California Housing Market
Buyers are wondering when to buy, but sellers don’t look willing to sell, and then be faced with high rising mortgage rates themselves. It’s a perfect storm for the California real estate market as affordability plummets.
California home prices soared 4.1% higher than March’s levels to a new record again at $884,890. Sales are slowing and fell 1.9% from March and are down 8.5% from last April.
Judging by declining sales which are uncharacteristically slow at peak buying season, Realtor’s latest outlook this month, and expected rising interest rates, the prediction is for a cooling California real estate market.
When Will Home Prices Drop in California?
Californians are constantly asking if and when home prices will drop, just as the outlook for the summer is perhaps for further new records. It’s uncertain how further interest rate rises will be enacted by the US Federal Reserve, but recessionary trends are evident in the economy.
Rent prices too, having reached record heights are beginning to show slower growth. The rental market suffering from exceptionally low inventory will likely not show mercy to Californians for sometime. New housing development is once again slowing.
Higher priced homes in the state continue to sell well, while the low supply of affordable homes continues to shrink, making purchases less likely. The share of million-dollar home sales rose again in April to reach the highest level on record at 34.7% Homes sold below $500,000 hit and hit the lowest level recorded.
Supply is still a key matter even as prices and mortgage payments soar.
C.A.R. President Otto Catrina “As rates remain on the rise, the sense of urgency to buy is keeping the market highly competitive, especially since housing inventory continues to stay well below pre-pandemic levels… While we will likely see more listings come on to the market as we move further into the home-buying season, the housing shortage issue will likely persist throughout the rest of the year in major metropolitan areas, such as the Bay Area and the Southern California region.”
All 5 California regions fell by double digits year over year, with the Central Coast dropping 21.35, San Francisco Bay Area falling 18% and southern California down by 16%. 80% of counties saw a sales decline last month.
Homes in the San Francisco Bay Area rose the most at 15.9% clip year over year, while the Central Valley home price on average rising 14.9%. Mono county saw the highest price growth, up 142% year over year. The counties of Plumas (-12.5%), Glenn (-7.0%) and Tehama (-3.3%) actually saw home prices fall.
The number of listing rose a strong 20% and are the highest they’ve been since January 2019.
80% of counties saw big increases in listings. Yuba listings jumped of 176.7% compared to April 2021. Sutter active listing rose a high 108.7% while Glenn doubled vs 12 months ago.
Median days on market rose by just one day vs last April, and the California list to price ratio hit 104.2%.
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California Home Prices Rise Again
Totally against what would normally be expected with a sales decline, home prices only fell in 3 of 51 counties.
Single family home prices rose just more than $8,000 in the LA region, up $160,000 in San Francisco, and were up $13o,000 in in Santa Clara county. Conversely, house prices rose in San Diego by 7% to $950,000 which is up 18.8% from 12 months ago. Up in San Mateo, prices rose by $180,000 over the previous month and are up 8.6% from the previous month to $2,280,000 and are up $350,000 vs one year ago. Some cities are seeing a big growth in demand.
Condo prices however did decline $12,760 (-2.1 %) from last January to a new median of $600,000.
Housing inventory stayed at a record low of 1.8 months in March and days on market too remained at a low 8 days.
Recently, CAR reported a record low number of homes viewed per homebuyer now at 8, and 3 of them are online viewings. Two years ago homebuyers viewed 12 homes on average.
Housing Stats for Major Metros
The Los Angeles Metro Area saw a slight month to month price rise for single family houses of 3.9% or $30,000 in home value. Sales were down 3% from March and down 16.8% year over year.
Los Angeles County single family homes reached an average price of $900,000 in April even though active listings rose by 8%.
The Central Coast region prices stayed level through but are up 13.4% year over year.
The San Francisco Bay Area year over year price increased about $95,280 for an 6.6 % growth month over month. Month over month home sales grew 5.4%.
Orange County saw prices rise 4.2% to a new median of $1,305,000. San Bernardino County saw houses rise 4.2% (+$20,000) to $495,000 from March. And Ventura saw home prices rise 4.5% to $955,000.
In San Diego County, homes prices rose $25,000 vs March to $975,000 even as sales dropped 1.3% (down 12.6% vs 12 months ago.
In Sacramento County, existing home prices rose 1.8% to $570,000, which is up 16.3% from last April. Home sales in Sacramento country rose a solid 6.7% month to month yet have fallen 5% vs 12 months ago.
California Exodus Pushing Prices up Elsewhere?
