Median price of an existing single-family California home hits a record $813,980, up 34% in a year.
Record-setting median price over $813,000 raises questions for the future
“Bubble Watch” digs into trends that may indicate economic and/ or housing market troubles ahead.
Buzz: As another statewide homeprice record is shattered in the pandemic era, we hear this: “Not only do skyrocketing home prices threaten already low homeownership levels and make it harder for those who don’t already have a home to purchase one, it also brings to question the sustainability of this market cycle.”
Source: Those aren’t the words of this columnist or some perpetual real estate skeptic.
That’s Jordan Levine — the California Association of Realtors’ chief economist — commenting on his group’s eye-grabbing homebuying report for April.
The trend
The median sale price for an existing, single-family home in California rose to an all-time high of $813,980 in April, a record-setting 34% price jump from April 2020, according to the association.
The dissection
Pick-your-adjective time: Is it hot or searing or … insane?
The CAR report states …
• Gains were widespread, with 48 of 51 counties seeing one-year price gains of 10% or more. Highest? Santa Barbara, up 83% to $1.1 million.
• Broken records were common, too: 29 counties set price highs. San Mateo County passed the $2 million median.
• Sales were quick and above what sellers originally sought: The typical single-family house went from listing to escrow in seven days vs. 13 a year earlier, at a sale price to list price ratio of 103.3% vs. 100% in April 2020.
• The Southern California median hit $750,000, up 28% in a year. The Bay Area rose to $1.33 million, jumping 36%.
• Statewide gains in sales counts were certainly skewed. The 458,170 annual pace was up 65% in a year, but that was compared with the locked-down April 2020 economy.
Another view
Affordability is a growing problem, even with mortgage rates still near all-time lows.
John Burns Real Estate Consulting found all eight California markets it tracks showed affordability below historic norms when it compared March homebuying conditions with a history dating to 1985.
San Jose affordability had the ninth-worst affordability among 33 U.S. markets studied tracked. Los Angeles was 14th; Orange County, 15th; San Diego, 16th; Sacramento, 17th; East Bay, 20th; Inland Empire, 21st; and San Francisco, 25th.
Just so you know, it’s not just California: The U.S. markets with worse affordability than these Golden State regions were Salt Lake City; Denver; Seattle; Houston; Austin, Texas; Portland, Oregon; Las Vegas; and Dallas.
How bubbly?
On a scale of zero bubbles (no bubble here) to five bubbles (fivealarm warning) … FIVE BUBBLES!
When California’s No. 1 homebuying champions suggest the selling frenzy is getting too toasty, it’s time to be worried.
Levine’s hope: “As vaccination rates increase and the state reopens fully, higher home prices will hopefully entice prospective sellers who have held off putting their homes on the market during the pandemic to feel more comfortable listing their homes for sale, which would alleviate pressure on home prices.”