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Sacramento Housing Market: Prices, Trends, Forecast 2023

June 5, 2023 by Marco Santarelli

Sacramento Housing Market

The Sacramento housing market has been a topic of great interest for homeowners, real estate agents, and investors alike. In this report, we will delve into the latest data and statistics to provide an overview of the market's performance in April 2023. We will examine the median sold price of existing single-family homes, as well as the sales trends in comparison to the previous month and the same period last year.

Median Sold Price of Existing Single-Family Homes:

According to the California Association of Realtors®, the median sold price of existing single-family homes in Sacramento County during April 2023 was $515,000. This represents a 3.0% increase compared to the previous month's median price of $500,000. However, it is essential to note that the median sold price has experienced a year-over-year decline of 9.6%, as the price in April 2022 stood at $570,000.

Sales Trends:

The number of home sales in Sacramento County has seen some fluctuations in recent months. In April 2023, the sales volume dropped by 6.6% compared to March 2023. This decline is indicative of a slowdown in the market activity during this period. Furthermore, when compared to April 2022, there has been a significant decline of 40.4% in home sales.

Price MTM% Chg and Price YTY% Chg:

The month-to-month percentage change in the median sold price shows a positive trend, with a 3.0% increase from March to April 2023. However, the year-over-year percentage change reveals a decline of 9.6%, reflecting the overall downward price movement in the housing market over the past year.

Sales MTM% Chg and Sales YTY% Chg:

The month-to-month sales percentage change demonstrates a decrease of 6.6% from March to April 2023. This decline indicates a slowdown in buyer demand and market activity during this period. Additionally, the year-over-year sales percentage change highlights a significant drop of 40.4%, indicating a notable decrease in sales volume compared to April 2022.

Is Sacramento a Seller's Housing Market in 2023?

The following Sacramento housing market trends are based on single-family, condo, and townhome properties listed for sale on realtor.com. Land, multi-unit, and other property types are excluded.

Median Listing Home Price and Sale-to-List Price Ratio

As of April 2023, the median listing home price in Sacramento County, CA stands at $540,000, which reflects a -1.8% decrease compared to the previous year. Additionally, the median listing home price per square foot is reported to be $322. However, it's essential to consider the sale-to-list price ratio, which indicates how close homes are selling to their listed prices. In Sacramento County, CA, homes have been selling for approximately the asking price on average, with a sale-to-list price ratio of 100%.

Median Days on the Market

Another crucial factor to examine is the median days on the market, which provides insight into the speed at which homes are being sold. In Sacramento County, CA, homes typically sell after an average of 26 days on the market. It's worth noting that the median days on the market have decreased since the previous month, indicating a trend of faster sales. However, compared to the previous year, the median days on the market have seen a slight increase.

Based on the data and market indicators, it can be concluded that Sacramento County, CA is currently a seller's market in 2023. With a median listing home price of $540,000 and homes selling at the asking price on average, sellers have an advantage in this market. The median days on the market have decreased since the previous month, indicating a trend of faster sales.

However, compared to the previous year, there has been a slight increase in the median days on the market. With a substantial number of homes available for sale and a range of rental options, prospective buyers and renters in Sacramento County have various opportunities to find a suitable property.

Sacramento Single Family Housing Market

Below is the latest monthly report of the Sacramento housing market released by the Sacramento Association of REALTORS®. The report shows key housing metrics of Sacramento County and the City of West Sacramento for April 2023.  The Sacramento housing market for single-family homes in April 2023 saw some interesting trends, with changes in sales volume, sales price, listing inventory, and days on the market.

Sales Volume

In April, there were a total of 850 closed sales, indicating a 6.2% decrease compared to the previous month's figure of 906 sales. However, when compared to April 2022, there was a significant decline of 41.2% in sales volume, with only 850 sales as opposed to 1,464 sales. Of the sales made in April 2023, conventional financing accounted for 65%, while cash and FHA financing both represented 13.2% of the sales.

Sales Price

The median sales price for single-family homes in Sacramento showed a positive trend in April. There was a 2.9% increase in the median sales price, rising from $500,500 to $515,000. However, when compared to April 2022, there was an 8.9% decrease in the median sales price, which stood at $565,500. The median sales price represents the midpoint, with exactly half of the monthly sales above this price and half below it.

Listing Inventory

The number of homes available for sale, also known as listing inventory, experienced a 19.3% increase from March to April, rising from 879 units to 1,049 units. However, in comparison to April 2022, there was a decline of 21.8% in inventory, which stood at 1,342 units. The Months of Inventory, a metric indicating the time it would take to deplete the active listing inventory at the current sales rate, increased from 1 month to 1.2 months.

Days on Market

The median Days on Market (DOM) metric provides insights into how quickly homes are selling. In April 2023, the median DOM decreased from 16 to 11 days. This indicates that homes were spending less time on the market compared to the previous month. However, when compared to April 2022, there was an increase from 7 DOM to 11 DOM. Of the 850 sales made in April, 72.5% (616) were on the market for 30 days or less, while 81.7% (694) were on the market for 60 days or less.

Sacramento Housing Market Forecast 2023-2024

The Sacramento housing market has experienced fluctuations over the past year, with changes in home values, market forecasts, and key market indicators. Let's explore the current state of the market and the forecast for the near future.

Average Home Values

According to Zillow, as of April 30, 2023, the average home value in the Sacramento-Roseville-Arden-Arcade area is $556,683. This reflects a 5.8% decrease over the past year, indicating a slight decline in home values. It's important to note that these values are based on historical data up to April 30, 2023, and may be subject to change as market conditions evolve.

1-Year Market Forecast

The market forecast for the Sacramento housing market indicates a projected increase of 0.8% in home values over the next year. While there has been a slight decrease in home values in the past year, the forecast suggests a positive trend in the near future. However, it's crucial to consider that market forecasts are estimates based on various factors and may not guarantee precise outcomes.

Market Indicators

Several market indicators provide valuable insights into the Sacramento housing market. The median sale-to-list ratio, as of March 31, 2023, is reported as 0.992. This ratio suggests that, on average, homes in the area sell very close to their listed prices. Additionally, 31.3% of sales in March 2023 were made over the list price, indicating a competitive market environment. Conversely, 53.9% of sales were made under the list price, suggesting that some buyers may have negotiated discounts.

Days to Pending

The median number of days for a home in Sacramento to go pending, as of April 30, 2023, is 12 days. This means that, on average, homes in the area receive offers and enter the pending stage within a relatively short time frame. A low median days to pending metric can indicate a fast-paced market with high buyer demand and limited housing inventory.

The Sacramento housing market has experienced a decline in home values over the past year. However, the market forecast suggests a potential rebound in the near future, with a projected increase in home values. Market indicators such as the sale-to-list ratio and the percentage of sales over or under the list price reflect the competitiveness of the market and the dynamics between buyers and sellers.

Sacramento Real Estate Market Forecast
Credits: Zillow.com

Is Buying a House in Sacramento a Good Investment?

Should you consider Sacramento real estate investment? Now that you know where Sacramento is, you probably want to know why we’re recommending it to real estate investors. Investing in real estate is touted as a great way to become wealthy. Many real estate investors have asked themselves if buying a property in Sacramento 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.

Let’s talk a bit about Sacramento. Sacramento is the capital of California, though many mistakenly think it is L.A. or another larger city. Sacramento is a minimally walkable city in Sacramento County with a population of approximately just over half a million people. It is overshadowed by bigger, glitzier cities like San Francisco or Los Angeles. When you take suburbs like Yuba City, Truckee, Roseville, and South Lake Tahoe into account, the Sacramento real estate market contains around two million people. However, size isn’t reason enough to invest in any real estate market.

The rise and fall of Detroit and the current decline of other rust belt cities are testaments to this. The city of Sacramento has a mixture of owners and renters, with 47.12% owning and 52.88% renting. According to Neigborhoodscout.com, a real estate data provider, three and four-bedroom single-family detached homes are the most common housing units in Sacramento. Other types of housing that are prevalent in Sacramento include duplexes, rowhouses, and homes converted to apartments. Sacramento has more renter-occupied housing accounts as compared to owner-occupied.

Single-family detached homes account for roughly 60% of Sacramento's housing units. Looking back in 2018 about 2,400 new dwelling units were built in Sacramento, most of them being single-family detached homes. That’s even more than San Francisco, a city of nearly 900,000 people where new towers have altered the skyline. Overall, neither Sacramento nor California produced nearly the same amount of new housing that occurred during the state’s big building boom more than a decade ago, when home construction in Sacramento peaked at 4,000 new units, city officials said.

Although this article alone is not a comprehensive source to make a final investment decision for Sacramento, we have collected evidence-based positive things for those who are keen to invest in the Sacramento real estate market. Let’s take a look at the number of positive things going on in the Sacramento real estate market which can help investors who are keen to buy an investment property in this city.

Sacramento is a Healthy Housing Market

Sacramento had several thousand people move in there in 2017. Between people relocating here from overheated housing markets and demographic momentum, it saw 1.4 percent growth in 2017 and 2018. This gives the Sacramento housing market a source of slowly increasing demand and rising property values. Yet the area isn’t experiencing a bubble that will burst down the line.

The area also has a steady enough job market that it isn’t experiencing population loss like the San Joaquin Valley due to environmental crackdowns on agriculture or the risk of a collapse like San Francisco’s tech bubble may see. This is why SmartAsset ranked the city as the third healthiest housing market in the state.

For those considering Sacramento real estate investment, median rents of around 1700 dollars a month in Sacramento don’t sound as appealing as the 4000 dollars a month in San Francisco and 3400 dollars a month in San Jose. However, Sacramento is more landlord-friendly than some of the alternatives. For example, the Sacramento housing market isn’t burdened by local rent control laws, though the state government is considering imposing it on the whole state.

A side benefit of the relatively affordable Sacramento real estate market and increasing demand is that any Sacramento real estate investment will see significant appreciation. For example, the average rental rates in the Sacramento housing market went up nearly 9 percent year over year in 2018. That was the greatest increase for any American metro area.

Among all the nation's largest metros, the Sacramento metro area is predicted to have the highest sales and price growth in 2021. Therefore, with the affordable entry price of homes, high appreciation, and growing rent prices, real estate investors in Sacramento can enjoy positive cash flow and nice profits in the long term.

