California Housing Market
The latest home sales stats for the month of July 2021 show that after 4 record-setting months, California home prices moderated slightly overall, yet price per square foot hit an all time high.
Sales to list price remains elevated the last few months as home supply becomes an issue across the state. On the positive side for buyers and Realtors, is active listings are trending upward.
Resale home sales and prices did fall slightly, yet considering everything that’s been happening lately, the downward movement could have been stronger.
Covid 19, fiscal crisis, drought, inflation, heat wave, forest fires and more cooled the California housing market a little, but year over year increases are still very high. In fact, home prices hit an all time high in southern California. That does show a lot of resilience.
Given the economic situation, one wonders what it would take for home prices to seriously recede so they are affordable. The drought is affecting California’s agricultural and manufacturing sector which requires water in big amounts. Manufacturing in CA actually uses 40% of available fresh water. This can affect new business development in the state as well as decide whether companies might want to head to greener pastures. However, the drought has hit the entire western region of the US.
Fortunately the tech sector which isn’t roaring of late is still warm enough to breathe life into the California real estate markets. Still in the Bay Area, home and condo prices fell 3.6%.
“The California housing market continues to normalize from the white-hot conditions we experienced at the height of the pandemic with both sales and prices moderating as we slowly transition from the peak home-buying season into the fall,” said C.A.R. President Dave Walsh
Sales across California declined 1.6% from June showing buyers might be fatigued after too many bidding wars this summer, or it might show temporary reluctance about the economy. Mortgage payments have risen and is likely suppressing sales too.
Condo and townhouse prices remained high after a big recovery in June, and they’re up $100,000 on average since last summer.
Homes sold strongly in Alameda, Fresno, Contra-Costa, San Francisco and Santa Clara, signifying the return of the tech sector this summer as Covid 19 vaccinations continue.
Pending sales have dropped down strnogly in the last two months although they’re increasing in the more affordably priced segment. Pending condo sales are down too.
Covid cases in California appear to be peaking, as infection rates start to decline, so the 3rd wave in California might be passing, although the coming school year may prolong infections.
California real estate is always a hot topic and rental house investment is wise and property management software is the foundation for profitable rental portfolios. Learn more.
California Housing Chart
Some experts however, including CAR’s, believe home prices are headed down and the market will calm further. We’re interested in hearing about your experiences and thoughts and comments in the comments section below. Please do share this post with others and give a link to our property management software.
California real estate is always a hot topic and rental house investment is wise and property management software is the foundation for profitable rental portfolios. Learn more.
July Home Prices and Sales Volume
Biggest Monthly Price Growth Losses for houses:
- Orange County down 4.2% to $1,000,900
- San Francisco down 5% to $1,852,500
- Santa Barbara down 10.4% to $838,000
- Monterey down 3.9% to $828,500
- San Mateo down 7.2% to $2,110,000
- Santa Clara down 4.6% to $1,670,000
Hottest Monthly price Losses for Condos/Townhouses:
- Napa down 22.9% to $475,000
- San Mateo down 5.7% to $938,000
- Central Valley down 6.1% to $275,000
- Solano down 18.4% to 332,750
Home Sales and Prices Last Week
Last week, closed sales and listings fell, and only about a quarter of Realtors polled feel sales and prices will rise next week.
CAR notes the positive side in lower interest rates and a better than average jobs report. However, and single family house building permits are up 30%.
On the down side is rising and high jobless claims along with less mortgage applications. And of course, Covid 19 is spreading fast which is discouraging businesses and weighing on home showings. Fewer homeowners will list their home when Covid 19 surges are occurring.
With buyer fatigue, summer vacations, and ultra high home prices, we’re seeing much less interest in the housing market. It’s believed 75% of Californians cannot afford to buy a home in the state.
What’s Available is Getting Sold
New listings might be lagging, but compared to last year, a lot of sales are happening and sellers are getting more for their property.
Sales price to list price history timeline. Screenshot courtesy of CAR.In June, the all important Sales price-to-list price ratio climbed strongly as it did in May. Sellers are getting more for their home and likely not having to reduce or offer accept any type of concessions. 7 out of 10 homes sold above asking price. The Bay Area is the hottest area for seller returns in June. Oddly, listing prices are falling just as actual selling prices are rising.
Redfin reported that cash offers now comprise 30% of all offers across the US.
“I’ve never seen more cash in Boise’s housing market than I’ve seen in the past year,” said Shauna Pendleton, a Redfin real estate agent in Idaho. “I just sold a $700,000 home to a cash buyer last week. The entire $700,000 came from his E*Trade account.” — from WorldPropertyJournal report.
However, given California homes high prices, the state has one of the lowest cash offer rates among buyers.
Redfin reports that in San Jose, CA and Oakland, CA, only 12.5% of reported home purchases this year were all cash. Next were Los Angeles (16%), San Diego (16.2%), Sacramento (17.7%), San Francisco (17.8%), Oxnard, CA (18%) and Bakersfield, CA (19.3%). Redfin reported that two thirds of homes were in bidding war situations.
California Condo Market Heated Up This Summer
In the absence of affordable single family homes which continue to be in strong demand, buyers are turning to the condo market. Condo and apartment investors are sensing the upward trajectory of multifamily and apartment unit rent prices and are likely keen on competing for units too.
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Are California housing market and rent prices about to jump with reopening?
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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?
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.
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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.
Will California’s Home Price Rise in the last half of 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. 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.
Home Sales and Prices in Major Metros
Los Angeles, San Francisco, San Diego House Prices continue to climb.
In Los Angeles County, in May, house prices rose .5% to $818,260 which was 39% higher than May 2020. House prices in LA metro stayed flat at $725,000 and sales dropped 5.2%.
In LA county, house prices rose 1% to $725,680 on average. Sales dropped 10% from April, yet are still up 80% from May of 2020.
Up in the SF Bay Area, in May, home 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 rose $100,000 to $1,900,000 , a rise of 5.6%. Sales of houses dropped 9% from April yet are up a surprising 136.6% from last May. Condo prices in San Francisco rose 3.8% to $830,000. Condo townhouse sales dropped -8.5%, yet are up 232.6% from last May.
In San Diego County, home prices rose 3.1% to $851,000 which is up 30% from 12 months ago. Sales fell 3.2% yet are still up 76% versus 12 months ago. Condo prices rose 2.6% to an $542,000 average, and are up 24.7% from last May. Condo sales dropped 12% yet are still up 91% from pandemic lows one year ago.
Orange County saw home prices stayed the same at $1,100,000 as sales fell 10% from April. Sales were still up 130.9% over levels 12 months ago.
In Sacramento, home prices 2.% to $500,000 in May, while sales fell .3% month over month, yet were still up 46.1% year over year. Monterey saw house prices jump 5.6% to a new average of $887,000. Sales in the county climbed just .4% month over month, yet that was still rise of 153.% 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.
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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.
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.
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.
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