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California Housing Market Report & Predictions 2021

April 25, 2021

California’s Housing Market Forecast

The latest home sales and price data from CAR shows the California housing market is progressing but is constrained by a lack of supply.

For renters, the 13 months of the pandemic eased rent prices in California, however that trend appears to be abating (see below).

In March, both prices and sales took a major leap upward. Nearly two thirds of homes sold were above asking price.   The Median California statewide median home price rose 8.6% to $758,990 from February and was up 23.9% from March 2020. Year to date home sales across the state jumped 17.1% from March 2020.

Closed escrow sales of existing, single-family detached homes reached a seasonally adjusted annualized rate of 446,410 last month. It’s a seller’s market and buyers are facing very competitive conditions. The price trends in California are supporting a much stronger rental property market and helping to grow demand for property managers and online property management software. Learn more about the sector.

California Realtors Still Optimistic

58% of California Realtors® feel sales will rise this coming week and 72% feel prices will rise even though listings and sales are dropping. Growing vaccinations are likely increasing buyers’ and sellers desire to sell at these very high prices, yet listings are shrinking.

“While intense homebuying interest is the engine that continues to drive housing demand, a shortage of homes for sales is the rocket fuel pushing prices higher across the state. A lack of homes for sale is creating unprecedented market competition, leading to a record share of homes selling above asking price in March,” said C.A.R. President Dave Walsh

Year over year, prices and sales of homes are well up. Despite this terrible pandemic, a severe housing shortage, and a shrinking, shutdown California economy, the housing market continues a hot pace.

April home prices changes California.

Screenshot courtesy of CAR. April 2021 home prices changes California.

March 2021 Housing Market Report

The latest California Association of Realtors report for March 2021 just released, shows overall that home and condo prices statewide rose. Notable growth was predictably in single family houses, where prices rose sharply at 8.6% and are up 23.9% year over year. Sales slumped due to diminished supply and reduced new listings.  It might suggest a forecast of much higher prices over the next 6 months until new construction can help out.

California Housing Market, Sales and Prices in each Region. Screenshot courtesy of CAR.

CAR reports that March home sales dropped by 3.5% from 462,720 in February yet are still up almost 20% from last March when 373,070 homes were sold on an annualized basis.

 

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Housing market summary. Screenshot courtesy of CAR.

The exodus from the metros continues as home sales in resort markets remained robust in March.  Big Bear, Lake Arrowhead, and South Lake Tahoe saw sales grow 50% higher compared to last March. South Lake Tahoe was particularly brisk in March seeing home sales rising increases 128% compared to last March. Lake Arrowhead also had sales growth in the triple-digits year-over-year.  Big Bear home sales rose 55% while sales in Mammoth Lakes rose 16.7%.

All 51 counties tracked by C.A.R. reported a gain in median price on a year-over-year basis, with 45 of them increasing more than 10%. Active listings fell 51.1% in March from last year — the third consecutive month that listings declined more than 50%.

The Metro LA saw new sales growth of 36% over February while home prices grew 4.8%. LA home prices are up 36% year over year, while sales have increased 24.5%. The LA market is officially sizzling hot.

San Francisco Bay Area Housing market snapshot. Screenshot courtesy of CAR.

The San Francisco Bay Area including the most pricey districts had the highest year-over-year sales growth rate at a gain of 5.2%% over February. The Central Coast (5.2%) and Southern California (4.4%) regions saw big price growth.

All major regions’ median prices continued to increase by double digits on a yearly basis. San Francisco itself bucked the trend seeing prices fall 1.8%, even though sales jumped by 81%.  Homes in Contra Costa jumped 12.5% to $920,000, while home prices in Santa Clara and Solana jumped 7.7%.

San Francisco County saw surprising monthly price growth fall to $1,755,000.  And nearby Monterrey enjoyed a 9.6% increase. Smaller counties of Lassen (+21%), Plumas, San Benito, and Mono saw significant home price increases as well.

CAR President Dave Walsh said “It’s a testament to the strength of the market that even after the pandemic effectively shut down the spring home-buying season in 2020, the market still was able to recover the substantial sales lost in the first half of the year and even top 2019’s levels,”

 

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.

Zumper’s report shows the California one bedroom median rent was $1,762 last month. Let’s review Zumper’s findings.

