California Real Estate Market Update
October showed continuing declines in housing sales and home prices in California. That might be good news for buyers who are wondering why California homes prices are so high. Buyers ears are perking up and it could be more homeowners may be ready to sell in the next 6 months.
Although prices typically decline in the fall, and listing retreat, these lowering prices might be seen as a market turning point, but that’s unlikely. Other stats show real estate declines are slowing and better than previous fall seasons. The fact is housing supply is reaching very low levels and is affecting sales activity.
There’s little doubt that buyer burnout is also accumulative and with poor housing choices available, its little surprise search behavior is weaker now. California has lots its luster as the US premium housing market. You can check out the forecast and predictions below. First let’s look at the current home prices and trends.
Sales and Prices in October
California home prices fell 1.3% overall to $798,440, down from September’s price of $808,890 Still year to date prices are still up, and year over year prices are still up 12.3% from the $711,300 recorded in October 2020.
Realtors might believe listings will rise, but the stats are pointing to fewer as both active and new listings keep retreating. In fact, new home listings suffered a sharp drop during October.
Sales of home in the state during October dipped slightly by 0.9 % from $438,190 in September. This is down 10.4% from 12 months ago, when 484,510 homes were sold (on an annualized basis).
43 of 51 counties suffered year-over-year decrease in closed sales during October, with 29 of those counties falling by at least 10%.
Home prices in Los Angeles, Napa and Santa Barbara counties suffered the biggest declines. San Mateo bucked the price trend as their average price rose 6% to $2,110,000 (up $135,000) from September.
Homes in the Far North showed the highest upside with growth ranging from 4% to 18% during the month.
Condo prices rose in general with the exception of the Central Coast, Far North, and Inland Empire. Looks like workers are beginning to head back to the cities for work.
Housing Inventory Falling
Housing inventory continues its downward path falling to its lowest level in 4 months. California now has 1.8 months of home supply.
California Housing Market Forecast
A Fitch Ratings’ quarterly review of housing valuations) about the California Bubble watch suggests homes in the state right now are 10% to 14% too high. The report suggests the Federal Reserve’s meddling in bond markets is the force behind excessive house valuations.
With tapering of asset purchases, the pressure on prices would ease. And should mortgage rates 1 to 3% as predicted, further demand is taken away.
In its report, Fitch says ”If the 30-year mortgage rate increases to 4%, the ratio of mortgage payments to monthly income could rise to 19% — assuming home prices and monthly income remain constant at 2021’s levels. This would represent a record high since the financial crisis and a challenge for home price growth.”
NAR’s own 2022 California Economic and Housing Forecast released during the REimagine! Real EstateVirtual Conference & Expo predict sales to drop next year while prices will rise.
Case for a Better 2022
- covid cases are easing
- job growth is improving
- home prices rising reflecting strong interest
- new home construction picking up
- trend to moving away from CA is easing
- high wage sectors have recovered
- interest rates are still very low
- first time buyer interest still high
- 2nd/vacation home buying growing
- homes sales growing faster in core cities
California Economic Outlook
Best Performing Cities in California
Where to buy your next home in the Golden State? Homesnacks conducted an estimate based on about 5,000 population and growing, rising home prices, and within 20% of state price average. Here’s their best picks:
- Los Altos
- Aliso Viejo
- Los Altos Hills
- Pacific Grove
- Palos Verdes Estates
Realtors will need better strategies on how to get people to sell their homes.
rom is $569,000 currently in March 2021. The averagehome rental in California is up to $2657 per month. Mortgage delinquency rate is very low at .6%.
Post Pandemic, if Fed stimulus is executed, and oil restrictions eased, we might see a return to the price growth typical before 2019. There is lots of demographic, wealth, return to work, and other factors that should help prices achieve another 5% growth.
California Home Price Growth 2017 to 2020 by County
|California County||Median Price June 2020||Median Price May 2020||Median Price 2017||3 year change|
|Contra Costa County||$750,500||$690,000.00||$570,750.00||24.0%|
|Los Angeles County||$610,260||$546,930.00||$581,000.00||4.8%|
|San Diego County||$678,000||$655,000.00||$550,000.00||18.9%|
|San Francisco County||$1,805,000||$1,627,500.00||$1,325,000.00||26.6%|
|San Joaquin County||$415,000||$415,000.00||$386,500.00||6.9%|
|San Luis Obispo County||$645,500||$632,500.00||$599,000.00||7.2%|
|San Mateo County||$1,735,000||$1,650,000.00||$1,250,000.00||28.0%|
|Santa Barbara County||$671,750||$637,500.00||$545,000.00||18.9%|
|Santa Clara County||$1,382,000||$1,365,000.00||$1,000,000.00||27.6%|
|Santa Cruz County||$905,000||$850,000.00||$727,000.00||19.7%|
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