Housing Market California for July 2022
Home sales and home prices fell again across the state of California in July, but few homebuyers here are feeling positive about their ability to buy in the next 12 months.
CAR conducted a survey of consumer sentiment last month, and it revealed homebuyers feel it is a poor time to buy and only 8% plan to buy in the next 12 months. With experts believing the Fed will raise interest rates, mortgage rates will be on the rise in September, resulting lower buyer affordability.
The timing of market forces combined with continued low affordability saw home sales drop across the Golden State in July. And home prices took a steeper drop last month despite wages and employment being strong and listing inventories growing fast.
Active Inventory Rising
Active listings increased 54.9% year over year, although down slightly from June. Supply throughout the state rose from 1.9 months to 3.2 months in July. CAR states this is due to a pullback in demand. 46 of 51 counties saw listings rise. Days to sell has risen to 14 days from 8 days last year.
The combination of housing market downturn risk, rising interest rates, and inflation are making more Californian homeowners consider selling their property. 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.
Buyers are still walking away from deals at a faster pace too. With rent prices continuing strong, it shows buyers are committing more fully to the rental market, and perhaps waiting for the economy to sort itself out.
As layoffs in the corporate sector grow against fast rising mortgage rates, July’s housing market decline may accelerate further in September and October.
California Home Sales Fall
Home sales fell 14.4% to a 295,400 annual rate, from June’s volume (344,970) and were down 31.1% from last July 2021 (428,980 homes sold). This was the fourth straight monthly decline and the 13th straight annual reduction.
C.A.R. President Otto Catrina said “In the midst of the peak home-buying season, high home prices and rising interest rates depressed housing affordability to the lowest level in nearly 15 years, which in turn dampened home sales.”
C.A.R. Vice President and Chief Economist Jordan Levine believes the pace of sales declines is expected to slow in the coming months and market volatility could subside.
California’s median home price dropped by 3.5% or $30,000 last month to $833,910, from the $863,790 recorded in June. That is only up 2.8% from last July which is the lowest year-over-year price gain in more than 2 years. Sales of multimillion dollar homes dropped almost 25% accounting for much of the overall decline.
3 of 5 major California housing regions saw sales drop 30% yet 80% of all counties saw prices still above where they were last July. Mariposa, Lassen and Napa saw the biggest price increases.
Sales across all regions are down sharply year over year, with the biggest drops in the San Fran Bay Area (-20.4%), Los Angeles Metro area (-2.19%), and Southern California (-21.8%).
Napa, Los Angeles, San Bernardino, San Diego, and Santa Barbara suffered the largest declines month to month. Year over year declines were extreme in Santa Clara, Contra Cost, Alameda, Orange, San Bernardino, Los Angeles and San Diego.
Sales fell at all price points overall, yet the most affordable range under $300k saw an increase of 6%. Sales of million dollar homes ( between $1M to $2M) tailed off last month by 4%, with those above $2 million plummeting 18% vs May.
California House/Condo Prices Fall
Condo prices however did decline $15,000 (-2.3 %) from last month and sales are down 36.2% year over year, and down 18% vs June. The San Francisco Bay area saw condo price drops of 4.6% and sales down by 16.9% vs June.
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.
Mortgages did experience a reduction in growth rate, however with more Fed rate hikes expected, it should dampen enthusiasm and qualification for home loans for more buyers.
Housing Stats for Major Metros
The Los Angeles Metro Area saw a slight month to month price drop of $5,000 on average on the sale of a single family houses. Sales in Metro LA fell 3.9% from May and are down 26.2% from 12 months ago.
Los Angeles County single family homes rose 6.5% year over year growth to $895,000 in June, a slight drop from May, even while listing rose 46.1% year over year. 31% of properties have reduced prices.
The Central Coast region saw it’s average price fall 1.5% or $15,000 in June from May. Sales rose 3.3% from May which is up 26.3% from last year.
The San Francisco Bay Area saw prices actually fall 7% likely due to the downturn in the tech sector. Prices in the Bay Area fell 1.8% while sales 4.4% vs last month, and sales down 27.1% year over year.
In San Francisco itself, home prices fell $115,000 or 5.7% just in the last 30 days. However, sales are actually down 14.6% vs May, so buyers are not easy to find at the inflated price levels. That suggests prices must drop to find buyers in July or August.
Orange County saw prices fall 2.3% to a new median of $1,265,000. San Bernardino County saw house prices stay even at $490,000. Riverside home prices fell only by $5000. Sales there are down 10.5% since May.
In San Diego County, homes prices fell faster in June to $20,000 vs May to $950,000 even as sales dropped 6.4% vs the previous month.
In Sacramento County, existing home prices fell by $20,000 to $560,000, a 3.4% drop vs May.
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.
Inventory and Listings: California July
Inventory of California homes rose and active listings are up.
It took one more day to sell a home, from average of 11 days from 10 last month.
Active listings hit their highest levels since before the pandemic.
California Housing Forecast
C.A.R.’s “2022 California Housing Market Forecast” predicted a 5.2% decline in existing single-family home sales to 416,800 units, down from the projected 2021 sales estimate of 439,800 units. Their forecast for California median home prices was for a rise of 5.2 percent to $834,400 in 2022.
Given the volatility and political activity in everything from interest rates to taxes, and a delayed recovery from the Covid pandemic, it’s almost impossible to predict market levels accurately. The timing of the interest rate hikes could make forecasting a little more accurate — given a depressing effect on home sales for the rest of 2022.
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 8.5% in July yet food, rent and other prices rose. If energy prices rise this fall, it’s easy to predict strong Fed rate hikes to slow it down so they can meet their 2% inflation rate goals.
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%|
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.
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.
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.
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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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 sats 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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