Pos.CityPriceM/M %Y/Y %PriceM/M %Y/Y %
1San Francisco, CA$2,6500.00%-24.30%$3,5000.00%-22.90%
3San Jose, CA$2,100-3.70%-17.60%$2,650-1.10%-12.50%
6Oakland, CA$1,930-3.50%-19.60%$2,480-0.80%-17.10%
8San Diego, CA$1,800-1.10%0.00%$2,4000.00%0.00%
9Santa Ana, CA$1,7000.00%0.60%$2,3800.40%8.70%
10Anaheim, CA$1,6900.60%2.40%$2,0301.50%2.00%
12Long Beach, CA$1,6000.00%0.60%$2,0100.50%0.50%
22Sacramento, CA$1,420-0.70%9.20%$1,770-2.70%14.90%

California Rent Prices by City

Rent prices in California Cities. Screenshot courtesy of Zumper.

California renters have asked “will rent prices drop?” and it appears they have.  In the Bay area especially, rent prices have fallen significantly.

Rent price drops across California cities, 2021. Screenshot courtesy of Zumper.

Red Hot Real Estate in Some Areas of California

Why are people buying real estate in California? It’s the move to the pandemic destination cities/communities. Californians continue to move to more spacious homes with room for offices or a garden, take advantage of ultra low-interest rates, and sellers are happy to sell at such record prices.  The California real estate market still seems to be a good investment.

California’s housing market continues to be the bright spot in the economy, but the direction and pace of the recovery will hinge on the coronavirus pandemic and the distribution of the vaccine in the coming months,” said Leslie Appleton-Young, CAR’s Senior Vice President and Chief Economist.

Is it a Good Time to Buy a Home?

According to C.A.R.’s monthly Consumer Housing Sentiment Index, 59 percent 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.

Red Hot Real Estate in Some Areas of California

 

California’s housing market continues to be the bright spot in the economy, but the direction and pace of the recovery will hinge on the coronavirus pandemic and the distribution of the vaccine in the coming months,” said Leslie Appleton-Young, CAR’s Senior Vice President and Chief Economist.

 

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.  However, with the phenomenal growth of price likely this spring and summer, it’s a good bet home prices will rise strongly and listings will grow too.

It’s absolutely the biggest seller’s market ever across California. And perhaps more so for the pandemic destination cities within the state.

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.

 

 

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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.

Home Sales in California in March

Housing sales summary California in March. Screenshot courtesy of CAR.

 

Sales growth Chart California March 2021. Screenshot courtesy of CAR.

 

California median home Price March 2021. Screenshot courtesy of CAR.

California Condo Stats

Sales of condos and townhouses fell 26.8% from December’s numbers yet are still up 29.2% YoY.  While buyers might expect the condo market to be troubled due to the pandemic, but as vaccinations grow, this market will be the one we’ll be talking about more this summer.

California condo/townhome median price, March 2021. Screenshot courtesy of CAR.

 

March condo prices California. Screenshot courtesy of CAR.

Will California’s Home Price Rise through 2021?

A lot of buyers are asking whether home prices will rise or fall?  High demand, low mortgage rates, and low inventory will likely skew homes and condo prices higher.  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.

 

Trending California Housing Stats

However, a bigger trend to buying luxury homes with more space, away from dense urban areas is also taking hold across the country and in California. Low mortgage rates make buying luxury homes a more viable possibility for wealthy buyers and investors.

For rental property managers and landlords, the latest employment and rent default numbers are not encouraging. Please remember that a modern property management software is a great way to increase rent collection, improve tenant relations, and manage your property finances.

Sales of higher-end homes are soaring. Sales of homes above $2 million jumped again in March at 121%. Sales of ultra-low end homes (under $300,00) reduced by 36%.

Home Sales by Region

Home sales in the Bay Area grew 34.4% and the Central Coast was second for November at 33.4% growth.

Home Sales and Prices in Major Metros

Los Angeles, San Francisco, San Diego House Prices continue to climb.

What’s notable about home sales in the major metros is price growth compared to last December. Homeowners who held onto their homes have been rewarded with whopping increases in sold prices. Yet without new supply, pending sales are down.