Sacramento's Cost of Living & Quality of Life

Sacramento may not offer the $200,000 salaries of tech startups, but it doesn’t cost you more than a million dollars to buy a modest bungalow, either. Sacramento’s cost of living is much cheaper than the California coast just 75 miles away. That’s why the Sacramento real estate market being 50 percent higher than that national average is irrelevant – it is the sizzling home prices in the Bay Area that make people move here for the relative bargains. The 20 percent higher cost of living is a bargain, too, compared to the California coast.

Sacramento offers a better quality of life than the larger cities it is becoming a suburb of. We’ll ignore the fact you’re far closer to Lake Tahoe because any home in the Sacramento housing market puts you in easy reach of the outdoors. The area offers white water rafting, hot air balloons, mountain biking, fishing, and nature walks. You don’t have to buy a luxury property in the Sacramento real estate market to enjoy beautiful views or live near open spaces.

The area had its great cuisine and entertainment options before the influx of Silicon Valley types, but a livelier night scene is forming, too. A side benefit of the more affordable Sacramento housing market is that homelessness is almost nonexistent in Sacramento. You certainly don’t need a poop-reporting app to avoid the attendant health hazards while you go on your morning run.

One of the reasons to snap up a Sacramento real estate investment over one in the hotter real estate markets is that the area is safer overall. Sacramento has a slightly higher property crime rate than other big cities in cities, but Sacramento has a much lower violent crime rate. People are more concerned about being mugged, raped, or murdered than having their car broken into.

The nonviolent crime stats are also skewed due to the more lenient authorities in San Francisco and Los Angeles. When you ignore people shooting up in public and won’t punish violent panhandlers, your official crime rate is lower but that doesn’t make it better. Sacramento seeks to maintain order, public health, and safety to make it a safer place to live.

Sacramento is Bucking the Bad Trends Plaguing California

California is seeing overall population growth, but it isn’t healthy. Native-born Americans are fleeing the state for Oregon, Nevada, Arizona, and Idaho. They’re replaced by lower-skilled, lower-paid legal and illegal immigrants. This hollows out the middle class of the state while contributing to sky-high poverty rates. Sacramento is a stark contrast to these unhealthy trends. It is receiving an influx of middle-class and working-class people from around the state who don’t want to leave California.

This is why Sacramento ranked number one in the state for one-way U-Haul trips in 2018. This makes the Sacramento real estate market much healthier since it contains a true income mix. It also allows Sacramento real estate investment investors more options than luxury homes and densely packed affordable units, the only types of housing you see built in San Francisco.

People are willing to commute 90 minutes to San Francisco each way to get those Silicon Valley paychecks, though they don’t want to pay SF prices for a property. This is increasing the value of homes on the western side of the Sacramento real estate market since they’ve become a de facto suburb of the Bay Area.

While Yolo County is a rapidly developing suburb of San Francisco, the eastern side of the Sacramento metro area contains large tracts of agricultural land. The Central Valley is one of the most productive agricultural areas in the United States. This means that Sacramento's real estate investment opportunities include agricultural land and former farmland that is open to new development.

Sacramento's Diverse Job Market Is a Plus for Residents

San Francisco suffered a decline in the early 2000s when the first internet bubble burst. Fears of regulation and anti-trust action against Big Tech firms could cause the San Francisco area to suffer a second major decline because they’re so dependent on high tech to bolster the real estate market. Sacramento does have several high-tech jobs, many of them small firms that relocated to the area for its lower cost of living and doing business.

The government is the largest employer, and it is a stable one at that. Healthcare and construction are major employers, as well. This gives Sacramento a more stable job market in addition to low unemployment rates. Tourism and the service sector is a growing contributor, too, as people move here for the lower cost of living and have more money to spend on luxuries like going out. This contributes to the improving quality of life that will keep the Sacramento real estate market going strong.

Sacramento Rent Prices

Sacramento was on the nation’s top 10 list of rent increases in 2020. More people are moving out of big cities and heading toward surrounding areas, like Sacramento. The transition is driving rental prices up in counties like Sacramento, while rent in areas like San Francisco is going down. There is not a whole bunch of rental property inventory out there, which is driving the prices up.

As of May 2023, the average rent for a 1-bedroom apartment in Sacramento, CA is currently $1,595. This is a 0% increase compared to the previous year. Over the past month, the average rent for a studio apartment in Sacramento increased by 3% to $1,500. The average rent for a 1-bedroom apartment increased by 1% to $1,595, and the average rent for a 2-bedroom apartment increased by 1% to $1,895.

The Diverse Sacramento Rental Market Is a Plus for Investors

If you’re considering Sacramento real estate investment, the diverse rental market is a definite plus. Being a state capital, it is home to several universities. This allows you to rent to the relatively large student market in addition to the local population. There is, of course, the University of California campus in Sacramento, but you could own investment properties by American River College and other, smaller schools in the area, too. Around 50% of households are renter-occupied.

Best Neighborhoods in Sacramento to Buy a House

In any property investment, cash flow is gold. 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. Sacramento is an island of sanity in an overpriced, over-regulated, and overheated West Coast housing market.

It reflects the California ideal that most of the state has lost, and that’s we recommend it to investors over the “hotter” California metro areas. These are the same factors causing many Californians themselves to vote with their feet and move here instead of moving out of the state altogether.

The city remains a choice landing spot for coastal emigres tired of skyrocketing housing costs and long commutes. Sacramento is also a fast-growing city with a flourishing real estate market. Continuously developing economy, employment, and a better quality of life offer a lot of opportunities for real estate investors in Sacramento to purchase single-family homes as investment properties.

Good cash flow from Sacramento 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 Sacramento in a growing neighborhood would be key to your success. If you invest wisely in Sacramento real estate, you could secure your future.

The less expensive the Sacramento investment property is, the lower your ongoing expenses will be. When looking for the best real estate investments in Sacramento, 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 Sacramento 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.

Sacramento home prices are some of the most expensive in all of the United States. There are 89 neighborhoods in Sacramento. Midtown has a median listing price of $838.9K, making it the most expensive neighborhood. Hagginwood is the most affordable neighborhood, with a median listing price of $278K (Realtor.com).

Some of the most popular neighborhoods in Sacramento, California are Florin, East Sacramento, Midtown, Meadowview, Natomas Crossing, Arden-Arcade, North Sacramento, Elmhurst, East Sacramento, Tahoe Park, North Highlands, Natomas Park, Hollywood Park, Rancho Cordova, and South Land Park.

Elmhurst, Land Park, and Upper Land Park are some of the top neighborhoods in Sacramento to buy investment properties. These are quite affordable neighborhoods with a low entry price of homes, high cash-on-cash returns, and a positive appreciation forecast for the coming years. According to Zillow, Elmhurst home values have gone down 0.2% over the past year. Typical Home Value is $616,096 (Data through September 30, 2022).

According to Realtor.com Market Hotness Index, Elmhurst, Sacramento, CA is VERY HOT at the moment. It ranks in the top 11% of neighborhoods in the area and the top 28% in the U.S. Homes sell 5 days slower and are 23% less popular than homes in the surrounding area. In October 2022, the median list price of homes in Elmhurst was $580K, trending down 13.4% year-over-year. The median sale price was $580K. It is a seller's market.

Land Park, Sacramento, CA is also VERY HOT. It ranks in the top 3% of neighborhoods in the area and the top 13% in the U.S. Homes sell 4 days faster and are 116% more popular than homes in the surrounding area. In October 2022, the median list price of homes in Land Park was $749.9K on Realtor.com, trending up 7.3% year-over-year. The median sale price was $750K. It is a seller's market.

Upper Land Park is a neighborhood in the more general Land Park area of Sacramento, California. The real estate is primarily made up of small (studio to two bedrooms) to medium-sized (three or four bedrooms) single-family homes and apartment complexes/high-rise apartments. Most of the residential real estate is occupied by a mixture of owners and renters.

Upper Land Park, Sacramento, CA is also VERY HOT at the moment. It ranks in the top 3% of neighborhoods in the area and the top 13% in the U.S. It is a seller's market. The housing supply is very tight compared to the demand for property here. In October 2022, the median listing home price in Upper Land Park was $529K, trending up 2.7% year-over-year. The median home sold price was $493.7K.

Top 10 Sacramento Neighborhoods Where Real Estate Is Going Up

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

  1. Central Oak Park
  2. Woodlake
  3. South Hagginwood
  4. Norwood I-80
  5. Youngs Heights
  6. Central Oak Park East
  7. Midtown Winn Park Capital Avenue North
  8. Boulevard Park
  9. Old Sacramento
  10. Glen Elder North

We recommend taking the help of the local real estate agents to find neighborhoods with an affordable entry prices of homes, high appreciation forecasts, and growing rent prices so that as an investor you can enjoy positive cash flow and nice profits. Apart from Sacramento, 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.

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 turnkey investment properties.

Not just limited to Sacramento or California but you can also invest in some of the hottest real estate markets in the United States. All you have to do is fill up this form and schedule a consultation at your convenience with our team to see if Sacramento makes sense as a place to invest today.

We can help build you a custom portfolio of turnkey properties located in some of the best markets in the United States. By researching and structuring complete turnkey real estate investments, we can help you succeed by minimizing risk and maximizing profitability.


This article shouldn't be used to make real estate or financial decisions. Some of this article's information came from referenced websites. Norada Real Estate Investments makes no express or implied representations, warranties, or guarantees that the information is accurate, reliable, or current. All information should be validated using the below references. Norada Real Estate Investments does not predict the future US housing market. Buying a rental property requires research, planning, and budgeting. Not all investments are good. Always do research and consult a real estate investment counselor.

