https://www.realtor.com/realestateandhomes-search/Portland_OR/overview

Impact of Covid-19 & Recovery
https://realestateagentpdx.com/portland-real-estate-market-spring-2020-covid-19-update/17320
https://www.oregonlive.com/realestate/2020/06/portland-area-housing-market-pending-sales-new-listings-surge-in-may.html

Rental Statistics for apartments
https://www.rentcafe.com/average-rent-market-trends/us/or/portland/
https://www.rentjungle.com/average-rent-in-portland-or-rent-trends/

Best Neighborhoods
https://www.neighborhoodscout.com/or/portland/real-estate
https://www.rentjungle.com/portland-or-apartments-and-houses-for-rent/
https://www.rentcafe.com/blog/apartment-search-2/neighborhood-guides/portlands-best-neighborhoods-for-renters/

Foreclosures
https://www.realtytrac.com/statsandtrends/or/multnomah-county/portland

Oregon Tax Rates & Way of Computing
http://www.tax-rates.org/oregon/property-tax
https://smartasset.com/taxes/oregon-property-tax-calculator
https://realestateagentpdx.com/portland-property-taxes-to-rise-in-2020/16247
https://www.oregonlive.com/news/erry-2018/10/7273fa75401636/property-tax-rates-in-oregons.html

Top Reasons to Invest in Portland
https://www.entrepreneur.com/article/273822
https://www.oregonbusiness.com/article/item/16045-is-oregon-good-for-business
https://www.cnbc.com/2015/05/14/water-millennials-drive-portland-oregon-housing.html
https://www.oregonlive.com/politics/index.ssf/2017/02/portlands_tina_kotek_explains.html
https://www.oregonlive.com/portland/index.ssf/2014/07/how_friendly_is_oregon_portlan.html
https://www.pdx.edu/nerc/sites/www.pdx.edu.nerc/files/The%20State%20of%20the%20Portland%20Housing%20Market.pdf
https://www.business2community.com/brandviews/upwork/why-silicon-valley-techies-are-rushing-to-the-pacific-northwest-02076366
https://www.forbes.com/sites/thomasdelbeccaro/2018/04/19/the-top-four-reasons-california-is-unsustainable/#6f1366cd3a23
https://www.portlandmercury.com/news/2018/01/24/19626335/portlands-small-time-landlords-dont-have-to-follow-renter-protections

If you are looking at buying a house in Cleveland you must read till the end. Cleveland is often looked at as a has-been market. However, its turnaround has created several opportunities for investors and residents alike. The Cleveland housing market is rebounding. All indicators point to growing income, a solid job market, and increasing home values in Ohio. The Cleveland real estate market prediction is positive — investors and home buyers will reap benefits when considering the city and its suburbs over the next few years.

According to Realtor.com's latest report, Cleveland is one of the top U.S. markets for new listings. Cleveland saw an increase of 35.8 percent in the number of homes listed for sale. That ranked third among the country's 50 largest metro areas, with Columbus, Ohio leading the way with 42.9 percent, followed by Baltimore with 36.9 percent.

In August 2021, the median list price of homes in Cleveland, OH was $113K, trending up 3.7% year-over-year. The median listing price per square foot was $68. The median sale price was $123.5K. Homes in Cleveland, OH sold for approximately the asking price on average in August 2021. On average, homes in Cleveland, OH sell after 56 days on the market.

Cleveland Housing Prices, Trends, and Forecasts

The FMHPI provides a measure of typical price inflation for houses within the United States for the state, national, and Metropolitan Statistical Areas. The current Freddie Mac House Price Index for Cleveland–Elyria Metropolitan Statistical Area (MSA) is 152.21 (June 2021).

• June 2011 HPI: 88.4
• 10-year change in home prices: 72.2%
• June 2020 HPI: 130
• Annual House Price Appreciation: 17.1%
• May 2021 HPI: 150.1
• Monthly change in home prices: 1.4%

Here's the July 2021 Market Report for Cuyahoga County released by the Akron Cleveland Association of REALTORS®. Cleveland is a seller's real estate market. Months Supply of Inventory is 1.3 months. It refers to the number of months it would take for the current inventory of homes on the market to sell given the current sales pace. Six months of supply has historically been associated with moderate price appreciation, while a lower level of months' supply tends to accelerate price increases.