In Los Angeles Count, in March, house prices rose 4.8% to $680,000 which was 22% higher than March 2020.  Overall, LA home sales rose 36% from last month, and are up 24.5% over 12 months ago.

In LA county, house prices fell .6% to $668,220 yet that is 17.7% higher than 12 months ago. Sales grew 39% in LA County in March yet and that is up 26.2% from last March. Condo prices in Metro Los Angeles hit $512,000 on average which is up 2.5% from February, and up 38% from 12 months ago.

Up in the SF Bay Area, in March, house prices rose 6.4% in March to an average of $1,755,0 from $1,150,000 in February.  That price is still up 24.1% from last March. Sales of houses were hot throughout the Bay Area jumped 51.3% month over month, and 35% year over year. 

In San Francisco, house prices fell 1.8% to $1,755,000 from $1,786,400 the previous month, a drop of $31,400.   Sales of houses rocketed 81.5% from February and that is up 56% from last March.  Condo prices in San Francisco dropped 2.1% to an average of $1,216,500.  Condo sales actually jumped 86.1%, and that is up 137.6% from last March.

In San Diego County, home prices rose 4.6% to $800,000 which is up 4.6% from 12 months ago.  Sales rose 29% in March, and are up 18.1% from 12 months ago.  Condo prices rose 1.4% to an $513,500 average, and are up 13.4% from last March

Orange County saw home prices rose 3% to $1,025,000 as sales rose 39% from February, and rose 30.4% above what they were in March 2020.

In Sacramento, home prices 4.85% to $485,000 in March, while sales grew 25.3% month over month, and 7.8% year over year.  Monterey saw house prices jump 13.5% to a new avaerage of $931,000.  Sales jumped 26.3% month over month, and that was 27% rise year over year. 

California Homes for Sale (Listings)

The key issue for the market is a lack of California homes for sale. As sales have grown, the number of active listings continues to drop suggesting a crisis point might be met in future when a severe shortage is reached amidst post-pandemic buyers with renewed buying power.

 

California Housing Market Forecast 2021

Updated C.A.R. Predicts More Home Sales and Higher Prices in 2021: Leslie Appleton-Young delivered her updated California housing market forecast for 2021.  She expects 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.

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.

Screenshot courtesy of CAR.org and their 2021 Market Forecast.

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It might have been premature, but Realtors and homeowners are asking for much more than the going rate. This could be in anticipation of even fewer home listings than normal.

Unsold inventory has dropped as there are fewer active listings and sales are rising fast. This could lead to much higher price growth.

New Update for Corona Virus Period

Jordan Levine, Deputy Chief Economist with the California Association of Realtors® feels the housing market bottom is appearing.  The resurgence of the Virus across the state is particularly troubling and could wound confidence in economic recovery.

California Consumer Confidence

Screenshot courtesy of CAR.org

 

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.

See more about the rental markets.

Housing Market 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.

Infographic courtesy of CAR.org.

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.

Zillow Forecasts for Home Prices

Zillow forecasts a price of 10.6% by next November 2021.

Zillow had reported in its latest release that home prices were expected to fall slightly for the rest of the year.  However, that didn’t happened. 

Their forecast of a 1.1% drop in price would have been good news for Millennials in LA, San Diego, San Jose and San Francisco who are hoping to take advantage of historic low mortgage rates. Yet, limited supply, a federal stimulus deal, and the coming spring housing market will likely see much higher house prices.

However, that’s not dampening the spirits of hopeful buyers in California. 48% of Zillow survey respondents said it’s a good time to buy.

This 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.  Google Trends reports the search volume for homes for sale within California.

 

Booming Online Software Solutions

The new residential and commercial housing market in California has changed. Renters and business owners will seek layouts and buildings with room. The 6 foot social distancing mandate makes crowded spaces a big problem.

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.

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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Read more Housing and Property Management Topics:

See also: Housing Market |  Property Management Software | Property Management Software DemoHousing Market ForecastRental AdvertisingRental MarketHouses for RentApartment Management SoftwareHousing Market Forecast 2021 | Hawaii Real Estate ForecastDenver Housing Forecast 2021 | Los Angeles Home Prices |  San Diego Housing Market | Florida Property Management Companies | California Property Management Companies | Arizona Property Management Companies | South Carolina Property Management Companies | Property Management InsightsProperty Management Companies

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