California Housing Market Report
California’s housing market finds itself in a state of flux. Sellers enjoy a robust market with favorable pricing, while buyers face limited inventory and fierce competition, demanding quick decisions and strategic tactics. C.A.R. Senior Vice President and Chief Economist Jordan Levine acknowledges potential challenges due to escalating mortgage rates.
Recent months have shown some resilience, but higher rates might cool housing activity in the short term. However, Mr. Levine maintains an optimistic outlook, suggesting a rebound once the market adjusts to evolving economic factors like inflation.
Data from the CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.) paints a picture of a California housing market in 2024 that’s both resilient and challenged. March saw a slight slowdown, with existing single-family home sales at 267,470, a 7.8% decrease from February. This dip marks the first year-over-year decline in three months, following January and February’s increases. Despite this, year-to-date sales remain modestly up by 0.7%.
California’s Housing Prices Remain Strong
The median home price in California for March skyrocketed to $854,490, a significant 6.0% jump from February and a robust 7.7% increase year-over-year. This marks the ninth consecutive month of annual price growth, highlighting the ongoing strength of the state’s housing market even amidst economic shifts.
Despite the slight dip in sales, California’s housing market remains fiercely competitive. Homes are selling swiftly, outpacing last year’s pace, indicating sustained demand. C.A.R. President Melanie Barker emphasizes the market’s competitiveness, noting that properties are selling faster than in the previous year. This heightened competition underscores the desirability of California’s real estate market, despite fluctuations in sales volumes.
The supply side of the market shows signs of improvement, with an increasing number of properties being listed as sellers adapt to the “new normal.” However, the pace of new listings may not fully match the demand, leading to a persistent imbalance between supply and demand. Sales of homes priced at or above $1 million have remained relatively stable, while the sub-$500,000 segment has experienced modest declines. This shift in sales mix has contributed to upward pressure on the statewide median price.
Regional Insights into the California Real Estate Market
Here’s a breakdown of trends across major regions and counties:
- Sales Volume: Unadjusted sales dropped year-over-year in most regions except the Central Coast. The Central Valley saw the steepest decline (-9.6%), followed by Southern California (-7.8%), San Francisco Bay Area (-5.4%), and the Far North (-4.0%). The Central Coast bucked the trend with a +7.2% increase.
- County-Level Sales: Market nuances appear at the county level. While 33 of 53 tracked counties saw sales decline, others like Plumas (220.0%), Mono (120.0%), and Mariposa (56.3%) experienced significant gains. Tuolumne (-39.2%) and Tehama (-37.5%) had the steepest drops.
- Median Prices: All regions witnessed year-over-year increases. The San Francisco Bay Area led with a 15.5% jump, followed by Southern California (11.1%). The Far North, Central Valley, and Central Coast also saw growth, though at slower rates.
- County-Level Prices: Mono (66.7%), Siskiyou (45.8%), and Santa Barbara (32.0%) saw the biggest price hikes, while Mendocino (-23.9%) and Trinity (-16.3%) experienced declines.
- Inventory Dynamics: Unsold inventory decreased month-over-month but rose year-over-year. The Unsold Inventory Index (UII) dipped to 2.6 months in March, indicating tight inventory. Active listings, however, showed promise, increasing year-over-year for the second straight month. This growth, particularly in Solano and Santa Barbara counties, suggests potential improvement in housing supply.
While these trends offer some optimism, rising mortgage rates could lead to potential sellers delaying listings, impacting inventory. However, the increase in new listings coupled with a slight slowdown in demand suggests a possibility of achieving more balanced supply-demand dynamics in the future.