• Total homes sold in Cuyahoga County were 1,762, down 0.5% from 1,770 in July 2020.
• In July 2021, the median sales price in Cuyahoga County was $188,000.
• The average sales price was $240,884.
• The average sales price per sq. ft. was $129.
• The average list price was $240,884, down 1.7% from $300,184 in July 2020.
• Pending sales in July were 2,517.
• Homes are typically seeing offers accepted faster than a year ago.
• The median days on market is 29 days.
• New listings were up 11.8% compared to July 2020.
• Active listings were down 8.7% compared to July 2020.
• Months Supply of Inventory is 1.3 months.

Data by Redfin, a real estate company, shows that the Cleveland housing market is somewhat competitive. Homes in Cleveland receive 5 offers on average and sell in around 20 days. In August 2021, Cleveland's home prices were up 19.8% compared to last year, selling for a median price of $125K. On average, homes in Cleveland sell after 25 days on the market compared to 34 days last year. Hot homes can sell for about 7% above the list price and go pending in around 7 days. There were 405 homes sold in August this year, up from 400 last year.

Cleveland Rental Market Trends

Cleveland has a mixture of owner-occupied and renter-occupied housing. The average rent for a 1-bedroom apartment in Cleveland, OH is currently $1,343. This is a 12% increase compared to the previous year. Over the past month, the average rent for a studio apartment in Cleveland increased by 2% to $925. The average rent for a 1-bedroom apartment increased by 3% to $1,343, and the average rent for a 2-bedroom apartment increased by 13% to $1,475.

• The average rent for a 2-bedroom apartment in Cleveland, OH is currently $1,475. Compared to last year, the average rent price has remained flat.
• The average rent for a 3-bedroom apartment in Cleveland, OH is currently $1,000. This is a 5% decrease compared to the previous year.
• The average rent for a 4-bedroom apartment in Cleveland, OH is currently $1,073. This is a 13% increase compared to the previous year.
• The most expensive neighborhoods in Cleveland are Glenville, Downtown Cleveland, Hough, Ohio City, and University.

Cleveland Real Estate Market Forecast 2021-2022

What are the Cleveland real estate market predictions for 2021 & 2022? Let us look at the price trends recorded by Zillow over the past few years. Cleveland has a record of being one of the best long-term real estate investments in the U.S. The Cleveland metropolitan area, or Greater Cleveland as it is more commonly known, is the metropolitan area surrounding the city of Cleveland in Northeast Ohio, United States. The five-county Cleveland–Elyria Metropolitan Statistical Area (MSA) consists of Cuyahoga County, Geauga County, Lake County, Lorain County, and Medina County, and has a population of over 2 million.

Since Sep 2011, the Cleveland–Elyria Metro home values have appreciated by nearly 60.4% — Zillow Home Value Index. ZHVI represents the whole housing stock and not just the homes that list or sell in a given month. The typical home value of homes in Greater Cleveland is currently $197,278. It indicates that 50 percent of all housing stock in the area is worth more than $197,278 and 50 percent is worth less (adjusting for seasonal fluctuations). The typical value of homes in Cleveland (City) is $96,455, up 28.6% over the past year.

In Sep 2020, the typical value of homes in Greater Cleveland was around $169,000. Home values have gone up 18.1% over the past year alone. Cleveland is a hot seller’s real estate market as there exists a limited supply of homes, and buyers are forced to compete often resulting in higher prices and/or quicker sales that tend to benefit sellers. In other words, the 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. Also, in a balanced real estate market, it would take about six months for the supply to dwindle to zero. In terms of housing supply, the Cleveland market can tip to favor buyers if the supply increases to more than six months of inventory. And that's not going to happen soon.

The Cleveland real estate market remains strong to favor sellers, due to persistent imbalance in supply and demand. The real estate appreciation rate in Cleveland in the latest quarter was around 2.27%, which equates to an annual appreciation rate of 9.41%. Relative to Ohio, NeighborhoodScout's data shows that Tampa's latest annual appreciation rate is higher than 80% of the other cities and towns in Ohio. However, even small changes in the appreciation rate can change the long-term value of buying considerably.

Here is the housing forecast for Cleveland, Cuyahoga County, and Cleveland MSA. The home appreciation has been incredibly strong over the past year.