References

Market Data, Reports & Forecasts
https://www.sacrealtor.org/
https://www.sacrealtor.org/consumers/housing-statistics
https://www.zillow.com/sacramento-ca/home-values
https://www.littlebighomes.com/real-estate-sacramento.html
https://www.neighborhoodscout.com/ca/sacramento/real-estate
https://www.sacbee.com/news/coronavirus/article243805667.html
https://www.realtor.com/realestateandhomes-search/Sacramento_CA/overview

Foreclosures
https://www.realtytrac.com/statsandtrends/ca/sacramento-county/sacramento

Best Neighborhoods
https://www.homeunion.com/sacramento-ca/
https://www.neighborhoodscout.com/ca/sacramento/real-estate

Top Reasons to Invest in Sacramento
https://en.wikipedia.org/wiki/California_locations_by_crime_rate
https://realestate.usnews.com/places/california/sacramento/jobs
https://www.gobankingrates.com/making-money/economy/sacramento-vs-bay-area
https://www.thesandiegocriminallawyer.com/california-cities-most-dangerous.html
https://www.theguardian.com/business/2019/apr/29/big-tech-regulation-facebook-google-amazon
https://www.abc10.com/article/news/local/5-rent-controlled-cities-in-california/103-591256565
https://www.thrillist.com/entertainment/san-francisco/why-sacramento-is-the-new-oakland-sf
https://www.sfgate.com/bayarea/article/SnapCrap-app-San-Francisco-poop-feces-dirty-street-13281837.php
https://www.sfgate.com/expensive-san-francisco/article/uhaul-sacramento-san-francisco-moving-exodus-13509219.php
https://www.sfgate.com/expensive-san-francisco/article/sacramento-move-grass-is-greener-tips-bay-area-13164238.php
https://www.technologyreview.com/s/613628/big-tech-breakup-regulation-antitrust-apple-amazon-google-facebook-doj-ftc-policy

Rental Market Trends
https://www.rentjungle.com/average-rent-in-sacramento-rent-trends/
https://www.rentcafe.com/average-rent-market-trends/us/ca/sacramento/

Filed Under: Growth Markets, Housing Market, Real Estate Investing

San Diego Housing Market: Prices, Trends, Forecast 2023

June 5, 2023 by Marco Santarelli

San Diego Housing Market

California's housing market faced challenges in April, as higher mortgage rates and a shortage of available homes for sale contributed to a decline in home sales. However, the statewide median home price reached over $800,000 for the first time in six months, according to a report by the CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.). The San Diego County housing market showed mixed results during April 2023.

While there was a modest increase in the median sold price of existing single-family homes, there was a significant decline in the number of homes sold. These trends suggest a market that is adjusting and possibly transitioning to a more balanced state.

San Diego County Housing Market April 2023

The real estate market in San Diego County has been a topic of interest for many potential buyers and sellers. April 2023 brought some notable changes in the housing market, which can have a significant impact on the decisions of those involved. Let's take a closer look at the data and trends for the month.

Median Sold Price of Existing Single-Family Homes

One of the crucial factors to consider when analyzing the housing market is the median sold price of existing single-family homes. In April 2023, the median sold price in San Diego County stood at $930,000. This figure reflects a 1.6% increase compared to the previous month, March 2023, when the median sold price was $915,000. However, when compared to April 2022, there has been a decline of 4.6% in the median sold price, as it was recorded at $975,000 during that period.

Sales Statistics

Sales figures play a vital role in understanding the dynamics of the housing market. In April 2023, San Diego County experienced a decrease in sales compared to the previous month and the same period the previous year. The number of home sales dropped by 8.2% from March 2023. When compared to April 2022, there was a significant decline of 36.9% in the number of homes sold.

Price Movement Month-to-Month (MTM) and Year-to-Year (YTY)

Analyzing the month-to-month and year-to-year changes in prices provides valuable insights into the market's direction. In April 2023, San Diego County experienced a positive price movement compared to the previous month, with a 1.6% increase in the median sold price. However, when comparing it to April 2022, there has been a 4.6% decline in the median sold price, indicating a cooling trend in the market.

Conversely, the year-to-year sales data indicates a substantial decrease. The number of homes sold in April 2023 dropped by 36.9% compared to the same period in the previous year. This decline in sales could be attributed to various factors, including changes in buyer preferences, economic conditions, or market saturation.

Condo Housing Market Trends in San Diego County

The condo market in San Diego County is an integral part of the real estate landscape. Understanding the trends and dynamics within this segment can provide valuable insights for buyers and sellers. The condo market in San Diego County during April 2023 exhibited stability in terms of median sold prices, with no change compared to the previous month.

However, there was a notable decline in the number of condos sold. These trends indicate a market that may be experiencing a balancing act between supply and demand, with potential shifts in buyer preferences and market conditions. Let's delve into the data and trends for April 2023.

Median Sold Price of Existing Condos and Townhomes

The median sold price of existing condos and townhomes is a key metric to gauge the market's performance. In April 2023, the median sold price in San Diego County stood at $635,000. Interestingly, this figure remained the same as the previous month, March 2023, when the median sold price was also $635,000. However, when compared to April 2022, there was a decline of 3.4% in the median sold price, as it was recorded at $657,500 during that period.

Sales Statistics

Examining the sales statistics is crucial to understanding the level of activity in the condo market. In April 2023, San Diego County experienced a decrease in sales compared to both the previous month and the same period in the previous year. The number of condo sales dropped by 8.7% from March 2023. When compared to April 2022, there was a significant decline of 33.4% in the number of condos sold.

Price Movement Month-to-Month (MTM) and Year-to-Year (YTY)

Analyzing the month-to-month and year-to-year changes in prices provides valuable insights into the market's direction. In April 2023, San Diego County's median sold price remained steady with no change compared to the previous month. However, when comparing it to April 2022, there has been a 3.4% decline in the median sold price, indicating a slight cooling trend in the condo market.

The year-to-year sales data paints a more substantial decline. The number of condos sold in April 2023 dropped by 33.4% compared to the same period in the previous year. This decline in sales suggests a shift in buyer demand or other market factors affecting the condo segment in San Diego County.

Is San Diego a Seller's Housing Market?

The following San Diego housing market trends are based on single-family, condo, and townhome properties listed for sale on Realtor.com. Land, multi-unit, and other property types are excluded. San Diego County, California is a highly sought-after location for home buyers and sellers alike. With a beautiful coastal location, thriving job market, and endless amenities, it's no surprise that San Diego County's real estate market is booming.

Median Listing Home Price and Price per Square Foot

In April 2023, the median listing home price in San Diego County was $949,000, indicating a 6% increase compared to the previous year. Additionally, the median listing home price per square foot stood at $583. These figures reflect the prices at which homes are listed for sale, providing an overview of the market's overall price range.

Sale-to-List Price Ratio

The sale-to-list price ratio is a crucial metric to assess the negotiation power of sellers. In San Diego County, CA, homes sold for approximately the asking price on average in April 2023, with a sale-to-list price ratio of 100%. This ratio suggests that sellers have been able to achieve their desired asking prices for their properties.

Days on Market

The average number of days a home spends on the market can provide insights into the level of buyer interest and the speed of transactions. In San Diego County, CA, homes typically sell after an average of 30 days on the market. The median days on the market have remained relatively flat since the previous month but have seen a slight increase compared to the previous year.

City Variations

San Diego County encompasses a diverse range of cities, each with its own unique real estate landscape. La Jolla stands out as the most expensive city in San Diego County, with a median listing home price of $2.7 million. On the other end of the spectrum, Lakeside is the most affordable city, with a median listing home price of $725,000.

Seller's Market Assessment

Considering the median listing home price, sale-to-list price ratio, and average days on market, it can be concluded that San Diego County, CA is currently a seller's market. The median listing home price is showing an upward trend, indicating strong demand and competition among buyers. Additionally, homes are selling close to their asking prices, further reinforcing the advantageous position of sellers.

It is important to note that market conditions can change over time. Factors such as inventory levels, economic trends, and buyer preferences can influence the balance between supply and demand. Therefore, it is essential for sellers to stay informed about market fluctuations and work closely with real estate professionals to navigate the San Diego County housing market successfully.

San Diego Housing Market Forecast 2023-2024

Let us look at the price trends recorded by Zillow (a real estate database company) over the past few years. The housing market in San Diego has experienced some notable changes over the past year. As of April 30, 2023, the average home value in the San Diego-Carlsbad area stands at $850,397. This represents a decrease of 3.3% compared to the previous year. Additionally, homes in this area typically go pending within a short period of around 10 days, indicating a high level of buyer demand.

Average Home Values

The current average home value of $850,397 provides an overview of the general price range in the San Diego-Carlsbad area. While there has been a slight decline of 3.3% over the past year, it's important to consider that housing market values can fluctuate due to various factors such as economic conditions, supply and demand dynamics, and overall market trends.

Market Forecast

Based on the available data, there is a positive market forecast for the San Diego housing market. The forecast suggests a projected increase of 3.6% in home values over the next year, starting from April 30, 2023. This projection indicates that the market is expected to rebound and experience moderate growth in the coming months.

Sale-to-List Ratio and Sales Price Performance

The sale-to-list ratio is an essential metric that reflects the negotiation power of sellers and the level of buyer competition. As of March 31, 2023, the median sale-to-list ratio in San Diego stands at 0.997. This ratio indicates that, on average, homes are selling close to their list prices, showcasing a balanced market environment.

Additionally, the market has seen 36.4% of sales going over the list price, indicating instances of competitive bidding and potential multiple offers. On the other hand, 50.2% of sales have occurred under the list price, suggesting room for negotiation and potential opportunities for buyers.

Median Days to Pending

The median number of days it takes for a home to go pending in San Diego as of April 30, 2023, is 10 days. This swift pace indicates a high level of buyer interest and competition, with properties quickly attracting offers and moving through the sales process.

San Diego Housing Market Forecast
Courtesy of Zillow.com

San Diego Area Housing Market Report

According to the Greater San Diego Association of REALTORS®, the housing market in the Greater San Diego Area witnessed some notable changes in April 2023. The Greater San Diego Area housing market in April 2023 exhibited a slowdown in closed and pending sales, along with a decrease in inventory. The median sales prices also experienced a decline, while the number of days on market increased significantly. However, there was an increase in housing supply, which might provide more options for buyers. Let's dive into the key highlights and trends:

Closed Sales

The number of closed sales experienced a significant decline in April 2023. Detached homes saw a decrease of 40.3 percent, while attached homes experienced a slightly lower decline of 35.0 percent. This decrease indicates a slowdown in the pace of completed home sales in the region.

