By Ken Go
The California housing market ended the previous year on a high note as sales remained strong in December and median house price reached another record high. The same momentum has been carried forward in 2021. In the first month of 2021, the California housing market had its largest increase in sales and pricing in 17 years. Continuing the California housing market’s hot streak, home sales record eighth straight year-over-year gain, C.A.R. reports. Year-to-date statewide home sales were up 15.9 percent in February 2021.
Home sales and prices ease as compared to the previous months but strong buying interest continues to provide support to the market. The median price paid for all homes sold in February was $699,000, down 0.1 percent from January but up 20.6 percent from February 2020, according to new data from the California Association of Realtors. Homes are moving 56% faster than a year ago; the median time on the market was 10 days in February.
The existing single-family home sales totaled 462,720 in February on a seasonally adjusted annualized rate, down 4.5 percent from January and up 9.7 percent from February 2020. The year-over-year sales gain was the eighth consecutive. Tight supply and steady demand from home buyers boosted home sales across California real estate market. All major regions, except for the Central Valley, experienced a surge in sales from a year ago.
New construction can’t keep up with demand. Southern California home prices reached an all-time high in February as buyers competed amid a shortage of homes for sale. There is an increase in demand leading to bidding wars and subsequent higher selling prices. These trends show us that the California housing market remains very competitive.
Growth of sales are prices are driven by low mortgage rates, buyers seeking more living space, and a perennial shortage of housing supply. Homes are selling quickly with a minimal price reduction. The statewide sales-price-to-list-price ratio was 101 percent in February 2021 and 99.1 percent in February 2020. If it’s above 100%, the home sold for more than the list price. If it’s less than 100%, the home sold for less than the list price.
High demand across all California’s sub-markets means that low inventory and lightning-fast market conditions are not going away soon. There just aren’t enough homes listed for sale to satisfy the demand from buyers. C.A.R.’s Unsold Inventory Index (UII) remains low at 2 months in February and was down sharply from 3.6 months in February 2020. The index indicates the number of months it would take to sell the supply of homes on the market at the current rate of sales.
The housing affordability index has decreased by 13% for the last quarter (Q4 2020). According to the California Association of Realtors (C.A.R.), over a third (35.5 percent) of homebuyers paid more than what home sellers asked for in 2020, compared to a quarter (26.7 percent) in 2019. In fact, last year’s level is the highest in seven years and is 16 percent higher than the long-run average.
Will The Housing Market Go Up or Down in California?
Each month C.A.R. surveys 1,000 California consumers regarding their sentiments about various aspects of the housing market or the economy that directly impact housing to create a California Housing Sentiment Index. There has been no change in the overall housing sentiment index (74) from the last month.
Mortgage rates have been on the rise in recent weeks and now average slightly above 3%. If the economy improves, rates could keep rising, but many experts expect borrowing costs to remain low by historical standards throughout 2021. Here’s what consumers feel at this time.
Is it a good time to buy a home in California?
C.A.R.’s monthly Consumer Housing Sentiment Index for February 2021 found that 28% of consumers believe that now is the time to buy, and 72% think this is not a good time to buy. That’s up 3% from January 2021. As a result of rising prices and mortgage rates, the housing market sentiment also shows that only 32% of the consumers feel
that it will be easier to find a home over the next twelve months. That’s down 8% from January 2021.
Thanks for your inquiries, please call Ken Go of 1st Innovative Finance at 562-508-7048 or write to firstname.lastname@example.org CABRE 01021223 NMLS 238636