Housing Market California
Hoping to buy a house, townhome or condo in California in 2023? While expectations may run higher, it appears prices and mortgage costs will be higher according to the latest sales report from CAR.
The National Association of Realtors in it’s new release on the state of the California housing market shows sales are down yet median prices still rose.
Single-family home sales totaled 267,880 in April , a drop of 4.7% from March 2023, which is down 36.1% from last April 2022. Median home prices rose 3% to $815,340 in the last month, while still being down 7.85. The low supply and rising prices might work for landlords and property managers who are looking for growth and improved ROI.
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Unnatural and artificial policy changes can create volatility to scare off investors or any investment in asset improvement and encourage rent controls. In some cities, rent prices have skyrocketed. If California’s economy recovers from some very tough years, it could send rent prices much higher.
Latest reports from NAR Realtors shows some optimism about sales for the summer season.
In the first quarter, housing affordability in California reached is highest level in the last year. Lower home prices combined with slightly reduced mortgage rates improved the outlook for buyers in 2023.
Yet, only 20% of prospective homebuyers are able to buy a median-priced, existing single-family home in California during Q1 2023. That was actually up 3% from numbers in the Q4 of 2022, and is down 24% from Q1 of 2022.
“While home sales declined in April, the market is getting more competitive as we’re seeing time on the market before selling down to 20 days in April from 33 days in January and the share of homes sold above asking price double from one in five at the beginning of the year to more than two in five in April,” said C.A.R. President Jennifer Branchini. From CAR press relases on May 18th.
April’s Housing Stats by Region
California’s median home price surpassed $800,000 in April for the first time since October 2022 (+3.0% from $791,490 in March to $815,340 last month.
Last month’s median price was lower on a year-over-year basis for the sixth consecutive month, declining 7.8 percent from the revised $884,680 recorded last April. The sizable drop in median price from last year was due partly to the strong price surge in early 2022 when homebuyers rushed into the market to take advantage of low rates before the Fed began aggressively raising rates.
CAR Housing Forecast Revised for Full Year 2023
C.A.R. just revised its 2023 Housing Market Forecast. They see existing single-family home sales to fall 18.2% to 279,900 units this year vas 342,000 homes sold in 2022. They expect home prices to improve in Q3 & Q4 this year, over in 2023 they expect the medium home will delince 5.6% compared to 2022, to $776,600 in 2023 ($822,300 in 2022). They had predicted a median 2023 price of $758,600 forecast last October.
They report home sales fell faster in all California regions with sales in the San Francisco Bay Area dropping 38%, while the Central Valley fell 36.7%.
Inventories of housing residential real estate in California rose slightly after a 2 month downtrend. dipping month-over-month for two straight months. Across the state, the unsold inventory index (UII) in April 2023 rose from from last year up 38.9% YoY. Unsold properties increased the most in the $1 million and higher price category (64.7%), followed by the $500,000-$749,000 price range (33.3%), <$500,000 (26.3T) and the $750,000-$999,000 sector (up 21.1%).
Unsold inventories of single family houses was the highest in the Far North (3.0 months) and in the Los Angeles region (1.9 months) and in Southern California (1.8 months) according to new C.A.R. stats released.
The highest month to month home price increases month to month were in the Central Coast (+10.6%), Far North (+8.5%), and Southern California (+1.9%).
Marin county (+11.9%), San Mateo (+5.9%), Santa Clara (+5.9%), Santa Barbara (+40.5%), Santa Cruz county (+12%), Butte county (+11.2%), Tehama (+11.2%), Mono county (+57%), and Siskiyou county (+20.4%) had the highest price growth from March.
Year over year of course, all counties are down pricewise, as that was the peak of the housing boom.
Days on market for single family homes is almost double that of April 2022 at 20 days (11 days in April 2022). C.A.R.’s statewide sales-price-to-list-price ratio was 1005 in April 2023 compared to 104.2 last April of 2022.
This last stats shows sellers are asking for and getting their price or they’re not selling. Staying put is the trend that many in the media won’t comment on.
It makes buying and selling and moving a tough challenge which alone may suppress the residential real estate market and lead to economic stagnation.
Homes Sold over Asking in April
Buyers will have better results in outlying regions of the state, rather than in the Bay Area, San Diego or Los Angeles. Home sold above asking price have slid overall, but remain highest in the major urban regions.
