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California Housing Market Report & Predictions 2021

February 15, 2021

California’s Housing Market Forecast

The California housing market is recovering slowly.  Rent price declines have flattened in the Bay Area, and home prices are expected to rise in February.

60% of California Realtors® feel prices and listings will be rising this week in February. Growing vaccinations are likely raising buyers’ and investors’ intent and action, yet listings are shrinking.

Year over year, prices and sales of homes are well up. Despite this terrible pandemic, a severe housing shortage, and a shrinking California economy, the housing market is beginning its turnaround.

Weekly Update. Screenshot courtesy of CAR.

The December Housing Market Report

The latest California Association of Realtors report shows overall price drops in most regions. Of course, the exception as usual, is single-family detached houses which rose 2.4% across the state in December. The fact that prices of condos, apartments and attached dwellings have eased, might create a jumping on point for some investors.
Is next fall school season going to bring a return of renters to the cities?

CAR reports that existing, single-family home sales rose .2% to 509,750 in December from November. Sales are up 28% from December 2019. The median price of a California house price rose 2.7% to $717,930, which was is up 16.8% from December 2019. Statewide, in 2020, home sales rose 3.5% from 2019.

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,”

In November, prices declined to $700,000 but returned to set another record high in December. The double-digit increase in year over year rises, was the 5th month in a row. The statewide median home price for 2020 was $659,380, up 11.3% from a revised $592,230 in 2019.

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.

With Covid 19 shutdowns the norm during the few winter months, most housing markets are still in a hold pattern. Will the vaccinations, Fed stimulus funds, and the spring market recovery put California’s limited housing supply put the real estate.

Screenshot courtesy of California Association of Realtors CAR.

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 is a good time to sell, up from 55% last month. 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 to sell their homes at record prices. It’s absolutely the biggest seller’s market ever across California. And perhaps more so for the pandemic destination cities within the state.

December Sales Report. Screenshot courtesy of California Association of Realtors CAR.

Existing housing report. Screenshot courtesy of California Association of Realtors CAR.

 

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 19% and sales rose 55%). Condo prices are up 26% in the far north yet house prices fell strongly.

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 December

Screenshot courtesy of California Association of Realtors CAR.

Screenshot courtesy of California Association of Realtors CAR.

Screenshot courtesy of California Association of Realtors CAR.

California Condo Stats

Perhaps surprisingly, given migration trends and the Covid 19 pandemic surges, the condo/townhouse market in California is still alive and well. YoY price increases are very strong. Only the Central Coast and Far North districts saw sales decreases. Prices are slightly down from last month’s records.

Screenshot courtesy of California Association of Realtors CAR.

Will California’s Home Price Rise in 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.

Most Districts and Counties See Growth

In the Los Angeles metro area, single family prices fell .8% from November $625,250 (which is still up 13.7% year over year). In the SF Bay area, house prices fell 3.8%  to $1,058,000 which is still up 16.4% year over year. 

Screenshot courtesy of California Association of Realtors CAR.

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 $3 million jumped again in November this time 93% year over year. 

Screenshot courtesy of California Association of Realtors CAR.

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.

Screenshot courtesy of California Association of Realtors CAR.

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 Metro Los Angeles, in December, house prices fell .8% to $625,250 which was 13.7% higher than December 2019.  Overall LA home sales rose 14.3% from last month.

In LA county, house prices rose 6.8% to $709,500 from $664,160 but are still down from $728,160 in October. Sales were up in LA County in November by 22.1% and are up 30.5% from last December.

Up in the SF Bay Area, in October, house prices fell 6.95 in December to $1,058,000.  That price is still up a whopping 53.8% from last December.  Sales of houses throughout the Bay Area rose a slight 1.5% vs November, yet are up 40.2% from 12 months ago.

In San Francisco, house prices fell 6.9% (-$42,000) to $1,581,000. Sales of houses however increased 5.6% and are up 53.8% from 12 months ago.  Condo prices in San Francisco fell 7% to $1,139,000 on average.   Sales actually rose 5.1% during December.

In San Diego, home prices fell $10,000 on average from December, to a new median price of $730,000.  Sales rose 4.4% in December, yet are still up 30.3% from 12 months ago.  Condo prices rose 2.1% to an $485,000 average. That is up 24.5% from one year ago.

Orange County saw home prices rose 2.2% to $950,000 while sales picked up 5.5% (up 25.1% from 12 months ago).

In Sacramento, home prices fell .1% to $442,250 against a rise of 1.6% in sales.  Monterey saw house prices fall to $785,000 on average while sales picked up by1.6%. 

Pending Sales of Homes

Pending sales are leveling off of late from a torrid pace in the late summer. It could be the election and stimulus aid standoff are giving buyers pause for thought, and rising prices might be making a home purchase unaffordable.

Pending Sales California

Screenshot courtesy of California Association of Realtors CAR.

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.

Housing Inventory California

Housing Inventory California last month. Screenshot courtesy of California Association of Realtors CAR.

Almost all districts reported declines in listings except for the Bay Area (average 40%).  The Central Valley saw the largest year-over-year decline of 53.3% in November, followed by Southern California (49%), Central Coast (-46.3%), Far North (-40.1%), and the San Francisco Bay Area (-18.7%).

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 ForecastApartment Management SoftwareHousing Market Forecast 2021 | Hawaii Real Estate ForecastCovid Foggers Denver Housing Forecast 2021 | Los Angeles Home Prices | Oakland Housing Market Outlook | 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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