Pending Sales

Pending sales, which represent homes under contract but not yet closed, also saw a notable decrease in April 2023. Detached homes had a decline of 28.8 percent, while attached homes experienced a slightly higher decrease of 29.1 percent. This decline suggests a reduced level of buyer activity and a slower pace of homes entering into the pending stage.

Inventory

The available housing inventory in the Greater San Diego Area decreased in April 2023. Detached homes saw a decline of 22.8 percent, and attached homes experienced a relatively lower decrease of 13.5 percent. This decrease in inventory signifies a tighter market with fewer homes available for sale.

Median Sales Price

The median sales price for homes in the Greater San Diego Area also experienced a decline in April 2023. Detached homes saw a decrease of 4.7 percent, with the median sales price reaching $952,600. Attached homes had a smaller decline of 3.0 percent, with a median sales price of $640,000. These declines suggest a slight softening in home prices during this period.

Days on Market

The number of days homes spent on the market before being sold increased significantly in April 2023. Detached homes experienced a substantial increase of 52.6 percent in days on market, while attached homes saw an even higher increase of 76.5 percent. This increase indicates a lengthening of the selling process and potentially more time required to attract buyers in the current market conditions.

Supply

The supply of homes in the Greater San Diego Area increased during this period. Detached homes saw an 18.2 percent increase in supply, while attached homes experienced a larger increase of 37.5 percent. This increase suggests a greater number of homes available for potential buyers, potentially contributing to the longer days on market and the overall market dynamics.

San Diego Rental Housing Market Trends

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 population by 2050, adding tens of thousands each year. The median rent in San Diego is $2700. The rent you’d receive on single-family San Diego rental properties would, of course, be much higher.

If you find a good bargain and make it family-friendly, you could charge well over $3000 a month. If you can convert San Diego rental properties into smaller units, you’d receive around $2200 a month for a one or two-bedroom apartment. The cash-on-cash returns for properties in the San Diego housing market is around 2.5% for traditional rental properties and nearly 2% if you rent on Airbnb. The fact that the city isn’t too dependent on tourism means you could rent properties on the beach to newcomers, locals, and students if tourism is slow.

Before the pandemic, the average rent for an apartment in San Diego had been growing at 4% year-over-year (source: RentCafe). About 40% of the apartments can be rented for less than $2000, and 60% of the apartments can be rented for more than $2,000 per month. This shows that rent prices are very high in San Diego.

Homeowners vs Renters Statistics: According to the most recent 2020 American Community Survey census data, San Diego County has a renter percentage of 46.7% which is the second most renter percentage of all the counties in the greater San Diego County region. The homeowner percentage is 53.3%. The monthly cost of ownership for property owners in San Deigo is around $2,073.

The median gross rent is $1,658, which is the third most expensive among all other counties in the greater San Diego County region. Comparing rental rates to the United States average of $1,062, San Diego County is 56.1% larger. Also, compared to the state of California ($1,503), San Diego County is 10.3% larger.

San Diego Rent Market Trends & Prices

As of May 2023, the average rent for a 1-bedroom apartment in San Diego, CA is $2,422. This is a 1% increase compared to the previous year. Over the past month, the average rent for a studio apartment in San Diego increased by 2% to $1,938. The average rent for a 1-bedroom apartment increased by 1% to $2,422, and the average rent for a 2-bedroom apartment increased by 1% to $3,205.

  • Two-bedroom apartment rents average $3,205 which is a 7% increase from last year.
  • Three-bedroom apartment rents average $4,300 which is a 27% increase from last year.
  • Four-bedroom apartment rents average $5,000 which is a 21% increase from last year.

FAQs About San Diego Housing Market

$930,000

$517,000

$739,000

$950,000

$1.68M

$635,000


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

  • https://www.car.org/
  • https://www.car.org/marketdata/data/countysalesactivity
  • https://www.sdar.com/press-releases.html
  • https://www.zillow.com/SanDiego-ca/home-values
  • https://www.neighborhoodscout.com/ca/san-diego/real-estate
  • https://www.realtor.com/realestateandhomes-search/San-Diego_CA/overview
  • https://www.sandiegorealestatehunter.com/blog/san-diego-real-estate-market-forecast
  • http://www.homebuyinginstitute.com/news/san-diego-more-moderate-forecast
  • https://www.zillow.com/research/2020-hot-markets-south-26293/
  • https://journal.firsttuesday.us/san-diego-housing-indicators-2/29246/
  • https://www.rentcafe.com/average-rent-market-trends/us/ca/san-diego

Filed Under: Growth Markets, Housing Market, Real Estate Investing Tagged With: San Diego Housing Market, San Diego Housing Market Forecast, San Diego Real Estate Market

Los Angeles Housing Market: Prices, Trends, Forecast 2023

June 5, 2023 by Marco Santarelli

Los Angeles Housing Market

The Los Angeles housing market has been closely watched by real estate professionals and potential buyers alike, as it is one of the most active and competitive markets in the United States. In this report, we will take a closer look at the current state of the Los Angeles housing market, including prices, trends, and forecasts for the rest of 2023. We will analyze the latest data on median home prices, sales volume, and inventory levels to provide insights into what buyers and sellers can expect in the months ahead.

In April 2023, the median home price in Los Angeles County dropped 7.9% from the previous year but rose 2.8% from the previous month.

  • Los Angeles County's median home price in April 2023 was $738,520.
  • The median home price in March 2023 was $718,370.
  • Last year, in April, the median home price was $801,680.

The decline in home prices is due to higher mortgage rates that have caused a decrease in closed sales in the region. However, the supply of inventory remains low, with only 2.6 months of supply left. This suggests that the housing market will continue to experience upward pressure on home prices in the coming months. Despite the drop in prices, the Los Angeles County housing market still holds potential for real estate investors looking to invest in the region.

C.A.R.’s resale report for April shows that at the regional level, all regions in California continued to record annual sales declines of more than 35 percent. The Central Coast witnessed the steepest drop at -42.8%, closely followed by the Far North with a decline of 41.8%. The San Francisco Bay Area, Southern California, and the Central Valley also saw substantial decreases, falling by -38.5%, -37.4%, and -36.7% respectively.

The Los Angeles Metro Area posted a decline of -37.5% year-over-year in sales of existing single-family homes. The median home price in the Los Angeles metropolitan region was $740,000, a decline of 7.5% compared to April 2022. However, it was a rise of 0.7% from the previous month's price of $735,000. These figures reflect a challenging market environment with reduced sales activity and fluctuating prices in the real estate market.

Generally, a balanced market will lie somewhere between four and six months of supply. Inventory is calculated monthly by taking a count of the number of active listings and pending sales on the last day of the month. If an inventory is rising, there is less pressure for home prices to increase. With 2.2 months of supply left, it is still short of what economists say is needed for a balanced market. Hence, the Los Angeles County housing market will continue to see upward pressure on home prices.

  • Months Supply of Inventory (SFH) for Los Angeles County is now 2.6 months.
  • Months Supply of Inventory (SFH) for the Los Angeles Metro Area is 2.6 months.
  • Months Supply of Inventory (SFH) for Southern California is 2.5 months.

Is Los Angeles a Seller's Real Estate Market?

The following Los Angeles housing market trends are based on single-family, condo, and townhome properties listed for sale on realtor.com. Land, multi-unit, and other property types are excluded. This data is provided as an informational resource only.

Los Angeles County, CA is renowned for its thriving real estate market, offering a diverse range of properties to buyers and investors. In April 2023, the housing market in Los Angeles County exhibited several trends and indicators that point towards a seller's market.

Rising Home Prices

In April 2023, the median listing home price in Los Angeles County stood at $930,000, marking a 3.4% increase compared to the previous year. This upward trend in home prices indicates a growing demand for properties and reflects the desirability of the region's real estate market. Buyers should be prepared for the potential of higher price points when exploring properties in Los Angeles County.

Sale-to-List Price Ratio: 100%

One notable aspect of the Los Angeles County housing market is the sale-to-list price ratio, which reached 100% in April 2023. This means that homes, on average, sold for the asking price or very close to it. The fact that buyers were willing to meet sellers' price expectations demonstrates the high demand and competition for available properties. Sellers have been able to secure prices close to their initial listing amounts, highlighting the advantageous position they hold in the current market conditions.

Median Days on Market

The median days on market metric provides insights into the pace at which homes are selling. In Los Angeles County, homes sold after an average of 39 days on the market in April 2023. This figure suggests a relatively fast turnaround time, indicating a high level of buyer activity and interest. Furthermore, the trend for median days on the market in Los Angeles County has been decreasing since the previous month, indicating an even faster pace of sales.

It's worth noting that although the median days on market have slightly increased compared to the previous year, the overall trend still suggests a robust real estate market. Buyers need to act swiftly and be prepared to make competitive offers to secure their desired properties.

Limited Housing Inventory

One of the key factors contributing to the seller's market in Los Angeles County is the limited housing inventory. Currently, there are 19,611 homes available for sale, with 1,982 newly listed within the last week. With more people looking to buy than there are homes available, the market heavily favors sellers. This scarcity of inventory drives competition among buyers and leads to higher prices and faster sales.

Some economists forecast that house prices would tumble in 2023, but few, if any, foresee declines comparable to the Great Recession. In large part, this is due to the fact that foreclosures were mostly responsible for the previous significant decreases. Now, financing criteria are much stricter, and experts say that unless they are forced to, many homeowners prefer not to sell for less than their neighbor did a few months ago.

C.A.R.’s April 2023 resale housing report shows that in Los Angeles County, homes are still moving fast. The median days on market is 22 days. But the sales of existing single-family homes are down 37.6 percent from the previous year. The average sale price to list price ratio in LA was 100.0% in April. In April 2022, it was 104.7% and in March 2023, it was 99.4%.

  • The single-family median price went down by 7.9% YoY to $738,520.
  • In the previous month, the median home price was $718,370.
  • Last year at this time the median home price was $801,680.
  • Single-family sales were down 37.6% YTY and 8.0% MTM.
  • The condo market also showed less buyer turnout.
  • Sales of existing condos were down 43.3% YTY and 6.1% MTM.
  • The median condo price in Los Angele grew slightly by 0.8% YTY to $588,000.
  • It was up by 0.5% from March's price of $585,000.
  • Last year at this time the median condo price in Los Angeles was $626,500.
Los Angeles Housing Market Report
Infographic Courtesy of CALIFORNIA ASSOCIATION OF REALTORS®

Are Home Rents Going Up or Down in Los Angeles?