• Cleveland–Elyria Metro home values have gone up 18.1% over the past year and Zillow predicts they will rise 12.1% over the next 12-months.
• Cleveland home values have gone up 28.6% over the past year (current = $96,455) and will continue to rise over the next twelve months.
• Cuyahoga County home values have gone up 20.7% over the past year (current = $180,455) and will continue to rise over the next twelve months.
• Lorain County home values have gone up 15.6% over the past year (current = $192,169) and will continue to rise over the next twelve months.
• Medina County home values have gone up 14.5% over the past year (current = $267,924) and will continue to rise over the next twelve months.

Cleveland Real Estate Investment Overview

Should you buy investment property in Cleveland? Looking for a home in Cleveland? These up-to-date Cleveland real estate statistics and trends will help you make smart investing decisions. You need to drill deeper into local trends if you want to know what the Cleveland market holds for the year ahead. We have already discussed the Cleveland housing market trends & forecasts for answers on why to put resources into this sizzling market. Cleveland is home to just under 400,000 people. The larger metropolitan area is home to roughly two million people.

That makes the Cleveland real estate market the 32nd largest in the country. If you include the Cleveland-Akron-Canton metro area, there are three and a half million people in the “combined statistical area”, making it the 15th largest metropolitan area in the United States. This century-old city was once a major manufacturing center. It is reinventing itself as a medical and BioMed hub. Home prices in Cleveland have been trending up 8.6% year-over-year.

As per the data from the real estate company called Neigborhoodscout.com, single-family detached homes are the single most common housing type in Cleveland, accounting for 46.56% of the city's housing units. Other types of housing that are prevalent in Cleveland include duplexes, homes converted to apartments or other small apartment buildings ( 26.01%), large apartment complexes or high-rise apartments ( 20.51%), and a few row houses and other attached homes ( 6.23%).

Just four miles from Downtown Cleveland, the University Circle has long been a diverse and appealing mix of single-family homes and apartments. This area of the city has the flavor of a quaint college campus. Given that area amenities are within walking distance, there is a lot of foot and bike traffic, which lends to its charm. The area is one of the largest employment centers in the entire state. People in Cleveland primarily live in small (one, two, or no bedroom) single-family detached homes.

Here are the top reasons to invest in Cleveland real estate.

• Top 10 Job Market for New College Graduates (CNN)
• Presence by 70% of Fortune 500 comp.
• More than 400 bioscience companies.
• Two new Amazon distribution centers.
• Over 120,000 healthcare professionals.
• Home to 27 area colleges & universities.
• Home to four professional sports teams.

Positive Demographic Trends

Cleveland’s population is stable at around 400,000 residents. It is doing a decent job of retaining its young people. Why is that something to bring up when discussing the Cleveland housing market? Because it is right next to Detroit, a city that has been shedding people for decades. The Cleveland real estate market is thus bolstered by steady to slow growth, though specific neighborhoods are seeing spikes in their valuations as new employers and attractions move in.

The Bright Future of Good Paying Research Jobs

Cleveland has invested in healthcare and bio-science business accelerators like Bio-Enterprise and the Global Center for Health Innovation. They expect institutions like this to lead to new healthcare advancements provided first in Cleveland and in the hope that discovered drugs and technology will be manufactured in Cleveland. Investors can find affordable investment properties for development and either sale or rental to people working at these facilities. In fact, Cleveland’s Health-Tech Corridor is a prime place for high-tech companies, while the Cleveland real estate market is booming around these businesses.

Downtown Brownfield Re-Development

Cleveland is intentionally redeveloping a number of brownfield industrial sites to create multi-use properties. For example, the Terminal Tower is being turned into a combination shopping and entertainment district. The Cleveland Gateway project is going to turn 65 acres into a densely populated urban neighborhood, mixing multi-family housing with trails, a marina, and an urban park. If you can’t invest directly in this redevelopment project, note that single-family and multifamily housing stock around the new units will go up in value as new infrastructure is built.

Significant redevelopment is occurring along the thoroughfare running from East 55th Street to East 105th Street. Given that it is right off Interstate 490 and connects with downtown streets like Quincy and Chester Avenue, this is an excellent place to buy a property that is going to go up in value. When you know that better streets and traffic management along with improved public transit will go into an area, it is a safe bet for investing in the Cleveland real estate market.