California is being blamed for fast rising housing prices in other states such as Utah and Idaho. An exodus of people and businesses might sound threatening but it may be that this state’s housing market is invincible. People want to live or rent in California. There’s always buyers. If high taxes, regulations, fires, floods, and high prices can’t scare buyers away, what could?
We’ve got several infographics below courtesy of CAR’s December sales report which say everything about the real state and direction of California’s real estate market.
April 2022: Home Sales Drop Yet Prices Still Rise
Are you considering selling your house or apartment in California? See our tips on house renovation and apartment renovation. Landlords, are you looking for the best California cities to buy a rental property?
Inventory of California homes dipped again and active inventory took a decided downturn at -18.3%.
It took one more day to sell a home, from average of 11 days from 10 last month.
Condo prices hit a record height again in April reaching 700,000 on average. That price is up 22.8% in the last 12 months, and up more than 200% in the last ten years.
Mortgage affordability is worsening in the state as rates rise even though home price growth is moderating.
Demand for California Property Never Ceases
There might be one key fact that is inescapable in the California housing market that separates it from other states housing markets (except Florida and Texas). That is that everyone would like to live in California. California Realtors understand the demand. Demand will never cease unless prices rise very steeply. Even then, people from all over the world want to live in this incredible region.
More housing may not necessarily satiate demand for houses or rentals. No matter how much housing is built, it will be sought by buyers or renters. Advancing age, retirement, another cold winter with high heating prices will encourage yet another wave of migrants from the north. And with open borders, immigrants will pour into the California market which creates positive growth for property managers and landlords.
Californian renters want to know when rent prices will fall. With the recovery kicking into higher gear, rent prices looks to grow faster than housing prices (IMO).
California Homes For Sale
NAR reports that California has a high percentage of homeowners who have reached the “tenured” time period of 9 years in their homes. This is one sign that you may see more homes for sale. Currently Realtor.com has 90,197 homes listed for sale in the state of California. Zillow has more than 48,000 agent listings alone. Redfin has 52,000 homes listed for sale across CA.
2022 California Housing Market Forecast
CAR just released its own outlook on the California housing market for the year 2022. They forecast fewer sales and a price rise of 5.2% in 2022.
In that release, they state:
“The baseline scenario of C.A.R.’s “2022 California Housing Market Forecast” sees a decline in existing single-family home sales of 5.2 percent next year to reach 416,800 units, down from the projected 2021 sales figure of 439,800. The California median home price is forecast to rise 5.2 percent to $834,400 in 2022, following a projected 20.3 percent increase to $793,100 in 2021 from $659,400 in 2020.”
The report suggest job growth will be solid at 5.2% and non farm job growth will be up 4.6% next year. Combined with continued low mortgage rates, it doesn’t seem to back up the moderate forecast.
In fact, mortgage rates have risen strongly recently, particularly 5 year and 30 year mortgages. Rates for 30-year, fixed-mortgages averaged 3.07 percent in October, up from 2.85 last October. And the five-year, adjustable mortgage rate average 2.54% in October compared to 2.89% twelve months ago. In a recent survey, Redfin reports that buyers feel a stronger urgency about buying as interest rates rise. With limited housing, rising employment and rising interest rates then, it might suggest that home prices will rise toward the higher end of predictions.
Redfin in its most recent forecast report believes home prices will grow nationally at about 3%, while rent prices will rise 7% in 2022.
Will California’s Recovery Outpace the Nation in 2022?
California seemed to fare worst during the pandemic, but will its rebound lead the nation?
The state has finally seen an easing of the Delta Covid Variant, which took hold last year about this same time. New concerns about the Omicron variant are concerning, but experts believe current vaccinations should protect, and one vaccine company said it could create a protective vaccine against Omicron within 3 months.
National rent growth is up strongly 11% to 13% yet lagging considerably in California. However, rent growth in California is still rising well in San Diego, Orange County, Fresno, Bakersfield, Anaheim, and Los Angeles. Given the prices, it is a challenging market for rental property investors.
There are a few graphics from CAR’s new report that best reflect the new state of residential real estate across California. Those are active listings and sales price.
The charts below help to us a broader understanding of where the California housing market is right now, and how far it is from recovering. Supply is a big issue as the recovery quickens after the pandemic. The neglect and over regulation of this state’s housing market could cripple economic growth by scaring off workers who can’t find a place to live and increasing inflation again to make life in California’s big cities difficult.
Forecast from California Realtors
2021 was a very strange year which means the sales/price/listings comparison might not be too relevant, especially as we head toward 2022. Of greater interest to California home buyers is price changes monthly — the trends and which way they’re headed.
There is not strong downward indicators thus homeowners don’t feel the need to unload their properties.