The Zumper Los Angeles Metro Area Report analyzed active listings across the metro cities to show the most and least expensive cities and cities with the fastest growing rents. Rents in Los Angeles are higher than the state median rent. The California one bedroom median rent was $2,061 last month. Beverly Hills was the most expensive city with one-bedrooms priced at $3,110 while Twentynine Palms was the most affordable city with one bedrooms priced at $940.

The Fastest Growing Cities in the Los Angeles Metro Area For Rents (Y/Y%)

  • San Bernardino had the fastest growing rent, up 27.1% since this time last year.
  • Torrance saw rent climb 18.1%, making it the second fastest growing.
  • Pasadena ranked as third with rent jumping 14.9%.

The Fastest Growing Cities in Los Angeles Metro Area For Rents (M/M%)

  • Pasadena had the largest monthly rental growth rate, up 6.2%.
  • Beverly Hills rent increased 6.1% last month, making it second.
  • West Hollywood was third with rent climbing 5.9% last month.
Los Angeles Metro Rental Market Trends
Credits: Zumper

Los Angeles Housing Market Forecast 2023-2024

Let us look at the price growth recorded by Zillow, a leading real estate marketplace. The Los Angeles-Long Beach-Anaheim housing market has experienced a slight decline in average home values over the past year, with a decrease of 3.5%. The typical home value in the area is currently $871,613. However, the market is expected to show signs of improvement, with a forecasted 2.5% increase in home values over the next year.

When it comes to the sales process, homes in the Los Angeles area tend to go to pending status relatively quickly, taking around 16 days on average. This indicates a competitive market where desirable properties are in high demand.

In terms of pricing dynamics, the median sale to list ratio stands at 0.994, indicating that homes in Los Angeles are generally selling very close to their listed prices. Additionally, a significant percentage of sales (35.2%) are happening above the list price, showcasing the competitive nature of the market.

On the other hand, 52.4% of sales are occurring under the list price, suggesting that there are still opportunities for buyers to find properties at a lower price point.

Overall, the Los Angeles housing market presents a dynamic landscape with shifting prices and competitive conditions. While there has been a slight decline in home values, the forecasted market outlook suggests a positive trend in the coming year.

Los Angeles Housing Market Forecast
Credits: Zillow.com

Is Los Angeles Housing Market Going to Crash?

Some of housing analysts say that home prices in Los Angeles and Orange counties will fall by the middle single digits in 2023, while home prices in the Inland Empire will fall by the high single digits over the same time period. They anticipate that prices will continue to fall on a regional and national scale in 2024 but at a considerably slower rate, followed by a little increase in 2025.

Do buyers have any advantage? Is it the right time to buy a house in Los Angles? This is a never-ending question with no definitive answer. Buyers believe it is not a very good time to buy a home in Los Angeles due to rising mortgage rates and home prices. On the other hand, it is a good time to sell so you can expect more inventory due to increasing seller optimism.

More houses are expected to be listed in the coming months which may bring down the pace of appreciation to some extent. Affordability is a big issue in Los Angeles County as nearly three in four residents can’t afford to buy a median-priced home in the area. According to HousingWire, an index that combined median income and median home prices made Los Angeles the least affordable city in the country, and several younger residents said they were concerned they will never be able to afford a house. Home shoppers are leaving Los Angeles for cheaper metros, the most popular being Las Vegas.

Is Real Estate a Good Investment in Los Angeles?

Should you consider Los Angeles real estate investment? Many real estate investors have asked themselves if buying a property in Los Angeles is a good investment. You need to drill deeper into local trends if you want to know what the market holds for real estate investors and buyers in 2023.

Los Angeles is a moderately walkable city in Los Angeles County. It is home to around four million people. It is the largest city in California and the second-largest in the United States. Los Angeles Metropolitan Area is a 5- region that includes Los Angeles, Orange, Riverside, San Bernardino, and Ventura. The L.A. metropolitan area with over 13 million people rivals New York in population as the largest in the country. However, being a huge real estate market is not reason enough to invest here.

The Los Angeles real estate market is considered one of the premier markets for both investors and homeowners. It is also touted as the nation’s least affordable housing market. If you look in the long-term, it’s always a good investment to buy in Los Angeles. It is said that you will always get your money back or you would make a profit, as Los Angeles has a track record of being a great long-term investment.

How do I Invest in Real Estate in Los Angeles?

According to Neighborhoodscout.com, a real estate data provider, one and two-bedroom large apartment complexes are the most common housing units in Los Angeles. Other types of housing that are prevalent in Los Angeles include single-family detached homes, duplexes, rowhouses, and homes converted to apartments.

Single-family homes account for about 40% of Los Angeles' housing units. In April 2020, the single-family homes posted their biggest percentage gains of the year so far in the Los Angeles metro area. House prices increased by 4.9% in Los Angeles County, 3.7% in Orange County, and 5% in the Inland Empire.

The Los Angeles housing market has been hot for years. In 2018, home prices in Los Angeles reached record heights, climbing to levels far above those recorded in the years leading up to the Great Recession. If we check historical data, in Los Angeles and Orange counties, year-over-year price increases peaked at 8.2% in April 2018 and have declined every month since. In October 2018, home prices in Los Angeles and Orange counties rose 5.5% over the previous year, according to the latest available data from the closely watched S&P CoreLogic Case-Shiller index.

A big factor, according to experts, is that many would-be buyers are increasingly priced out. But real estate agents also say a growing number of people who could buy, like Saavedra, have decided they don’t want to pull the trigger at the top. Home values in Los Angeles are up less than 3 percent since last year. After years of steady escalation, home prices in Los Angeles County are tapering off, according to a new report from CoreLogic.

They find that Los Angeles county’s median home price was $579,500 in January, down slightly from December’s median price of $581,500. That’s a 2.6 percent increase over the same time last year. By this comparison, prices shot up nearly 8 percent between January 2017 and January 2018. Prices continued to rise through much of 2018 but began to drop heading into Q4 2018. In Q4 2019, home prices were still slightly higher than a year earlier, but the spread has narrowed.

2018’s FRM interest rate increase decreased the principal amount homebuyers can borrow while making the same sustainable mortgage payment. The National Association of Home Builders and Wells Fargo Housing Opportunity Index have given the title of least affordable housing market to Los Angeles. In Los Angeles-Long Beach-Glendale region, only 11.3% of homes sold during the fourth quarter of 2019 were affordable to families earning the area’s median income of $73,100.

The 2020 pandemic had its impact on the market bringing down the rent prices while houisng prices reached record highs. Los Angeles real estate market isn’t the most affordable in the country, but it’s a market with ample investment opportunities for those who can afford the median price of over 700K.

However, this number doesn't apply to every part of the Los Angeles real estate market. There are some neighborhoods where prices are much cheaper and completion between buyers is much lesser. The high rate of appreciation has not prevented real estate investors from realizing a great return on investment. Instead of flipping rehabs, you should consider investing in rental properties.

Let’s find some factors that make LA a good place to invest for wealthy investors. We’ll address the biggest factor pulling people to the Los Angeles housing market next. In this section, we're not taking into account the short-term impact of the pandemic on the economy and housing market.

Los Angeles Hidden Real Estate Deals

Distressed sellers exist in every real estate market. If you do find an ideal property in the Los Angeles housing market, the increased selection of properties means you’re far less likely to end up in a bidding war. If you’re looking for other great deals, check out Vermont Vista, Hyde Park, Wilmington, and Cypress Park, where the asking prices are below the Los Angeles median price. In December 2020, the median list price of homes in Vermont Vista was $580K while the median sale price was $566K.

Foreclosures can be a great way to snap up Los Angeles real estate at a bargain price. Foreclosure rates, though, vary wildly. Note that for every home in foreclosure with the bank, there is probably another that is approaching that point and would be sold at a discount by a distressed seller who wants to avoid foreclosure. In distressed neighborhoods, fix and flip may be an option. So is buying Los Angeles real estate cheap and renting it out in a market starving for affordable rental units?

Single-Family Rental vs Multi-Family Investment

Years of appreciation have led Los Angeles real estate investors to favor rentals over flipping. This market favors rental property owners. In the city of Los Angeles alone, renters live in more than 600,000 apartments spread across 118,000 properties, according to the city’s Housing and Community Investment Department. In late 2019, California became the second state (after Oregon) to pass a statewide rent control law. It covers all multi-family rental units built more than 15 years ago. The state law applies on top of any stricter local ordinances.

Therefore, rent control applies to Los Angeles rental properties if they are multi-family units. Single-family detached homes rarely fall under rent control ordinances. They are generally not subject to LA Rent Control. The only exception is when two or more dwelling units are located on the same lot; then rent control rules are likely to apply. The simplest solution to this is to only buy single-family Los Angeles rental properties. Never buy a property with a separately rented granny flat or upstairs apartment you could rent out, as well.

On the other hand, homeownership rates in California have been declining for years. The sea change has been the growth of renting among the middle and upper classes. For example, a third of Los Angeles residents with incomes over $100,000 rent instead of own. Baby Boomers downsizing their homes choose to rent condos and homes that others maintain. Millennials who have a good income often say their parents lose their homes in the Great Recession and choose to rent instead.

This is driving demand for the luxury Los Angeles real estate market, whether condos, apartments with concierges, or luxury homes rented instead of purchased so that the resident can easily move if they lose their jobs. Only San Jose and San Francisco have more high-income residents that rent than the Los Angeles real estate market. Although apartment prices are high and rising, they’re lower in Los Angeles than in California.

That’s one bright spot in an otherwise tough rental market for Los Angeles renters. The Military also adds renters to the Los Angeles housing market. Any military base will pump renters into a real estate market. The Los Angeles real estate market is simply notable for having a large military population but a job market so diverse that the closing of a base won’t hurt the area’s home prices overall.

