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Housing Market California
With a brief respite from rising mortgage rates homebuyers in California jumped at the window of opportunity. That demand drove up sales and average home prices across the state.
While home prices rose statewide during August, they actually showed a monthly decline across most regions including the Bay Area where prices dropped (-3.7%) and Los Angeles (-1.9%). Sales in the SF Bay area rose a substantial 9% during August.
It was a brief time for homeowners to get their price before a potential market slide this winter.
What's driving the housing market in California is the same as all other states — higher interest rates and insufficient supply. Supply will never suffice in beautiful California, but interest rates are a big question mark, in the eyes of some. Housing experts aren't sure what the FED will do this fall, but most expect further rate hikes which would hurt the real estate market.
CAR's monthly survey is shows the market in a downtrend. Buyers look to be disinterested and gloomy, making homes sales a tough business to be in. The rental market however is a different story.
The August Housing Market Sentiment Index actually showed 6 point improvement in August to 54. 3% of buyers said it is a good time to buy, but it's only 19% who believe that. 47% believe it will be easier to buy a home in the next 12 months, but only 8% plan to buy. 75% believe interest rates will fall, yet new inflation reports from the Cleveland Fed suggest inflation will be difficult to lower (8.1% August). And 36% believe home prices will rise over the next 12 months, perhaps reflecting their true predictions of the 2023 housing market.
August Home Sales and Prices in California
The main chart from CAR reflects the new trend of rising sales and falling prices. Days on market doubled to 19 days, unsold inventory increased by 50%, and active inventory is up sharply in the last few months. Some sellers are eager to sell, which is a promising situation for buyers.
California Homes Sales and Price Changes. Screenshot courtesy of CAR.
Active Inventory Rising
Active listings remain on a strong upward path even though some stock was sold in August. 47 of 51 CA counties saw an increase in active listings (YoY) in August (July had 46 that increased).
California active home listings last 3 years. Screenshot courtesy of CAR.
Home Prices
The large increase in monthly sales did little to prevent the slid of the avergage home price as that rose slightly in August to $339,460. And that is where California Association of Realtors forecasted it would be (around $334,000). However, 3 months remain in the year.
Home prices reclined strongest in Monterey (-8.8%), Santa Clara (-5.2), Lassen (23.5), Plumas (-17.8), Mariposa (-25.1), and Mendocino(-18.9).
California home prices in August 2022. Screenshot courtesy of CAR.
Despite market conditions, sellers are increasingly demanding a higher price, while closing prices fall.
California list prices vs sales prices history chart. Screenshot courtesy of CAR.
Hottest Cities in California
Those cities with the highest price growth reported by Redfin:
Cities with highest price growth. Screenshot courtesy of Redfin.
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.
CAR latest data. Screenshot courtesy of CAR.
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 Home Sales Rise
Home sales rose 6% to 313,540 in August on a seasonally adjusted annualized rate, still down from June's volume (344,970) and down from last July 2021 (428,980 homes sold).
Thie chart below from CAR shows the sales decline is surprisingly similar to 2007 and 2020. Price discounts however took a short break, but could be back in the September, October and December reports.
"California's housing market stabilized briefly as a temporary reprieve on mortgage rates in July and early August brought buyers into the market. Active listings have passed their annual peak, and while homes are taking slightly longer to sell, the share of homes seeing price reductions has also stabilized to near pre-pandemic levels" said C.A.R. President Otto Catrina.
California home sales chart last 17 years. Screenshot courtesy of CAR.
Sales of single detached homes across all regions rose 6% last month, yet are down 24.4% from last August 2021. The biggest drops year over year were in the Central Coast region (-30.6%), Los Angeles Metro area (-29.1%), SF Bay Area (-29.1%) and the Inland Empire (-29.4%).
Sales picked up almost 16% on the Central Coast, while NAPA saw a 32.6% rise, while sales in Santa Barbara rose 39.2% last month. Home sales in Mariposa County surged 46% while prices dropped 25%.
Sales rose a little 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. Sales of million dollar homes leveled off.
California Condo/Townhouse Prices Fall
Condo prices however did decline $20,000 (-3.1 %) from last month although sales ros e9.6% during August year are still down 28.6% year over year.
San Francisco, Monterrey, Santa Barbara, Fresno, Sutter and San Bernardino suffered big prices drops in August.
California condo sales across regions, August 2022. Screenshot courtesy of CAR.
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Mortgage Rates
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.
Mortgage rates last 6 years. Screenshot courtesy of CAR.
Housing Stats for Major Metros
The Los Angeles Metro Area saw a slight drop in price of 1.9% or $15,000 on average on the sale of a single family houses to $765,000. Sales in Metro LA rose 5.75% from July and are down 29.1% from 12 months ago.
Los Angeles County single family homes rose 1.1% year over year growth to $854,960 in August. Unsold inventory dropped 6.1% month to month.
The Central Coast region saw its average price flat for the month, while sales grew 15.9% vs last month.
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 $50,000 or 3.1% just in the last 30 days, while sales grew 9.1%.
Orange County saw prices fall 3.1% (-$31,000) to a new median of $1,200,000. San Bernardino County saw house prices fall $17,250. Riverside home prices fell only by $5000 again while sales grew 8.8%.
In San Diego County, homes prices fell by $45,000 to $560,000, a 4.5% drop vs July.
In Sacramento County, existing home prices fell 2.7% or ($15,000) while sales grew 6.6% in August.
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.
Inventory and Listings: California August
Inventory of California single family 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 are staying on a strong unprecedented growth trend. This is mostly because buyers cannot afford to buy them.
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% to $834,400 in 2022.
Now in October, 2022, we know the market has turned downward quickly. With the price at $839460 in October, we still have 3 more months of decline ahead.
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 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 | ||||||
| Rank | City | Price | M/M% | Y/Y% | Price | M/M% | Y/Y% |
| 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% |
| 10 | Oakland, CA | $2,100 | 2.4% | 5.0% | $2,800 | 1.1% | 10.7% |
| 14 | Anaheim, CA | $1,860 | -2.6% | 12.0% | $2,470 | -6.1% | 22.3% |
| 18 | Long Beach, CA | $1,710 | -1.7% | 6.2% | $2,280 | -5.0% | 7.5% |
| 24 | Sacramento, CA | $1,600 | 0.0% | 8.8% | $1,980 | 1.0% | 7.6% |
| 31 | Fresno, CA | $1,520 | 6.3% | 25.6% | $1,680 | 5.0% | 15.1% |
| 69 | Bakersfield, CA | $1,060 | -1.9% | 9.3% | $1,380 | 0.7% | 15.0% |
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.
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.
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.
Screenshot courtesy of CAR.org and their 2021 Market Forecast.
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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.
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.
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.
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.
See more on the US housing market, UK housing market, and Hawaii real estate market. Find the best property management company near you.
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