California Housing Market Update
The California housing market sizzled last year to break all records. It was a hot seller’s real estate market. According to Zillow, at the state level, California’s housing market remains the most valuable in the country, with a total value of $9.24 trillion as of last December, accounting for more than a fifth – 21.3 percent – of the national total.
However, California’s overall value growth of $1.38 trillion in 2021 represents only “20.1 percent” of the overall national growth of $6.9 trillion – somewhat “underperforming” by about -5.5 percent relative to its total weight, particularly given the extreme growth seen in other states. In June 2022, the existing single-family detached house sales in California decreased 8.4 percent from 376,560 in May and 20.9 percent from 436,020 homes sold on an annualized basis one year ago.
According to C.A.R., outside of the initial lockdown in the Spring of 2020, this is the lowest level of home sales since 2008. The median house price in California decreased 4.0 percent to $863,790 from May’s revised record high of $900,170. This June’s price was 5.4% higher than the last June’s price of $819,630.
The median house price declined in June due in part to a shift in the composition of sales, as the high-end market began to retreat. According to Freddie Mac, June’s average 30-year fixed mortgage rate was 5.52%. With a 20% down payment, your monthly principal and interest amount for the 30-year fixed loan term would be $3,932. The down payment required to purchase a home in California is $172,758.
Looking at the current market shift, C.A.R. has reduced its 2022 housing prediction, projecting 380,630 existing single-family house sales in 2022, a 14.4 percent decrease from the 444,520 units sold in 2021. The most recent forecast is a decrease from the expectation of 416,810 units sold in October 2021. Despite a slower growth rate in the second half of the year, the California median home price is expected to rise 9.7 percent to $863,390 in 2022, representing a significant increase from the yearly median of $786,750 in 2021.
The latest statewide median price projection is higher than the estimate of $834,440 anticipated in October. According to C.A.R., the average 30-year fixed mortgage interest rate will climb to between 6.25 percent and 6.5 percent by the end of 2022, averaging 5.2 percent for the year.
Latest Weekly Trends & Forecast From California REALTORS®
CAR’s latest weekly housing data for the week ending July 18, 2022, shows that the prospective homebuyers are beginning to reap some of the benefits of a shifting market, despite the fact that newly released data indicates a rise in macroeconomic uncertainty that is beginning to affect the housing market.
Certainly, rising interest rates have lowered the purchasing power of purchasers, but increased inventories and less competition mean that buyers who remain in the market have a greater chance of having their offer accepted than at any time since the outbreak began. After more than two years of persistent year-over-year reductions in the number of active listings for sale, the inventory shortfall has demonstrated consistent signs of improvement over the past several weeks.
There were more active listings on the market last week than at any time over the previous two years. Last week, there were over 48,000 active listings, surpassing the week of May 23, 2020, as the greatest amount of active listings since we began collecting weekly MLS statistics in 2020. It is crucial to emphasize that listings remain down relative to historical norms, but it is good to see a more steady upward trend this year.
With the increase in inventory, homebuyers are finding the market to be less frenetic than at any time since the beginning of the epidemic. Last week, 46 percent of closings were for residences that sold for more than the asking amount. This is only the second week since September 2020 in which less than fifty percent of properties sold for more than the asking price.
In addition, a greater proportion of sellers are ready to decrease their asking price, with 37 percent of current listings reduced from the initial list price last week—another two-plus year high. Combined with the recent decrease in interest rates, the growing likelihood of locating a property and having an offer accepted should excite buyers currently in the market.
Here’s a rundown of the California market competitiveness for the week ending July 18, 2022.
- Median Listing Price = $760K
- Median Listing Prices Per Sq. Ft. = $424
- Median Closed Price = $775K
- Median Closed Prices Per Sq. Ft. = $435
- % of Active Listings w/Reduced Price = 37%
- Median Reduction on Reduced-Price Listings % = -5.3%
- % of Sales Closed Below List Price = 42.7%
- Median Reduction on Reduced-Price Sales % = -4.6%
- % of Homes Closed Above List Price = 46%
- Median Overage on Homes Closing Above List = 3.9%
- Median Days on Market for Closed Sales = 16
- Median Days on Market for Active/Unsold Homes = 31