Median Home Price in California Sets New Record
Despite the pandemic that has caused massive damage to the US economy, it seems the real estate market is faring well, especially in California.
As a result of the low-interest rates and the historic housing shortage, the median home price for California homes reached a record of $712,430.
This increase was also the highest one recorded since March 2014. It was also higher than the six-month average of 4.3 percent recorded between February 2020 and July 2020.
When the coronavirus first hit the real estate market of California, things cooled down for a while. There were very few buyers who were willing to invest in the real estate market, especially considering the rising unemployment and the bankruptcy of huge businesses. However, things turned around in June, and according to the California Department of Finance, the median sales price reached $626,000. This was the highest ever recorded at the time. Furthermore, over the next couple of months, the mortgage rates continued to stay below 3 percent. Several buyers were looking for opportunities to upgrade to larger homes. Because of this, the numbers continued to rise and in August 2020, the number exceeded $700,000. This was a 6.1 % jump from July’s $666,320 and 14.5 % from $617,410 in August 2019.
“A lot of people think the pandemic equals the market is suffering, but that’s just not the case,” stated Ryan Lundquist, an appraiser primarily based in Sacramento. “It’s the perfect storm of low rates, a housing shortage that we already had and is getting worse, plus heightened demand.”
Mr. Lundquist states that there are millions of people in California, and they are demanding houses for themselves. However, the builders have not been able to keep up with the demand. Consequently, on some level, there is a shortage of housing. According to Jonathan Miller, a member of the appraisal agency Miller Samuel, the builders in California are not building adequate, affordable new homes. He also states that “Most of the sales growth in single family homes in California is above the $600,000 mark. When it comes to inventory, there is more lost in affordable and modest-priced housing, year over year, than in the upper-level housing market.”
This is more obvious when one looks at the condominiums in the real estate market. In Los Angeles, specifically, there is an abundance of condos. Several of them are above the $600,000 mark. Condos below $500,000 are very difficult to find as they are few.
On the regional level, the Central Coast and the San Francisco Bay Area had the highest sales growth in August as they showed a record increase of 10 percent more than last year. The North and Southern California regions saw a rise of 5.5 %, and the Central Valley recorded a rise of 0.5 percent.
Long-term implications
President Jeanne Radsick from REALTOR firm located in Bakersfield, California, stated that the low housing inventory would increase prices. In the long run, this might hamper housing affordability and cause millions of people to move towards renting houses instead of buying them. It might also cause a downfall of the real estate market. Therefore, the supply must be increased to meet demand.