The nucleus is another downtown redevelopment project that seeks to bring mixed-use real estate to depressed areas. The nucleus is centered around two million square feet of retail, residential, and office space, though there will be around 500 residential units. If you want to invest in the Cleveland real estate market, consider buying and rehabbing housing for those who will work in NuCleus but couldn’t get one of the apartments or condos.

University Circle & The Western Rim

University Circle is one of the hottest neighborhoods in Cleveland. It is seeing a wave of high-end condos and apartments. If you can find single-family rentals or multi-family housing in the vicinity, snap it up. These are among the most desirable properties in the Cleveland housing market. We know that when they were willing to turn a former Children’s Museum into an apartment building.

The Western Rim of Cleveland hasn’t been overlooked in the rush to redevelop downtown and the Biotech corridor. Projects worth an estimated 350 million dollars have been proposed or are actually under construction between West 25th and West 117th streets. A business incubator has been proposed for the Western Rim. The Cleveland housing market on the west side should see significant growth as new businesses pop up here. The luxury rentals built in the Near West Side are probably only the start of this area’s resurgence.

The Redeveloped Lakeshore

Cleveland sits on the southern shore of Lake Erie. Cleveland is redeveloping its long waterfront district. The fifty-year plan has already resulted in mixed-use development between West 3rd and East 18th streets. Redevelopment includes rehabilitating waterfront infrastructure like bridges, canals, and “made land”. Reinvented lakeside trails create desirable areas that will command a premium on the Cleveland real estate market. Euclid has already demonstrated this with their lakefront project and main waterfront park. Newly opened areas like the one created by the demolition of the FirstEnergy coal fire plant are to be seen as opportunities to reinvent the Cleveland real estate market.

A New Lease on Life for Old Buildings

The Cleveland housing market is so hot that they’re turning old commercial buildings into new residential spaces. A classic example of this is the former Huntington Bank Building; it is currently known as the 925 Building. The commercial building will be transformed into a mixed-use building with office space, retail space, a Hilton hotel, and 600 apartments.

Catering to the New Medical Talent

While there are Americans who worship Canada’s single-payer healthcare system, the reality is that millions of Canadians come to the United States each year. Some were denied care by their government, while many simply don’t want to wait months for a procedure, so they choose to pay cash at U.S. hospitals. Cleveland is building medical facilities to cater to these medical tourists. And these doctors, nurses and medical specialists are buying homes close to work, whether it is at the world-renowned Cleveland Clinic or the hospital down the street.

Another variation of this strategy is buying property in the Cleveland housing market that caters to medical school students. Case Western Reserve University and the Cleveland Clinic Lerner College of Medicine see many students from around the world who come to the area for one to five years to attend before leaving to practice elsewhere. (The Lerner College is a five-year tuition-free medical school).

Summary

If you are a home buyer or real estate investor, Cleveland real estate investment definitely has a track record of generating one of the best long-term returns in the U.S. through the last ten years. Cleveland is a notable exception to the decline of the Rust Belt cities. It has managed to reinvent itself, shifting from classic manufacturing to biotech and medicine. In the process, it has maintained its population and has strong potential for growth both economically and demographically.

There are over 590 schools in Cleveland, OH. There are 238 elementary schools, 154 middle schools, 84 high schools, and 121 private & charter schools. There are over 105 neighborhoods in Cleveland. Some of the best neighborhoods in or around Cleveland, Ohio are Old Brooklyn, Parma, and Euclid. The Bay Village area is a highly desirable suburb of Cleveland, Ohio.

Cleveland Magazine rated it the number one suburb to nest in, citing low crime, increasing home values, and great schools. Bay Village retained these positive elements even during the recession. Tremont has a median listing price of $320K, making it the most expensive neighborhood. Mount Pleasant is the most affordable neighborhood, with a median listing price of $60K.

Here are the 10 highest appreciation neighborhoods in Cleveland since 2000 (List by Neigborhoodscout.com).

1. W 25th St / Walton Ave
2. W 7th St / Marquardt Ave
3. Detroit Ave / W 25th St
4. Castle Ave / Scranton Rd
5. Route 422 / Broadway Ave
6. W 6th St / Literary Rd
7. Detroit Ave / U.S. Route 6
8. Euclid Ave / E 55th St
9. City Center
10. Lake Ave / Detroit Ave

Buying an investment property is different from buying an owner-occupied home. Our Cleveland investment properties are designed to make money as rentals, which means you must look at it solely as an income-producing entity just like any other business. These are “Turnkey Cash Flow Investment Properties” located in some of the best neighborhoods of Cleveland.

