California Real Estate Market Forecast
The California Association of Realtors in its April housing market report shows home sales dropped while average prices rose above $800,000 for the first time since last October.
What’s dictating prices and sales is rising mortgage rates and fewer homebuyers willing to sell. The US economic environment isn’t positive and is creating stagnation. Similar circumstances exist in all US housing markets from Florida to Massachusetts.
April home sales fell 4.7% vs March even though prices actually climbed, most due to luxury home sales. What’s amazing about demand and prices in the Golden State is that outmigration of people to others states has been strong. This chart from Calmatters shows it clearly.
34% of Californians have considered relocation. Remote work has been cited as allowing many tech workers to leave for less expensive states. Housing costs, cost of living, taxes, crime, and more add to the exodus. If not for this outmigration, what would home prices be like?
California Realtors Housing Market Forecast
C.A.R. has revised its 2023 Housing Market Forecast. They project that existing single-family home sales will fall to 279,900 units in 2023, a decline of 18.2% from that sold in 2022. Despite prices rises this year, CAR sees home prices will fall 5.6% to $776,600 in 2023, down ($822,300 in 2022). They see 30-year fixed mortgage interest rates to average 6.3% for the year.
Of course, a lot is up in the air politically and with the FED obsession and mission to drop inflation back to 2%. There’s no certainty that inflation has been beaten, but trends do indicate reclining consumer demand. Another bank failure might be what signals the FED has gone far enough. Americans have been withdrawing money from small banks of late so we may see some bank failures yet.
California Realtors are feeling optimistic about the week ahead:
The average number of days it took to sell a California single-family almost doubled to 20 days in April 2023, from only 11 days in April 2022.
April Sales and Price Report
All 51 California counties tracked by C.A.R. had sales declines. 44 counties saw year over year drops of 30+ while 5 counties saw declines of 50+ vs last April 2022.
Housing inventory in California rose after a two month decline. California’s unsold Inventory Index (UII) rose 38.9% on a year-over-year basis. Let’s review the stats in CAR’s charts:
April’s Sales Chart
Sales levels have dipped back to levels of the great recession and while that is alarming, the road ahead in the next 5 years will be better. That’s not much solace for buyers desperate to buy now, however, by saving for several years for a home, the pain of buying should be less, and mortgage rates could be much lower by 2024/2025.
April’s Housing Price Chart
Prices remain elevated and constricted by high mortgage rates and low supply. Despite tough financing conditions, home prices rose, especially in the $1 million and above range. If not for high priced homes, the price trend may point downward.
Prices of Homes sold by Asking Price by County
Mortgage Rates and Trends
The Fannie Mae Home Purchase Sentiment Index® (HPSI) increased in April to its highest level since May 2022, jumping 5.5 points to 66.8.
California New Home Listings
Realtors will need better strategies on how to get homeowners to sell their homes.
If you’ve read the latest jobs report, and the US economic forecast, you can understand the transition all states are in, including California. Jobs are returning, but the best is still yet to come.
rom is $569,000 currently in March 2021. The average home 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 2023 by County
Was buying real estate before 2107 a good idea?
|California County||Median Price April 2023||Median Price May 2020||Median Price 2017||6 Year Price Change|
|Contra Costa County||$900,000||$690,000||$570,750||36.5%|
|Los Angeles County||$738,520||$546,930||$581,000||21.3%|
|San Diego County||$930,000||$655,000||$550,000||40.8%|
|San Francisco County||$1,587,500||$1,627,500||$1,325,000||16.6%|
|San Joaquin County||$520,000||$415,000||$386,500||25.7%|
|San Luis Obispo County||$925,000||$632,500||$599,000||35.2%|
|San Mateo County||$1,970,000||$1,650,000||$1,250,000||36.5%|
|Santa Barbara County||$1,080,500||$637,500||$545,000||49.5%|
|Santa Clara County||$1,800,000||$1,365,000||$1,000,000||44.4%|
|Santa Cruz County||$1,349,500||$850,000||$727,000||46.1%|
See more on the Los Angeles housing report, San Francisco housing market report, San Diego housing market report and the Sacramento housing report.
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See more forecasts on the real estate housing market, and the latest home prices and sales trends for numerous major metros in California including San Diego, Los Angeles, San Francisco, and Sacramento. See stats on other cities, including Denver, Dallas, New York, Boston, Atlanta and in the Florida housing market in Miami and Tampa. Visit linkedin if you’re seeking advanced level SEO and real estate marketing services.
Rising mortgage rates, inflation, reduced housing supply and high home prices threaten the markets, it appears 2002’s real estate scene will stay strong. Realtors may want to build their presence this year as house prices decline in 2023. Lower prices will bring plenty of homes onto the market and boost your opportunities.
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