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Housing costs have been on the rise in California, which has impacted affordability. California’s median home price is forecast to decline 8.8 percent to $758,600 in 2023, following a projected 5.7 percent increase to $831,460 in 2022. These Northern California real estate reports, data, forecasts, and market trends are provided for informational use.
If energy prices rise this fall, it’s easy to predict stronger Fed rate hikes to slow inflation further so they can meet their 2% inflation rate goals. Some are hoping the Fed will capitulate and pivot to avoid further hikes. Buyers in many states are still walking away from deals at a faster pace too given they can now walk away if they can’t get the right financing, don’t like inspection reports, and other reasons. The desperate bidding war environment where they waived inspections, etc. has ended. According to Redfin, nationwide, buyers walked away from 15% of deals in August.
SELL YOUR HOME FASTER, FOR A BETTER PRICE!
According to C.A.R.'s 2022 projection, the U.S. gross domestic product of 0.5 percent in 2023, after a projected uptick of 0.9 percent in 2022. Here's a rundown of the California housing market demand for the week ending November 5, 2022. While refinance applications rose 0.2% from the week before, rates are still 85% behind last year. The 30-year fixed-rate mortgage averaged 6.95% on November 3, according to Freddie Mac's weekly survey. With the Fed's latest rate hike and another one expected by the end of the year, rates are likely to remain high and deter purchasers. C.A.R.’s statewide sales-price-to-list-price ratio was 97.3 percent in October 2022 and 101.5 percent in October 2021.
Thousands of people have been moving to the area thanks to its affordable housing and close proximity to San Francisco and Lake Tahoe. Marco Santarelli is an investor, author, Inc. 5000 entrepreneur, and the founder of Norada Real Estate Investments – a nationwide provider of turnkey cash-flow investment property. His mission is to help 1 million people create wealth and passive income and put them on the path to financial freedom with real estate. He’s also the host of the top-rated podcast – Passive Real Estate Investing.
Home Prices
However, although the moving costs San Francisco are not high, the house prices in Northern California are. ❱ In the first quarter, it took an average of 40 days to sell a home, with homes selling fastest in Alameda County, and slowest in Shasta County. ❱ Year-over-year, sales rose in all counties contained in this report, with double-digit growth in all areas other than Solano County. ❱ In the second quarter, it took an average of 28 days to sell a home, with homes selling fastest in Alameda County and slowest in Shasta County. ❱ The greatest drop in market time was in San Luis Obispo County, where it took 19 fewer days to sell a home than it did the prior year. The greatest drop in market time from a year ago was in Napa County, where it took 14 fewer days to sell a home.
According to C.A.R.'s “2023 California Housing Market Forecast,” existing single-family home sales will fall 7.2 percent next year to 333,450 units, down from 359,220 units in 2022. The forecast for 2022 is 19.2 percent lower than the 444,520 residences sold in 2021. The median home price in California is expected to drop 8.8 percent to $758,600 in 2023, after rising 5.7 percent to $831,460 in 2022 from $786,700 in 2021. Next year's median price rise will be slowed by a less competitive housing market for homebuyers and a stabilization in the mix of home sales. Here's the California Housing Forecast for 2023 released by the C.A.R on October 12, 2022. High inflationary pressures will keep mortgage rates high, reducing purchasing power and lowering property affordability for prospective purchasers in the coming year.
California Real Estate & Homes for Sale
❱ The average time it took to sell a home in the Northern Californian counties covered by this report dropped 15 days compared to the second quarter of 2020. ❱ The most affordable counties—relative to average sale prices—continue to be Shasta and Solano. In addition to Santa Clara, average sale prices were above $1 million in Alameda, Contra Costa, and Napa counties.
An exodus of people and businesses might sound threatening but it may be that this state’s housing market is invincible. 47 of 51 CA counties saw an increase in active listings again in October. 5 northern counties saw inventory increases over 100%, yet prices were not all down in those counties. The Los Angeles metro region saw house prices fall 1% in October after a 2% drop in September. In the Bay Area, prices fell slightly by .5% (-6,500) and in San Diego fell 4.3% (-$39,000). The main October Sales/Price chart from CAR reflects a deepening trend.
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❱ In the final quarter of 2021, 14,218 homes sold—a drop of 10.6% compared to a year ago and 14.2% lower than in the third quarter. Seasonality is at least partially responsible for the quarter-over-quarter drop, but it’s also because inventory constraints are limiting sales. Even with sales pulling back, the average home price in the region rose an impressive 17.2% year over year to $1.215 million. Although mortgage rates did drop in June, the quarterly trend was still moving higher. Inflation—the bane of bonds and, therefore, mortgage rates—has yet to slow, which is putting upward pressure on financing costs. Even with rising inventory levels and higher financing costs, the market appears to still be buoyant.
There was a 98.7% sale-to-list price, down 4.0 points year over year. The number of newly listed homes was 19,290 and down 30.8% year over year. The first-quarter 2022 figure is less than half of the affordability index peak of 56 percent in the first quarter of 2012. Existing, single-family home sales are forecast to total 333,450 units in 2023, a decline of 7.2 percent from 2022’s projected pace of 359,220. In September 2022, the overall housing sentiment index was 55 (down 10% from last month). It showed that consumers acknowledged the current market challenges and felt increasingly pessimistic about homebuying opportunities.
Car predicts a J-shaped economic recovery extending over the next 12 months. Of course this trend will affect home prices in the coming 6 months. The latest survey of Realtors shows fewer are withdrawing offer, more are listing new properties, and are not optimistic about sales or prices.
The percentage of REALTORS® who believe sales will increase in the foreseeable future has been steadily falling, reaching only 4.6% in October. This is the lowest reading since C.A.R. began polling its members shortly after the pandemic began. The study also revealed that fewer members expect listing prices to climb, with the proportion dropping from half of the respondents at the start of the year to one in five this month. Housing affordability is expected to drop to 23 percent next year from a projected 26 percent in 2021.
October’s latest housing stats show sales are declining significantly again across California. The Old Sacramento Waterfront and downtown area boast many restaurants and endless entertainment; there are also numerous fun and free things to do in Sacramento. When you want to get away from the city, take a day trip to a nearby town or explore the great outdoors—the region's natural beauty will stun you. Most affordable Northern California cities, but Sacramento is also the most populous on our list with just under 500,000 inhabitants. Perfect for people who want to head north to explore, Stockton surprises residents and visitors in more than one way.
With all the data here, I have moved the needle a little towards home buyers, although it clearly remains a seller’s market. Over the past 12 months, the Northern California markets covered in this report added 184,600 jobs. With decent job growth, the unemployment rate fell to 2.4%, which is a significant drop from the 5.8% rate we saw a year ago. The lowest jobless rate was in Santa Clara County (1.8%), and the highest rate was in Solano County, where 3.5% of the workforce remains unemployed.
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