Demand for California real estate is one of the very few things considered to be a “no-brainer,” regardless of in- and out- migration patterns. Even as prices continue up a steeper path, people from all over the world want to live in California.
Recent Market Happenings
The California Association of Realtors (CAR) reported that single-family home sales jumped +5.6% from August to September despite condominium sales declining.
The median price for all home types in California dropped -2.3% to $808,890 in September. Despite this drop, September’s median price of $808,890 remained +13.5% higher than September 2020.
Recent forecasts from the University of California at Los Angeles (UCLA) predict that new home construction will increase to 130,000 units in 2022 and 140,000 units in 2023. The addition of +10,000 homes/month are most likely to elevate sales.
Additionally, California’s Governor Gavin Newsom just signed new bills authorizing $22B in new housing construction for an estimated 84,000 new housing units.
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California’s housing market compares only with that of Texas and Florida in terms of persistent demand. It almost doesn’t matter how much prices hike, people from somewhere in the world want to live, buy and/or rent in California. In fact, according to CAR, demand for rentals boomed in Orange County during September.
2022 California Housing Market Forecast
CAR has predicted that single-family home sales will drop -5.2% in 2022 and that the state’s median home price will rise +5.2% to $834,400.
Couple these two forecasts with those concerning the state’s job growth predictions for 2022 and these housing predictions may be low. California’s job growth is expected to come in at +5.2% and that its non-farm job growth will increase +4.6%. Perhaps CAR’s housing forecasts are too modest?
Will California’s Recovering Economy Outpace the Country’s Economy in 2022?
Rental investors have been flexing their muscles lately. Nationally, rent price growth is up between +11%-13%. Not so in California, however, despite rising rents in Orange County, Fresno, Bakersville, Anaheim and Los Angeles.
The home sale market is subdued. Take a look at these October stats provided by CAR:
- Closed sales –20.0%
- Pending sales – -5.8%
- New Listings – -9.1%
- Think sales will rise? – 17.1% yes
- Think prices will rise? – 22.6% yes
- Think listings will rise? 16.4% yes
Though home sale predictions for 2022 are subdued, CAR believes demand for housing in large metros will increase in 2022 as work routines return and the economy recovers. And, of course, increased demand translates into increased home prices.
Thanks to manage.casa.