Housing Market in Mid-April, the latest indictors:
The latest report shows Realtors® expect both home prices will rise, but fewer of the belief that listings and sales will continue rising. Realtors closed more sales last week so the sales trend appears firm, and listings continue a downward trend. Only 18% of Realtors® reported having a listing.
Can we can expect similar sales/price trends in other markets including the Atlanta Housing market, New Jersey Housing market, Nashville housing market, Denver Housing market, and Las Vegas housing market.
* Many thanks to CAR for the market info and graphics.
Will California Home Prices Fall in 2023?
span style=”font-size: 14pt;”>Buyers and even renters are curious about whether prices might fall. Yet as we saw above, and despite economists and analysts speaking of a 2023 recession with no recovery until 2024, there is low housing and rental supply. That has to translate to higher home prices as buyers give in to homeowners asking prices. This could also mean higher rent prices.
Is it a good time to buy a rental property in the Golden State in 2023? Most Millennial-aged Californians will prefer to continue renting until there is more economic certainty and numbers to justify the buy decision.
The biggest factors for the housing market forecast:
- rising interest rates (25 basis points expected in May)
- home prices appear to be rising although not at the pace of 2022
- supply continues to weaken encouraging price to rise
- tech sector uncertainty will weaken demand
- China’s economy reopening which could stimulate California’s economy
Forecasted for This Year
Unexpectedly for most Realtors, homeowners and home sellers, the debt ceiling crisis may result in upward pressure on interest rates. If rates persist, it could deflate many of the optimistic projections for sales. And prices would like still rise given the severe housing shortages.
C.A.R. Vice President and Chief Economist Jordan Levine predicted that “High inflationary pressures will keep mortgage rates elevated, which will reduce homebuyers’ purchasing power and depress housing affordability in the upcoming year. With borrowing costs remaining high in the next 12 months, a pull-back in sales and a downward adjustment in home prices are expected in 2023.”
Levine added, “Home prices will also moderate further over the next several months as interest rates remain elevated in the near term and seasonal factors come into play.”
CAR in its 2023 California Housing Market Forecast report, had predicted a 7.2% drop existing single-family home sales in 2023. They believed it would reach 333,450 sold unit units, down from their projected previous sales volume of 359,220 units for this year (19.2% less than the 444,520 homes sold in 2021).
The median home price outlook was for a decline of 8.8% to $758,600 next year following a projected 5.7% growth this year to $831,460. CAR adjust the forecasts each month as new economic events and factors come into play.
The rental market however appears to be a different story from the home resales market. Rental property investors have a completely different opportunity to recover their costs (with well selected properties).
CAR Realtors Survey November
California Realtors polled in November were bleak about their prospects, but this month’s survey shows buyer cold feet down, Realtor optimism up, and seller activity is up.
Hottest Cities in California
Those cities with the highest price growth reported by Redfin for March 2023:
Californians Looking Elsewhere
California has the highest percentage of people looking to buy elsewhere. California, New York, District of Columbia, Massachusetts, and Illinois were the top 5 states homebuyers searched to move from. The top 5 states homebuyers searched to move to were Florida, Texas, Arizona, Maryland, and South Carolina.
The combination of housing market downturn risk, rising interest rates, and inflation are making more Californian homeowners consider selling their property this fall. That selling intention is lessened by desires to get a comfortable price, having to make extreme relocation choices, and entering into a new, more expensive mortgage.
It’s perhaps the most difficult time for sellers to be able to sell their home.
Buyers in many states are still walking away from deals at a faster pace too given they can now walk away if they can’t get the right financing, don’t like inspection reports, and other reasons. The desperate bidding war environment where they waived inspections, etc. has ended. According to Redfin, nationwide, buyers walked away from 15% of deals in August.
As layoffs in the corporate sector grow against fast rising mortgage rates, August and September’s housing market decline may worsen the October and December outlook.
California Condo/Townhouse Prices Rise
Condo prices dropped steeply in NAPA (-31.9%), SF Bay Area (-3.4%), Santa Barbara (-22%), Fresno (-17%), and San Mateo (-7.9%) while prices rose in Monterey (+16.9%), Solano (+21.7%), and San Bernardino (+14.5%). This month’s stats don’t help to answer the much asked question in the past ten years about will prices drop?.
The forecast for landlords and the rental sector is a little better. Those rental managers who use a next generation property management software are most likely to generate the best profitability in 2023. See more on the rental market forecast. Find the best rental properties in California.
