Average Home Prices in California to Rise
California’s housing market just like the US housing market, is subdued by a continued lack of supply, affordability issues, rising interest rates, buyer anxiety and hope for falling prices, and very high home prices.
California Association of Realtors released its latest report and there are some good signs. Month to month sales jumped 46% in San Francisco, and prices rose 8.4%. Contra Costa and Santa Clara also saw sales jump from February. Average home prices in Los Angeles are higher than 12 months ago and sales in San Diego and Sacramento are above 30% higher MoM. Price growth is subdued.
California home prices are rising faster than this time last year.
Here’ the most recent California housing market news:
- there were 397,210 single, detached home sales in March (down .2 percent from February and down 6.3% from last March.
- California median home price was $565,880 (down 5.9% from February and up 0.2% from last March.
- year-to-date sales were down 8.2%
- pending sales had its first growth in 27 months (at all price levels)
- active listings are growing but inventory is down to 3.6 months
- days on market dropped from 33 to 25
- statewide sales-price-to-list-price ratio fell to 98.5%
- average mortgage payments in Bay Area is above $5000 per month
Besides lower mortgage rates (The 30-year, fixed-mortgage averaged 4.27%), falling mortgage payments, higher home inventories, and a continuing robust economy, buyers are choosing to sit it out until the US trade situation stabilizes. Buyers might be wary of overbidding at a time when a recession or even a housing crash is possible in 2020.
For buyers with funds, active listings are on the rise. Active listings are up 30% in Southern California. And for sellers prices are expected to rise. Once the economy resumes its strong growth, and jobs growth, we may see stronger price growth than expected.
California Cities Have Unique Demand
Housing market statistics vary depending on which city you are in. Migration out of dense, high priced communities to other cities creates these price variations.
Highly populated regions such as San Francisco/Bay Area, Los Angeles, and San Diego saw dropping sales in December. Prices in most districts however rose with Central coast communities seeing a strong 9% growth.
NAR said home prices rose 7.9% last year and Zillow believes home prices will further rise 7.3% this year. Cities with the highest price growth are Los Angeles, Tehama, Santa Barbara, Yuba, Merced, Santa Cruz and San Bernardino. The Bay Area is getting hit the hardest, with its lowest performance since 2010.
Listings in the Bay Area are up 37%.
“30,300 new and resale home transactions closed escrow in California during December 2018. The number of homes sold was 20% lower than a year earlier, amounting to 7,400 fewer sales in the single month of December, and total annual sales volume 4% below 2018. 2018 ended with 442,000 home sales in California — 19,900 fewer than took place in 2017 (-4.3%)” — from Firstuesday California report.
Predictions about California’s metro housing markets by CAR Realtors sees a slower market with homeowners hanging onto their homes and buyers unable to afford to buy. Without good locations to move to, and high prices for what’s available means everyone is staying put and fewer pending sales. CAR believes this will subdue sales throughout 2019.
The condo segment of California’s housing scene is where the action is. Prices of condos keep rising due to the low availability and high prices of detached homes.
There’s plenty of housing bubble theories but a crash seems pretty far off with home equity strong and delinquency rates very low. This graphic of southern California home stats shows just how strong the drop in sales has been.
Randy Patrick of Housing Bubble 2.0 says the market is negative and might be ready for a fall:
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:
- Dos Palos
- San Pablo
- Los Banos
- Lake Elsinore
Realtors will need better strategies on how to get people to sell their homes.
China Tariffs and 2019/2020 Growth
China trade tariffs and US business repatriation could stimulate California’s economy and encourage more home building. Many believe America First may not be good for California, New York, or Florida or other states that depend on International trade. And many multinationals are headquartered in California and New York City.
Now that we’re past 2 years, the pain will be much less and a US first business agenda will bolster the stock markets more and power up employment in California.
Housing Predictions for 2020 in California
CAR’s 2019 California Housing Market Forecast projects a decline of over just over 3% in single-family home sales this year, at 396,800 sold units, slightly less 2018’s expected year end sales figure of 410,460 and that was 28,000 units less than 2017’s total sales.
Zillow expects California home prices to rise from $554,000 currently to $589,000 in October of 2019. Zillow giave California’s housing markets a 9.6 health rating overall and sees a price growth rate of 8.6%. Oddly, we’re seeing almost 1/5th of homes being sold with a price cut from previous sold price. The average home rental in California is $2500 per month.
California Home Price Growth 2017 to 2018 by County
|California County||Sold||Median Price 2017||Median Price 2018||% Change YoY|
|Contra Costa County||1050||$570,750.00||$550,000.00||3.8|
|Los Angeles County||5291||$581,000.00||$570,000.00||2|
|San Diego County||2643||$550,000.00||$540,000.00||1.9|
|San Francisco County||363||$1,325,000.00||$1,160,000.00||14.2|
|San Joaquin County||792||$386,500.00||$350,000.00||10.4|
|San Luis Obispo County||247||$599,000.00||$585,000.00||2.4|
|San Mateo County||407||$1,250,000.00||$1,200,250.00||4.1|
|Santa Barbara County||293||$545,000.00||$466,250.00||16.9|
|Santa Clara County||1146||$1,000,000.00||$1,000,000.00||1|
|Santa Cruz County||144||$727,000.00||$658,500.00||10.4|
Above California housing data courtesy of CAR.org
How California Home Prices have Grown
This animated chart above, from Calmatters shows how California’s home prices have grown. The attraction of California from business owners and new residents is too much to abate. With home prices expected to rise to $589,000 on average, the real CA housing market stats are more dramatic.
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