The Los Angeles AirPort Base, Edwards Air Force Base, and smaller facilities dump many renters into the Los Angeles housing market. Those with families often choose to rent Los Angeles rental properties instead of life on base. On top of that are defense contractors like Raytheon in Long Beach and El Segundo who pay people a premium to live here.

Los Angeles Rental Market Trends 2023

Current Rent Prices in Los Angels: Before the pandemic, the average rent for an apartment in Los Angeles was $2,524, growing by 2% YTY, according to RENTCafé. The average size for a Los Angeles, CA apartment is 792 square feet. 40% of the households in LA are renter-occupied while 60% are owner-occupied. 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.

As of May 2023, the average rent for a 1-bedroom apartment in Los Angeles, CA is currently $2,443. This is a 3% increase compared to the previous year. Over the past month, the average rent for a studio apartment in Los Angeles increased by 4% to $1,866. The average rent for a 1-bedroom apartment increased by 2% to $2,443, and the average rent for a 2-bedroom apartment increased by 1% to $3,325.

  • The average rent for a 2-bedroom apartment in Los Angeles, CA is currently $3,325. This is a 3% increase compared to the previous year.
  • The average rent for a 3-bedroom apartment in Los Angeles, CA is currently $4,795. This is a 9% increase compared to the previous year.
  • The average rent for a 4-bedroom apartment in Los Angeles, CA is currently $6,500. This is a 10% increase compared to the previous year.

Some of the most affordable neighborhoods in LA are:

  • Jefferson Park, where the average rent goes for $1,355/month.
  • El Sereno, where renters pay $1,396/mo on average.
  • Vermont Knolls, where the average rent goes for $1,445/mo.
  • Glassell Park & Cypress Park, where the average rent goes for $1,485/month.
  • Cypress Park, where renters pay $1,396/mo on average.
  • North Hills, where renters pay $1,530/mo on average.

Construction Isn’t Meeting Housing Demand in LA

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 current supply of existing single-family homes is 1.4 which is insufficient to meet the demand. This also suggests that any new wave of construction will at most result in rental rates remaining steady instead of causing them to fall.

The geography of this region also limits the supply. The Los Angeles metropolitan area is perched between the ocean and the mountains. You obviously can’t build on water. There’s only so far you can build into the hills when mudslides and earthquakes limit how much you can build there. The Los Angeles real estate market is further constrained by the vast national parks around L.A. like the Angeles National Forest. These areas simply cannot be turned into residential areas.

Two of the most fundamental economic indicators are employment and income. Home sales usually are directly tied to an economy's health and rise and fall with economic activity. As economies slow, the supply of money tends to become more restrictive. 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. In terms of home prices, income, and employment indicate whether people can afford current and future increases.

The Golden State added 310,300 jobs in 2019, a 1.8% increase, to a total of 17.61 million, according to data released by the California Employment Development Department. The previous year’s increase was 1.6%. In Los Angeles County, nonfarm jobs grew by 67,800 to a total of 4.65 million. That was a 1.5% rise, led by healthcare and social assistance (up 28,000) and construction (up 8,500). The unemployment rate was 4.4% in December, down from 4.7% a year earlier.

Note that due to the ongoing pandemic, Los Angeles County’s unemployment rate has increased. It fell to 11% in November from a revised 12% in October amid seasonal hiring gains in retail and logistics, according to the State Employment Development Department. It was 19.6 percent in April 2020. Every major sector of the county’s economy suffered significant job losses during the past 12 months, led by accommodation/food services, which shed 120,000 payroll jobs.

How to Invest in Real Estate in Los Angeles?

In any property investment, cash flow is gold. 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 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.

How good is it to buy a Los Angeles investment property? Not every real estate investor wants to enter the most expensive and competitive Los Angeles real estate market. For buyers, the affordability is dropping and only 30% of LA county residents own a home. Home Prices are so high and out of reach for many buyers – many consider LA homes grossly over-priced.

While Los Angeles home prices may be increasing slightly over the next year, the fact remains that there are many homes available at fair prices. Growing household formations, ongoing job creation, and rising wage growth are fueling housing demand,” said NAHB Chief Economist Robert Dietz. “But a record-low resale inventory, coupled with underbuilding as builders deal with supply-side constraints, continue to put upward pressure on home prices even as interest rates remain at low levels.”

There’s still a strong opportunity for rental property investment in Los Angeles. There is a strong and continuous demand for apartments for rent in LA. This is fueled by always tight inventory, severe competition from tenants, rising wages, and a good economy. Therefore, for a great opportunity for rental income for investors. Good cash flow from Los Angeles investment properties 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 a good Los Angeles real estate investment opportunity would be key to your success. If you invest wisely in Los Angeles real estate, you could secure your future. The best investment is now looking for a rental property that will generate good cash flow. Your best tenants would be the retirees who intend to relocate to Los Angeles and want to purchase property to rent out.

The running costs for owning and managing a Los Angeles rental property should not be high. While hiring a property management company you should expect to give up roughly ten percent of the rent for each property they manage. Remember to factor this loss into your calculations when budgeting for a new rental property. The three most important factors when buying real estate anywhere are location, location, and location. The location creates desirability. Desirability brings demand.

There should be a natural and upcoming high demand for rental properties. Demand would raise the price of your Los Angeles investment property and you should be able to get a good return on your investment over the long term. The neighborhoods in Los Angeles must be safe to live in and should have a low crime rate. The neighborhoods should be close to basic amenities, public services, schools, and shopping malls.

A cheaper neighborhood in Los Angeles 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. Los Angeles real estate prices are well above average cost compared to national prices. It depends on how much you are looking to spend and if you are wanting smaller investment properties or larger deals such as duplexes and triplexes in Class A neighborhoods. The inventory is low, but opportunities are there.

If you think of investing in LA, you have decided on a long-term investment property. Here are the ten neighborhoods in LA having the highest real estate appreciation rates since 2000—List by Neigborhoodscout.com.

  1. W 21st St / S Orange Dr
  2. Irvington Pl / N Ave 51
  3. Montecito Heights Northeast
  4. N Ave 57 / Monte Vista St
  5. Happy Valley
  6. N Ave 52 / Granada St
  7. Highland Park
  8. Harvard Heights Southwest
  9. Highland Park North
  10. Apple St / S Dunsmuir Ave

As with any real estate purchase, act wisely. Evaluate the specifics of the Los Angeles housing market at the time you intend to purchase. Hiring a local property management company can help in finding tenants for your investment property in Los Angeles.


This article shouldn't be used to make real estate or financial decisions. Some of this article's information came from referenced websites. Norada Real Estate Investments provides no express or implied claims, warranties, or guarantees that the material is accurate, reliable, or current. All information should be validated using the below references. Norada Real Estate Investments does not predict the future US housing market. This article educated investors about LA real estate. Buying a rental property needs research, planning, and budgeting. Not all investments are good. Always do research and consult a real estate investment counselor.

REFERENCES

Market Data, Reports & Forecasts
https://www.car.org/marketdata/data/countysalesactivity
https://www.car.org/en/marketdata/interactive/housingmarketoverview
https://www.zillow.com/losangeles-ca/home-values
https://www.redfin.com/city/11203/CA/Los-Angeles/housing-market
https://www.realtor.com/realestateandhomes-search/Los-Angeles_CA/overview
https://www.zumper.com/rent-research/los-angeles-ca
https://www.zumper.com/blog/los-angeles-metro-report/
https://www.littlebighomes.com/real-estate-los-angeles.html

Covid-19 Impact/News
https://la.curbed.com/2020/2/28/21157988/home-prices-los-angeles-report
https://www.latimes.com/homeless-housing/story/2020-07-23/southern-california-home-prices

Best Neighborhoods and Statistics
https://www.zillow.com/
https://en.wikipedia.org/
https://www.neighborhoodscout.com/ca/los-angeles/real-estate/
https://www.mashvisor.com/blog/invest-los-angeles-real-estate-market-2019/

LA demographics
http://worldpopulationreview.com/us-cities/los-angeles-population

Rent control
https://www.latimes.com/archives/la-xpm-2007-dec-30-re-aptlife30-story.html

Foreclosures
https://www.realtytrac.com/statsandtrends/foreclosuretrends/ca/los-angeles-county

Rental market/Apartments
https://la.curbed.com/2019/2/4/18210857/los-angeles-rental-prices-2019-average
https://www.rentcafe.com/average-rent-market-trends/us/ca/los-angeles
https://la.curbed.com/2019/2/26/18241819/rent-vs-buy-los-angeles-high-income

Job & Unemployment Stats
https://fred.stlouisfed.org/series/CALOSA7URN
https://www.labormarketinfo.edd.ca.gov/file/month/la$pds.pdf

Military market
http://www.laalmanac.com/military/mi05.php
https://militarybases.com/california

Good time to buy/price predictions
https://la.curbed.com/2018/12/7/18128000/los-angeles-real-estate-market-prediction-2019
https://www.forbes.com/sites/ellenparis/2019/02/23/buyers-should-revisit-los-angeles-and-san-francisco-housing-markets-for-new-opportunities/#47bd1029428c

Filed Under: Growth Markets, Housing Market, Real Estate Investing Tagged With: Los Angeles Housing Market, Los Angeles Housing Market Forecast, Los Angeles Housing Prices, Los Angeles Real Estate Market

Bay Area Housing Market: Prices, Trends, Forecast 2023

June 5, 2023 by Marco Santarelli

Bay Area Housing Market
Bay Area Real Estate Market
Source: CAR

The housing market in the Bay Area experienced a notable decline in April 2023 compared to the previous month and the same period last year. Existing, single-family home sales have decreased, and the median sold prices have also shown significant changes. In this report, we will delve into the details of the market trends and explore the specific sales and price data for different counties in the San Francisco Bay Area.

Bay Area Housing Market Update

Sales Decline and Price Changes

Existing, single-family home sales in California totaled 267,880 in April on a seasonally adjusted annualized rate, reflecting a 4.7 percent decrease from March and a substantial 36.1 percent decrease from April 2022. The sales declines were observed across all regions, with the Central Coast experiencing the most significant drop at -42.8 percent, according to the California Association of Realtors.