September Housing Stats for Major Metros
The Los Angeles Metro Area in September suffered a 1% drop in price or $7,430 on average on the sale of a single family houses to $742,570. Sales in Metro LA fell 12.% from September and are down 40.8% from 12 months ago.
The Central Coast region saw its average price rise 1.9% or $17,500 while sales fell 22% vs September and were down 38.8% from 12 months ago.
The San Francisco Bay Area saw prices rise .5% to $1,250,500 while sales declined 3.4% vs September — down 26% year over year.
In San Francisco itself, home prices rose $42,500 or .2.6% vs September while sales increased 7.4%.
Orange County saw house prices fall $35,000 or 3.1% to$1,165,000, which is up 4% from one year ago. San Bernardino County saw house prices fall 3.1% or $15,000 to a new median of $480,000. Riverside home prices stayed even at about $600,000 while sales declined 19.2% vs last month.
In San Diego County, homes prices rose $4,000 to $899,000, a 1.6% jump while sales fell 15.6% in October.
In Sacramento County, existing home prices fell 1.4% or ($7,500) in October, while sales grew 4.7% fell 19.2%.
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 for California properties in any of its cities. If high taxes, regulations, fires, floods, inflation and high prices can’t scare buyers away, what could?
Looking for the best cities to buy a rental property and need to learn more about property management services? Get more insight and tips on the rental market on the ManageCasa Blog.
Calls for an economic recession and flat 2023 sales year would have most experts seeing reduced sales and prices in California which is seeing businesses and residents flee to more tax and cost friendly states such as Texas and Florida.
Inflation came in at 8.2% in September. If energy prices rise this fall, it’s easy to predict stronger Fed rate hikes to slow inflation further so they can meet their 2% inflation rate goals. Some are hoping the Fed will capitulate and pivot to avoid further hikes.<
California Rent Prices
11 California cities ranked as most expensive for renters out of top 70 in the US according to a new report from Zumper. Here are the mid July California rent price stats provided by Zumper.com.
|1 Bedroom||2 Bedrooms|
|2||San Francisco, CA||$3,000||3.4%||7.5%||$3,950||-1.3%||7.0%|
|3||San Jose, CA||$2,570||3.6%||19.0%||$3,130||2.0%||15.9%|
|6||Los Angeles, CA||$2,360||0.0%||18.0%||$3,200||0.6%||16.4%|
|7||San Diego, CA||$2,320||-6.1%||20.8%||$2,910||-6.1%||14.6%|
|9||Santa Ana, CA||$2,110||3.4%||24.1%||$2,770||-3.5%||23.7%|
|18||Long Beach, CA||$1,710||-1.7%||6.2%||$2,280||-5.0%||7.5%|
CAR stats show lower income Californians were hurt by the pandemic and aren’t participating in the recovery as yet. See more on the 2022 rental market forecast and the US rental market report.
California Rent Prices
Most CA city’s rent prices declined during the month, although not as fast as other US cities. California cities took 6 out of the top 10 rankings for top prices in the US. Given housing prices are so high, buyers are into the rental market firmly now.
|1 Bedroom||2 Bedrooms|
|San Francisco, CA||$3,020||-2.6%||7.9%||$4,060||-2.6%||5.2%|
|San Jose, CA||$2,600||-6.1%||12.6%||$3,230||-2.1%||13.3%|
|San Diego, CA||$2,500||-4.6%||21.4%||$3,210||-6.1%||17.6%|
|Los Angeles, CA||$2,410||-2.4%||12.6%||$3,300||-0.9%||11.9%|
|Santa Ana, CA||$2,150||-0.5%||20.8%||$2,770||-4.5%||9.1%|
|Long Beach, CA||$1,800||0.0%||11.8%||$2,420||-3.2%||12.6%|
Sales growth normally recedes in the fall months, but this fall season, the decline could be much steeper. Pending sales have been dropping even in the luxury home market. Pending sales of condos and townhomes have continued to drop.
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.
Read more on the San Francisco Market, San Diego market, and Los Angeles market.
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.
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.
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.
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 or 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.
As the graphic shows, affordability has jumped back up the top reason for relocating in California.
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.
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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 real estate housing market.
The key story with Los Angeles, San Francisco, San Jose, Santa Clara, San Diego, Orange County, Riverside, San Bernardino, etc. is the lack of listings.
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