Realtors are still decidedly pessimistic in October about sales and prices going forward.
Home sales are flat throughout 2021. The scarcity of listings is continuing and with material and labor shortages, housing construction numbers are disappointing. With the economy recovering and back to work routines returning, demand for housing in the large metros will increase. That will likely push home prices well up in 2022.
Enjoy all of the stats provided by the California Association of Realtors below. You should compare them with stats provided by Zillow and Redfin for further insights.
Sales growth normally recedes in the fall months, but this fall season, the decline is much steeper. Pending sales have been dropping by double digits since June, except in the luxury home market where sales are actually growing. Pending sales of condos and townhomes have continued to drop as well even as prices have hit $600k statewide. The pace of price growth in the condo/townhome segment however is slowing of late.
Condo prices rose in San Francisco, San Bernardino, Riverside and Fresno. Sales of condos dropped strongly month to month in almost every county except San Bernardino. Napa saw month to month sales drop of 40%.
New listings suffered its first double-digit decline since February and sales are outpacing new listings by 2700 units. The Bay Area suffered the steepest decline in new listings in September, down 19.8% YoY.
Redfin’s Latest Report for October
Redfin in its August report said home prices in California rose 14.2% year-over-year in August, slight less than August. They report the number of homes sold fell 3.2% and the number of homes for sale fell 28.2%. They say homes selling above list price rose 15% year over year yet 10.3% of homes are selling at a discount.
Sales Momentum Keeps Falling
“While home sales at the lower end of the market are underperforming due to a lack of supply and the economic uncertainty induced by the COVID resurgence, the higher-priced segments continue to see double-digit sales growth that’s keeping the overall market from moderating too fast,” said C.A.R. Vice President and Chief Economist Jordan Levine.
Mortgage Rates and Applications
Freddie Mac reported the 30-year, fixed-mortgage interest rate rose to 3.07 in October, up from 2.90 percent in September, and up from 2.89% last September 2020. The 5-year, ARM mortgage interest rate rose to 2.54% versus 2.45% in September.
Mortgage payment price growth is a concern for the market, as inflation increases and further rate hikes for 2022 were announced this week. Mortgage applications had declined 17 straight months. Of course, affordable housing supply and rising home prices are likely the main reason for that.
California real estate is always a hot topic. Find out more about rental property investment is wise and how property management software is providing the foundation for profitable rental portfolios.
Please note that CAR designates the Los Angeles Metropolitan Area as a 5- region that includes Los Angeles, Orange, Riverside , San Bernardino , and Ventura. The Bay Area includes: Alameda, Contra Costa, Marin, Napa, San Francisco, San Mateo, Santa Clara, Solano, and Sonoma. And the Inland Empire includes Riverside and San Bernardino counties.
Condo Report for California Regions
Condo prices in the big metros declined while in the Central Valley, they rose. The month to month trend is strongly downward.
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California Rental Housing Market
The pandemic resulted in a large number of residents exiting California, and many vacating apartments in the major metros. Not surprisingly, one and two bedroom rent prices have dropped. while rent drops year to year are well down from the beginning of the pandemic, month to month drops have flattened or are beginning to reverse.
A Zumper report shows the California one bedroom median rent was $1,762 in June. Let’s review Zumper’s findings.
|Pos.||City||Price||M/M %||Y/Y %||Price||M/M %||Y/Y %|
|1||San Francisco, CA||$2,650||0.00%||-24.30%||$3,500||0.00%||-22.90%|
|3||San Jose, CA||$2,100||-3.70%||-17.60%||$2,650||-1.10%||-12.50%|
|8||San Diego, CA||$1,800||-1.10%||0.00%||$2,400||0.00%||0.00%|
|9||Santa Ana, CA||$1,700||0.00%||0.60%||$2,380||0.40%||8.70%|
|12||Long Beach, CA||$1,600||0.00%||0.60%||$2,010||0.50%||0.50%|
California Rent Prices by City
California renters have asked “will rent prices drop?” and it appears they have. In the Bay area especially, rent prices have fallen significantly.
Is it a Good Time to Buy a Home in California?
According to C.A.R.’s monthly Consumer Housing Sentiment Index, in April, 59% of consumers said it was a good time to sell, up from 55% the previous. Only about 25% feel it is a good time to buy a home, unchanged from last year.
Certainly, the vaccinations will free up many older California residents perhaps to sell their homes at record prices. However, homeowners may be very cautious about relinquishing their valuable property when moving is difficult and costly, and homes are very hard to find. Without certain places to go, listings don’t grow as expected.