Another market that we suggest is the housing market in Iowa City. While the Iowa City real estate investment market is not overheated or exciting, it offers strong fundamentals like a large rental population relatively immune to rental rates. It will see slow, steady growth in property values and rental rates for years to come.

Investors in hot real estate markets have to wonder if the appreciation and rental increases will stop when a wave of new inventory hits the market. The Iowa City housing market does not face this problem. Instead, demand for the existing Iowa City housing market remains steady while the supply is constrained by a lack of construction. Replacing homes that flooded or burned down does not bring new inventory to a slowly growing market.

Another market that we suggest is the housing market in New Orleans, LA. New Orleans is a bit pricey for an average investor to make good returns and it involves strategic planning. However, it offers a good combination of short-term renters like students and tourists and a permanent population of renters who cannot afford to buy homes. Geography and market forces limit housing supply, keeping home values and rents stable.

Airbnb was legalized in the New Orleans real estate market in 2016 and it’s been growing quite well since then. Therefore, you can choose to invest in Airbnb rentals in New Orleans and earn a steady rental income. The upfront cost of running an Airbnb business is not much as you do not need to own a rental property. However, if you want, you can buy a rental property in New Orleans for an Airbnb investment. Unlike big cities like New York, the regulations on short-term rentals in New Orleans are not very tight, though there is some criticism from opponents about the leniency of these laws.

Whether you are a beginner or a seasoned pro you probably realize the most important factor that will determine your success as a Real Estate Investor is your ability to find great real estate investments. Buying in a market with increasing prices, low interest, and low availability requires a different approach than buying in a cooler market.

We strive to set the standard for our industry and inspire others by raising the bar on providing exceptional real estate investment opportunities. We can help you succeed by minimizing risk and maximizing profitability. We recommend asking for a FREE Strategy Session by clicking here. One of our investment specialists will get in touch with you to discuss all facets of searching for, buying, and owning a turnkey investment property.

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Remember, caveat emptor still applies when buying a property anywhere. The information contained in this article was pulled from third-party sites mentioned under references. Although the information is believed to be reliable, Norada Real Estate Investments makes no representations, warranties, or guarantees, either express or implied, as to whether the information presented is accurate, reliable, or current. All information presented should be independently verified through the references given below. As a general policy, Norada Real Estate Investments makes no claims or assertions about the future housing market conditions across the US.

References

Market Data, Trends & Statistics
https://www.zillow.com/cleveland-oh/home-values/#
https://www.redfin.com/city/4145/OH/Cleveland/housing-market
https://www.neighborhoodscout.com/oh/cleveland/real-estate
http://www.freddiemac.com/research/indices/house-price-index.page
https://www.realtor.com/realestateandhomes-search/Cleveland_OH/overview
https://www.movoto.com/guide/cleveland-oh/cleveland-real-estate-market-trends

Lerner College
https://atlantisglobal.org/blog/2017/11/21/get-paid-in-medical-school-my-journey-to-the-cleveland-clinic-lerner-college-of-medicine

Brownfields / urban redevelopment
https://www.calthorpe.com/content/cleveland-gateway-redevelopment-plan

The Opportunity Corridor
http://www.freshwatercleveland.com/features/SevenProjects022317.aspx

University Circle
http://www.freshwatercleveland.com/features/SevenProjects022317.aspx

Waterfront
http://planning.city.cleveland.oh.us/lakefront/cpc.html
https://www.cleveland.com/architecture/index.ssf/2017/11/euclid_close_to_building_lakef.html
http://www.news-herald.com/lifestyle/20170602/clevelands-lakefront-parks-are-stable-flourishing

The Western Rim
http://www.crainscleveland.com/article/20170507/news/170509850/clevelands-western-rim-embarks-development-boom

Biomedical hubs and hospitals
http://www.theglobalcenter.com/about-us
https://newsroom.clevelandclinic.org/2018/07/11/luye-medical-collaborates-with-cleveland-clinic-to-pioneer-value-based-healthcare-in-china