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
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.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.
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.
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