When talking about the California housing market, you could say that it finished 2020 on a positive note, with prices continuing to be solid in December and the average house price setting a new high.
As 2021 came, the market maintained the same energy. The California housing market saw its biggest surge in revenue and pricing in 17 years in January 2021. The California Association of Realtors (C.A.R.) reported double-digit price and sales growth on a year-over-year basis.
Real Estate Market Sales Report
On a seasonally adjusted annualized basis, single-family home sales totaled 484,730 in January, down 4.9% from December but up 22.5% from January 2020, as per C.A.R. Sales increased by double digits yearly for the sixth month in a row and also increased by more than 20% from a year earlier for the third month in a row.
Home prices in California have risen due to a lack of availability and steady demand from investors. In January, the statewide average home price was $699,890, up 21.7% from January 2020 and down 2.5% from December, California’s largest increase in home prices since February 2014.
The California housing market is still very competitive, and these numbers and developments strongly suggest that. With low mortgage rates, buyers want more residential rooms, and a chronic lack of housing supply increases sales and costs. Houses are being sold easily and at a fair price. In January 2021, the statewide sales-price-to-list-price ratio was 100.1%, up from 98.4% in January 2020. If it is less than 100%, the house was sold for less than the asking price and sold for more if it went up higher than 100%.
What was the reason behind the price hike?
The problem is the lack of houses on the market to meet the buyer demand. The Unsold Inventory Index (UII) of C.A.R. stands very low at 1.5 months in January, down from 3.4 months in January last year. Currently, the pace of purchases shown in the index explains how long it will take to sell the stock of homes on the market.
As said by C.A.R., in 2020, over 35.5% of home-buyers paid more than the asking price, up from 26.7% in 2019. Indeed, last year’s pace has been the best in seven years, and it was 16% higher than the median.
With most mortgage prices in the survey rising, the Mortgage Bankers Association announced a roaring refinance operation in the first week of 2021, causing mortgage applications to rise to a level not seen since March 2020. The 30-year fixed mortgage rate increased two basis points to 2.88%, but the 15-year fixed rate dropped two basis points to 2.39%, a new low, reversing the trend.
This shift has given buyers more buying power and is likely to have fueled both the surge in pending sales last week and the rise in house prices over the previous few months. The most involved in the market are home-buyers in the major cities, including Los Angeles, San Francisco, San Diego, San Jose, and Sacramento. As per the ATTOM Data Solutions’ study, these markets saw the highest rise in new mortgages in the third quarter of 2020.
Where do we go from here?
Is now the best time to invest in real estate in Los Angeles? Are there reliable real estate offices near me? Is there an advantage for buyers? While they are good questions, they are inquiries with no definite answer. Buyers agree that this is an excellent time to invest in a house in Los Angeles. With the relaxation of limits, the number of mortgage applicants for home purchases is growing. The next months would eventually slow down the rate of appreciation as more houses will be listed.
A large number of work cuts and unemployment claims, on the other hand, have driven potential buyers out of the market, implying that consumers will face less interest in finding their perfect home.
CoreLogic’s prediction does not anticipate dropping home prices in Southern California. Instead, by April 2021, prices are expected to increase 3% in Los Angeles County, 5% in Orange County, and 6% in the Inland Empire. As a result, now is a decent time to purchase a home in Los Angeles before prices start to rise again, and the time to visit real estate offices near you,
However, Los Angeles maintains a reputation as the least affordable city, not just in the USA but globally. A majority of residents can hardly pay for lake houses, breathtaking pools, and a cozy patio at a reasonable price.
When it comes to home affordability, only time will tell. For now, the real estate market for California is looking up. So, hopefully, that also goes for those hopeful homeowners of 2021.