The Far North region closely followed with a decline of 41.8 percent, primarily driven by more than 40 percent decreases in four of the six counties in the region. The San Francisco Bay Area (-38.5 percent), Southern California (-37.4 percent), and the Central Valley (-36.7 percent) also witnessed sales declining at a faster pace compared to the previous month.

Median Sold Price in the San Francisco Bay Area

The median sold price of existing single-family homes in the San Francisco Bay Area was $1,250,000 in April 2023, showing a slight increase from the previous month's price of $1,228,000. However, it marked a significant 16.7 percent decrease compared to April 2022. This indicates a challenging market for sellers, as prices have experienced a decline on a year-over-year basis.

County-specific Sales and Price Trends

When looking at specific counties within the San Francisco Bay Area, it's evident that each county has its own unique sales and price trends. While some counties experienced modest price changes and fluctuations in sales, others saw more significant shifts. For instance, Marin County witnessed a substantial increase in median sold price and sales, while Napa County faced notable declines in both categories.

Let's take a closer look at the sales and price trends in various counties within the San Francisco Bay Area:

Alameda County: In April 2023, the median sold price in Alameda County was $1,230,000, showing a slight month-to-month increase of 0.4% compared to March 2023. However, it experienced a significant year-over-year decrease of 18.0% compared to April 2022. Sales in the county also declined, with a month-to-month change of 2.6% and a substantial year-over-year decline of 37.3%.

Contra Costa County: The median sold price in Contra Costa County was $900,000 in April 2023. It saw a positive month-to-month change of 5.6% from March 2023 but a year-over-year decrease of 14.3% compared to April 2022. Sales in the county also declined, with a month-to-month change of 6.0% and a year-over-year decrease of 35.0%.

Marin County: In Marin County, the median sold price was $1,790,000 in April 2023. It experienced a significant month-to-month increase of 11.9% compared to March 2023 but a year-over-year decline of 15.8% compared to April 2022. Sales in the county showed a notable month-to-month increase of 40.0%, but still saw a year-over-year decrease of 30.3%.

Napa County: The median sold price in Napa County was $815,000 in April 2023. It witnessed a month-to-month decrease of 8.4% from March 2023 and a year-over-year decline of 16.4% compared to April 2022. Sales in the county also declined, with a month-to-month change of -15.3% and a substantial year-over-year decrease of 51.2%.

San Francisco County: In San Francisco County, the median sold price was $1,587,500 in April 2023. It experienced a month-to-month decrease of -6.6% compared to March 2023 and a significant year-over-year decline of 22.8% compared to April 2022. However, sales in the county showed a positive month-to-month change of 13.9%, although they still saw a year-over-year decrease of 32.3%.

San Mateo County: The median sold price in San Mateo County was $1,970,000 in April 2023. It witnessed a month-to-month increase of 5.9% compared to March 2023 but a year-over-year decline of 18.0% compared to April 2022. Sales in the county declined with a month-to-month change of -11.8% and a substantial year-over-year decrease of 49.0%.

Santa Clara County: In Santa Clara County, the median sold price was $1,800,000 in April 2023. It experienced a month-to-month increase of 5.9% compared to March 2023 but a year-over-year decline of 8.6% compared to April 2022. Sales in the county also declined, with a month-to-month change of -10.9% and a year-over-year decrease of 44.8%.

Solano County: The median sold price in Solano County stood at $580,000 in April 2023. It had a slight month-to-month decrease of -0.9% compared to March 2023 and a year-over-year decline of -9.4% compared to April 2022. Sales in the county, however, showed a modest month-to-month increase of 3.5%, although they still experienced a notable year-over-year decrease of 26.7%.

Sonoma County: In Sonoma County, the median sold price was $840,000 in April 2023. It witnessed a small month-to-month increase of 1.3% compared to March 2023, but a slight year-over-year decline of -3.4% compared to April 2022. Sales in the county remained relatively stable, with a month-to-month change of -0.8%, while experiencing a significant year-over-year decrease of 39.8%.

These figures provide an overview of the real estate market in each county for April 2023. It is important to note that these statistics reflect the median sold prices and sales changes during this specific period and should be considered in conjunction with other factors when assessing the local housing market conditions.

Bay Area Housing Market Forecast 2023-2024

Bay Area consistently ranks among the world's most expensive real estate markets, 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. Here are Bay real estate market predictions for 2023.

San Francisco-Oakland-Hayward Metro (Bay Area) Forecast up to April 2024

The Bay Area's real estate market is one of the most expensive and densely populated in the US, comprising nine counties and three major cities: San Francisco, Oakland, and San Jose. The San Francisco-Oakland-Hayward housing market has experienced a decline in average home values over the past year, with the current average home value standing at $1,116,046.

This reflects an 8.9% decrease compared to the previous year. However, there is a slightly positive market forecast with a projected 0.3% increase over the next year.

The median sale to list ratio in the market, as of March 31, 2023, is 0.999, indicating that homes are generally being sold close to their listed price. The market also shows a significant percentage of sales over the list price, accounting for 44.0% of transactions, while 44.5% of sales occur under the list price.

In terms of speed, homes in the San Francisco-Oakland-Hayward area are going pending relatively quickly, with a median of 13 days on the market before becoming pending as of April 30, 2023. This suggests a competitive market where properties are being snatched up swiftly.

These statistics provide insights into the current state and forecast of the Bay Area housing market. However, it's important to note that real estate conditions can be influenced by various factors and may vary across different neighborhoods or cities within the region.

Bay Area Housing Market Forecast
Source: Zillow

SF Bay Area 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.

Due to low-interest rates in 2021, there was 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. Keep on reading to find out more.

Why is housing so expensive in San Francisco?  The sky-high housing prices in San Francisco are not a new phenomenon. California, as a state, is facing a consistent housing shortage, and San Francisco is no exception. The limited availability of land and strict zoning regulations, combined with community resistance to new construction, resulted in a shortage of new housing units being built. Despite a strong economy and increasing job opportunities, San Francisco's housing prices have risen much faster than residents' incomes.

The minimum annual income required for owning a home in San Francisco was a staggering $197,970 in 2019, which is an increase of 119.1% from 2012 when affordability was at its peak. With the trend of rising housing costs and limited options for first-time buyers, the rate of homeownership in San Francisco is not expected to rebound anytime soon. It is estimated that by 2025, over 60% of the population will be renters.

However, the good news is that Zillow predicts that home prices in San Francisco may drop by 6.5% in the next year. This could relieve new homebuyers and investors, as many have struggled to afford the median-priced home in San Francisco. It is worth considering the long-term potential of investing in San Francisco real estate, despite the current high housing costs. With the right strategy, investing in San Francisco properties can prove to be a profitable decision in the long run.

Bay Area'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, the high-tech job market 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, improve transit options for the community, and support 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 the possibility that you could snap up San Francisco rental properties at a relative bargain price by people who 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 the 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 2023, 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 keep 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, and 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 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 which 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, kitchens, 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 pushed 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 111.65% over the last ten years, which is an average annual home appreciation rate of 7.79%. This figure puts San Francisco in the top 20% nationally for real estate appreciation. And within San Francisco, some individual neighborhoods’ home values have jumped by more than 100%. 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 $1,030,643 (Zillow Home Value Index as of October 2022).
  • The Forest Knolls: In April 2009, this neighborhood’s median home value was $811,800, and it topped $1.8 million in Aug 2018. The current value is $1,874,448, up 0.3% YTY.
  • 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 $1,565,485, a drop of  6.4% YTY.
  • 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 $1,332,707, down 5.3% YTY.
  • 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 $1,376,919, down 8.2% YTY.

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 over 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 upward which makes investing in SF real estate a sound decision.

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.


Please do not make any real estate or financial decisions based solely on the information found within this article. This page includes third-party content from references. Norada Real Estate Investments does not represent, warrant, or guarantee that the information such as market data and forecast is accurate, reliable, or current, even though it is thought to be reliable. 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/home-values/403105/bay-area-ca/
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

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

Filed Under: Growth Markets, Housing Market, Real Estate Investing Tagged With: Bay Area Housing Market, Bay Area Housing Market Forecast, Bay Area Housing Prices, Bay Area Real Estate, Bay Area Real Estate Investment, Bay Area Real Estate Market

Milwaukee Housing Market: Prices, Trends, Forecast 2023

June 5, 2023 by Marco Santarelli

milwaukee housing market

The housing market in Milwaukee, Wisconsin, has been facing challenges due to a lack of inventory, increasing prices, and limited new construction. According to a recent report released by the Greater Milwaukee Association of REALTORS®, the market has slowed down, but buyers remain active. In this blog post, we will explore the trends and challenges of the Milwaukee housing market in 2023.

Milwaukee Housing Market Update

The Greater Milwaukee Association of REALTORS® reports a significant decline of 26.6% in home sales in the Metropolitan Milwaukee area during April, compared to the same period in 2022. This decline can be attributed to the unique market dynamics resulting from the aftermath of the “Pandemic Market” in 2022.

>$400K Buyers Are Still Very Active

Despite the overall decrease in home sales, buyers with budgets exceeding $400,000 are still actively participating in the housing market. This indicates that higher-priced properties continue to attract interested buyers, potentially due to the availability of favorable interest rates.

Low Listings & Continued Buyer Interest Pushed Prices Up 3.5%

The scarcity of new inventory and limited new construction, coupled with sustained buyer interest, have contributed to a notable increase in prices. In April, average prices in the metropolitan area rose by 3.5%. The lack of supply has created a situation where demand outweighs availability, putting upward pressure on prices.

Market Is Stuck In A Frustrating, Vicious Cycle

Milwaukee's housing market finds itself trapped in a frustrating, vicious cycle. The absence of new single-family houses or condominium construction, combined with an abundance of apartment developments, has created a predicament for current homeowners. These homeowners, who would otherwise downsize and open up move-up properties for young families, are unable to find suitable options due to the limited inventory. Consequently, young families seeking larger homes are also unable to move up, while first-time buyers are forced to continue renting without building equity.

The Milwaukee housing market has been facing significant challenges and market imbalances. The lack of new construction for single-family homes and condominiums, along with an overemphasis on apartment developments, has hindered the market's ability to meet buyers' demands. This, combined with the demographic surge of Millennial and GenZ buyers and favorable interest rates, has resulted in an unusually tight market.