It’s absolutely the biggest seller’s market ever across California. And perhaps more so for the pandemic destination cities within the state.
The top challenge to the housing market in CA now as the coming end of pandemic stimulus payments to homeowners, renters, and small businesses. The end of the eviction moratorium could throw a large number of homes onto the market as owners can’t meet their mortgage obligations. The state’s unemployment rate improved to 7.9% in May but remains one of the highest unemployment rates in the nation.
Relocating to New Cities for Safety, Room and Improved Lifestyle
CAR’s forecast report shows the reasons people are relocating and buying, See some of that info below.
Sales and especially prices for condos in NAPA have rocketed (condo prices, see below, shot up almost 30% and sales rose 33% over February number). Condo prices in Shasta were up 81% over February and in Monterrey, were up 48%.
Although apartment rent prices are heading downward in the Bay Area as vacancy rates climb, other housing markets in the state are thriving. The demand is for single-family houses. It may be that when the pandemic is over, both the big cities and the rural regions will have evolved considerably.
For Landlords and Property Managers: This is an ideal time to Demo a modern Property Management Software Platform
Home listings continue to plummet which means price pressures could be intense as stimulus money arrives and the recovery begins. New funds would certainly help save landlords and the rental market, and support suburban housing markets around San Diego, Los Angeles, and San Francisco. See more on the Bay Area rental market.
Will California’s Home Prices Continue to Rise into 2022?
A lot of buyers are asking whether home prices will rise or fall? Renters are wondering if rent prices will fall? High demand, low mortgage rates, and low inventory will likely skew homes and condo prices higher. The trend is here and the return of buyers is here. A number of factors are contributing to California’s positive sales stats:
- desire to live away from the city in suburbs and rural regions and willingness top pay top dollar for homes
- record-low mortgage rates
- moving to regions (pandemic destination) that offer more room perhaps with an office or garden
- wealthy buyers have the funds ready
“Low rates and tight housing inventory are contributing factors to the statewide median price setting a new record high three months in a row from June to August. A change in the mix of sales is another variable that keeps pushing median prices higher, as sales growth of higher-priced properties continued to outpace their more affordable counterparts,” said C.A.R. Senior Vice President and Chief Economist Leslie Appleton-Young.
California Realtor’s Survey
The latest survey of Realtors shows fewer are withdrawing offer, more are listing new properties, and are not optimistic about sales or prices.
California Housing Market Forecast
C.A.R. Predicted More Home Sales and Higher Prices for 2021: Leslie Appleton-Young delivered her updated California housing market forecast for 2021. She expected sales to continue to improve through 2021. The prediction is based on growing buyer demand that’s pushed California’s median price above $700,000 and low inventories that will cause price increases. As know now, sales have declined.
California’s weekly showings index rose to 182.3% higher than it was in September of 2019. Mortgage rates have dropped back down and purchase applications rose 24.2% on an annual basis last week.
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GDP Forecasts are All over the Place
US real GDP growth was down -4.8% in the first quarter. Of course job losses have been significant, and there is doubt as to how quickly workers will be back on the job, and how many won’t be hired back. The good news is a big decline in new unemployment claims. Unemployment will be the heaviest weight, perhaps eliminating new young buyers from the market.
US major banks have reported wildly different views about GDP over the next 6 months and in 2021 (4.8% to 30% range for 5th quarter growth outlook).
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California’s Rental Market
Zumper reported that all west coast rental markets were trending downward. Their survey found 67% of renter respondents were financially impacted from the pandemic. Of those impacted, 35% lost their job or received a pay cut.
Learn more stats and forecasts/predictions regarding the rental market.
California Economic Forecast
Car predicts a J-shaped economic recovery extending over the next 12 months. Of course this trend will affect home prices in the coming 6 months.
Small Towns and Cities Seeing More Interest
With workers trying work at home arrangements,we may see more workers able to move away from high rent neighborhoods, perhaps even out of California. Employers are more accepting of the need to work at home, and one major real estate service CEO (Redfin) reported that demand in smaller cities is higher than in major cities.
The expected strong pickup in interest in homes for sale lately within San Diego, Oakland, San Francisco, and Los Angeles is a little shaky, however the trend is visible.
Booming Online Software Solutions
Realtors and property management pros are already testing out online maintenance scheduling and rent payment solutions. ManageCasa’s state of the art property management software integrates the global payment leader’s platform is the industry model. This might be the right time to make a platform switch. Check out online payments now.
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This updated report covers important stats including home prices, sales, and recent home sales trends from CAR, NAR, DOT, St Louis Fed, NAHB, Statista, Zillow and more. For national home price tends see the US housing market.