Most of the homes sold within the San Francisco Bay Area have ended up selling…
Summary: This article includes recent trends and data that show how the California housing market is handling the 2020 coronavirus health crisis. From May to June of this year, home prices and sales across the state both rose significantly.
This week, the California Association of REALTORS® published a report that revealed California housing market trends during the coronavirus (COVID-19) pandemic. The report contained data through the end of June 2020, offering fresh insight into real estate market trends across the state.
Apparently, the California housing market is still showing signs of strength, despite the ongoing COVID situation and resulting economic challenges. From May to June of 2020, home sales statewide increased by a whopping 42%. That shows there’s still a lot of demand out there, from home buyers.
California Housing Market Trends During COVID-19
On July 16, the California Association of REALTORS (C.A.R.) published a detailed report on California real estate trends during the ongoing coronavirus pandemic.
Among other things, this report showed a big jump in home sales from May to June of this year. This increase in sales was partly due to the state’s gradual reopening, which has since been scaled back due to a spike in COVID cases.
To quote the C.A.R. report:
“After falling to the lowest level since the Great Recession, California’s housing market rebounded in June with the largest month-to-month sales increase in nearly 40 years, while the median home price set another record high…”
Home Sales Up Across the State
The total number of single-family homes sold in June rose 42.4% compared to May. Year over year, however, home sales were down by -12.8% in June.
This tells us two things:
- There’s still a lot of demand from home buyers, across California.
- But the COVID-19 crisis has led to an overall decline in sales.
Meanwhile, mortgage rates hit another record low this past week. The average rate for a 30-year fixed home loan fell below 3% for the first time ever, according to Freddie Mac. This is one reason why there’s so much demand from buyers right now. People want to take advantage of today’s super-low interest rates.
According to C.A.R. president Jeanne Radsick: “Home sales bounced back solidly in June after hitting a record bottom in May, as lockdown restrictions loosened and pent up demand driven by record-low interest rates roared back.”
(Pent-up demand is a phrase we’ve heard a lot of lately.)
Prices Hold Up, Despite Coronavirus Situation
The uptick in home sales during June 2020 also helped to boost house values across California. According to C.A.R. data, the state’s median (or midpoint) home price set a new record high in June 2020. The median price rose to $626,170 during that month, a 6.5% increase over May 2020, and a 2.5% increase from June of 2019.
The real estate information company Zillow also reports a year-over-year increase in California home prices. According to data posted on their website in July, the state’s median home value was up 4.4% from a year ago. (These two groups collect and analyze data differently, resulting in different figures.)
Some forecasters are predicting that California’s housing markets could slow down again, as we go back into a COVID-related shutdown. But, as we’ve seen in recent months, the demand among home buyers remains.
House values might fluctuate in the short term. But recent trends suggest that prices could hold up surprisingly well over the long term, despite the COVID-19 situation.
More Highlights from the C.A.R. Report
Here’s a rundown of the latest California housing market trends during COVID, according to the C.A.R. report:
- Median home prices increased in all regions of California in June 2020. The more affordable housing markets posted year-over-year price gains in the high single digits.
- The Bay Area and the Central Coast regions, which experienced a modest home-price decline in May, bounced back in June with gains of 4.2% and 5.4% respectively.
- Median home prices in the Central Valley and Southern California continued to rise from last year by 7.4% and 3.3%, respectively, as pent-up demand returned to the market.
- Forty-three of the 51 counties tracked by C.A.R. saw a year-over-year home price gain in May 2020.
- Housing market inventory, on the other hand, continued to trend downward on a year-over-year basis in May. Active listings declined by more than 25% for the seventh consecutive month. Home buyers planning to enter the California housing market later this year can expect to find limited inventory.
- Southern California saw the biggest decline in housing supply. Inventory in all counties within the SoCal region dropped by at least 40% from a year ago. Riverside and San Bernardino counties declined more than 50% in active listings.
- The San Francisco Bay Area has also experienced a drop in housing supply, but to a lesser degree. According to C.A.R., eight of the San Francisco Bay Area’s nine counties experienced an annual drop in active real estate listings in May. Seven of them declined by more than 23% compared to a year ago. San Francisco was the only Bay Area county that saw an increase in active listings.
What to Take Away from All This
This latest report (and others like it) shows that there’s still a lot of demand among home buyers across the state. Despite the dampening effects of COVID-19, the California real estate market continues to show strength and resilience.
These trends also give us some idea of what the future might hold. As the state continues to tighten and relax restrictions, we could see more fluctuations in terms of home prices, sales, etc. But overall, the state’s housing market appears to be holding up better than previously expected.