Insufficient Inventory and Limited Listings

One of the primary factors contributing to the current situation is the scarcity of new inventory and listings. The lack of new construction for single-family homes and condos has left current homeowners with limited options for relocation. Additionally, many homeowners are hesitant to sell due to their low mortgage interest rates, which disincentivizes them from taking out a new mortgage on a different property.

The current housing market in Milwaukee has become caught in a frustrating cycle. Empty-nesters and elderly homeowners who would downsize and free up move-up properties are unable to find suitable options. Consequently, young families seeking more space are also unable to move up, as the move-up properties are not becoming available. First-time buyers are left renting for longer periods, unable to build equity or enjoy the benefits of homeownership.

As a result of the imbalanced market, prices have been on the rise. In April, average prices in the metropolitan area increased by 3.5%. This increase reflects the high demand and limited supply, further exacerbating the challenges faced by homebuyers in Milwaukee.

If the current trend persists, it will have long-term implications for the Milwaukee housing market. Prospective homeowners will miss out on the opportunity to accumulate equity and enjoy the benefits of homeownership. Instead, they will continue to spend significant amounts on rent without the ability to save for a down payment. This situation not only delays their entry into homeownership but also hampers their overall financial well-being.

To overcome these challenges and establish a more balanced market, concerted efforts are needed to address the supply-demand imbalance. Increased investment in the construction of single-family homes and condominiums can provide the necessary options for both current homeowners looking to downsize and young families in need of larger homes. Collaboration between developers, policymakers, and stakeholders is essential to create an environment that supports sustainable housing growth.

Milwaukee-Area Housing Market Forecast 2023-2024

According to Zillow, the Milwaukee housing market has been experiencing steady growth in home values over the past year, with the average home value in the Milwaukee-Waukesha-West Allis area reaching $310,042. This represents an increase of 4.8% compared to the previous year, highlighting the positive trajectory of the market. These figures, accurate as of April 30, 2023, indicate the overall strength and desirability of the local real estate market.

Market Forecast and Trends

Looking ahead, the market forecast for the Milwaukee housing market remains promising. With a 2.9% projected growth over the next year, homeowners and potential buyers can expect continued appreciation in property values. This forecast suggests that investing in real estate in Milwaukee can be a lucrative long-term strategy, as property values are anticipated to increase steadily.

Competitive Market Conditions

The market conditions in Milwaukee reflect a competitive landscape, characterized by a high demand for housing. As indicated by the median sale to list ratio of 0.998, sellers are typically able to secure close to their asking price. Additionally, 42.1% of sales are reported to be over the list price, indicating the presence of bidding wars and competitive offers.

Conversely, 44.0% of sales are below the list price, suggesting that buyers still have opportunities to negotiate favorable deals. However, it is important to note that the competitive nature of the market may require buyers to act swiftly and be prepared to submit competitive offers.

Quick Turnaround Time

The Milwaukee housing market is characterized by a median of 14 days to pending, as of April 30, 2023. This statistic indicates that homes in the area are going under contract relatively quickly. The shorter time on the market reflects the strong demand and the need for buyers to act promptly when pursuing a property.

Here is the Milwaukee-area real estate price appreciation graph by Zillow since the last decade.

Milwaukee Real Estate Market Forecast
Graph Credits: Zillow.com

Milwaukee Real Estate Investment Overview

Milwaukee's real estate market seems to be doing well, with steady growth in housing prices over the past year. The typical home value in Milwaukee-Waukesha-West Allis is $310,042, which represents an increase of 6.1% over the past year. Moreover, Zillow's one-year market forecast for Milwaukee-Waukesha-West Allis is 2.9%, indicating a stable and consistent growth rate in the housing market. However, it is important to note that the typical home value can vary depending on the neighborhood and housing type.

The Milwaukee real estate market seems to be a good option for affordable housing development, with Bear Real Estate Group receiving $20.6 million in financing for the construction of Michigan Street Commons, a 99-unit fully affordable housing development in Milwaukee.

Milwaukee's foreclosure rate is expected to be lower than ever before, accounting for less than 1% of all mortgages, less than half the average historical rate of 2.5%. However, the GDP growth rate is predicted to be 1.3%, indicating a significant slowdown. It is unclear how this will impact the real estate market in Milwaukee.

Real estate investment is active in Milwaukee, with Kyle Mack, owner of Mackximus LLC, a real estate investment company in Milwaukee, discussing his business in a video interview. Additionally, PIMCO, an investment management firm, manages assets for individual investors around the world.

Milwaukee is investing in its infrastructure, proposing to create the Vel R. Phillips Plaza, situated south of Wisconsin Avenue between North Fifth Street and North Vel R. Phillips Avenue. The city is prepared to move forward on the project which will add to the positive.

There seem to be various ways to invest in the Milwaukee real estate market, such as buying homes to renovate and resell, investing in real estate courses to gain knowledge about the industry, and investing in property management companies that help landlords maximize their investment properties in Milwaukee.

In terms of commercial real estate, Milwaukee's downtown office market has its strengths, highlighted by Fiserv's pending headquarters move from Brookfield to HUB640 by the end of 2023, and Northwestern. However, more Milwaukee office buildings may become apartments in the future.

Overall, Milwaukee's real estate market appears to be doing well, with steady growth in housing prices and various opportunities for investment in the residential and commercial sectors.

Top Reasons to Invest in Milwaukee Real Estate Market

Milwaukee is a city in Wisconsin that offers real estate investors a lot of opportunities. With a population of over 590,000 people, it is the largest city in the state and offers a diverse range of neighborhoods, property types, and investment opportunities. Here are some of the top reasons to consider investing in Milwaukee's real estate market:

  • Affordability: Compared to other major metropolitan areas in the United States, Milwaukee offers relatively affordable real estate prices. This means that investors can find deals on both residential and commercial properties that are priced lower than similar properties in other cities.
  • Strong rental demand: Milwaukee has a strong rental market, with a high percentage of residents who rent their homes. According to data from the U.S. Census Bureau, over 50% of Milwaukee's residents are renters. This creates a significant demand for rental properties, particularly in areas that are close to downtown, universities, or other major employers. As of March 2023, the average rent for a 1-bedroom apartment in Milwaukee, WI is currently $995. This is an 11% increase compared to the previous year. Over the past month, the average rent for a studio apartment in Milwaukee remained flat. The average rent for a 1-bedroom apartment increased by 1% to $995, and the average rent for a 2-bedroom apartment increased by 9% to $1,085.
  • Growing economy: Milwaukee has a diverse economy that is experiencing steady growth. The city is home to a range of industries, including manufacturing, healthcare, finance, and education. According to the Milwaukee Economic Development Corporation, the city has seen a 13.5% increase in employment since 2010, and the unemployment rate has dropped from 9.5% in 2010 to 3.5% in 2022. A growing economy typically translates to increased demand for real estate, both from businesses and from residents.
  • Low vacancy rates: With strong demand for rental properties, it's not surprising that Milwaukee has a relatively low vacancy rate. According to data from RentCafe, the overall vacancy rate in Milwaukee was 5.5% in 2021, which is lower than the national average of 6.8%.
  • Urban revitalization: Milwaukee's downtown and surrounding neighborhoods have undergone a significant revitalization in recent years, with new development projects and investments in public spaces. The city has also seen an increase in younger residents who are attracted to urban living. This has led to an increase in demand for properties in walkable neighborhoods that offer amenities like restaurants, bars, and shopping.
  • Favorable landlord-tenant laws: Wisconsin has landlord-friendly laws that make it easier for property owners to manage their rental properties. For example, landlords can evict tenants for non-payment of rent with just a five-day notice, and there are no limits on the amount that landlords can charge for security deposits. This can make investing in rental properties less risky for investors.
  • Availability of financing: Like many other cities, Milwaukee has a range of financing options available for real estate investors. Local banks and credit unions offer commercial real estate loans, and the city has a range of public-private partnerships that provide funding for development projects. Additionally, there are a variety of federal and state programs that offer to finance affordable housing projects and other real estate development initiatives.

Therefore, Milwaukee's real estate market offers several compelling reasons to invest. The city has a strong economy, affordable prices, a growing rental market, and a diverse population. These factors, combined with tax incentives and a robust infrastructure, make Milwaukee an attractive location for real estate investors. However, like any investment, there are risks involved, and investors should carefully consider their options before investing.

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 strives to set the standard for our industry and inspire others by raising the bar on providing exceptional real estate investment opportunities in the U.S. growth markets. We can help you succeed by minimizing risk and maximizing profitability.

Another market to go for diversifying your investments is the Dallas housing market. Dallas, TX is a great market because it has a strong economy and constant population growth and will make your pockets bigger. As rents go up smart investors should invest in Dallas.

Similarly, Houston is another great market for investing in real estate for your early retirement. Houston housing market is becoming a hotbed of buyer activity that could be beneficial for real estate investors; just ask the multitude of overseas investors who are choosing Houston as the city of choice to invest in for the foreseeable future.

Let us know which real estate markets you consider best for real estate investing! If you need expert investment advice, you may fill-up the form given 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.


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

  • https://www.gmar.com/resources/research-statistics/2021-housing-statistics
  • https://www.redfin.com/city/35759/WI/Milwaukee/housing-market
  • https://www.zumper.com/rent-research/milwaukee-wi
  • https://www.zillow.com/milwaukee-waukesha-west-allis-wi/home-values/
  • https://www.realtor.com/realestateandhomes-search/Milwaukee_WI/overview
  • https://www.neighborhoodscout.com/wi/milwaukee/real-estate
  • https://www.multihousingnews.com/bear-real-estate-lands-21m-for-milwaukee-affordable-project/
  • https://www.bizjournals.com/milwaukee/video/6082058683001
  • https://www.expertise.com/wi/milwaukee/property-management
  • https://www.milwaukeemag.com/milwaukee-mayor-proposes-investing-15-million-to-create-vel-r-philips-plaza/
  • https://www.jsonline.com/story/money/real-estate/commercial/2023/03/09/more-milwaukee-office-buildings-will-likely-become-apartments/69963549007/

Filed Under: Growth Markets, Housing Market, Real Estate Investing

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