Original Article – https://patch.com/california/across-ca/ca-housing-market-faces-lack-homes-surging-prices-2021
CALIFORNIA — It is well-known that Californians pay very dearly to live in the Golden State. In 2021, that fact was underlined, bold-faced and underlined again. This year’s housing market told a tale of surge and shortage that is likely to continue into the New Year, HouseCanary said in its latest Market Pulse report.
Homes in the U.S. are being snatched off the market at record prices even through winter, bucking the trend that generally sees slow market activity during the season, Co-Founder and Chief Executive Officer of HouseCanary Jeremy Sicklick told Business Wire. HouseCanary is a national brokerage well-known for its housing market and real estate evaluations.
“In November, we witnessed a nearly 15 percent decrease in net new property listings on the market compared to last year, coupled with a growing number of homes going into contract at elevated prices,” Sicklick said. “For homebuyers across the country, we expect the shortage of homes for sale to extend well into 2022, setting us up for additional price growth in the spring.”
While housing prices are predicted to rise heading into the New Year, Slicklick told Business Wire that this growth will likely be at a lower rate than the record rise Californians saw throughout 2021.
What’s With The Housing Shortage?
Deputy Chief Economist Oscar Wei of the California Association of Realtors told Patch that over the past year and a half, the Golden State’s housing market has been exploding with demand in part because of record-low interest rates on loans. Wei told Patch that the current interest rate stands a little over three percent.
“Way back in 2005, 2006, that’s when the housing market was really hot too… at that time, the interest rate was around 6 percent,” Wei said in an interview with Patch. “It really motivated a lot of buyers in the last year and a half to actually jump into the market.”
But low interest rates aren’t the only thing influencing Californians to buy houses. Wei said that the COVID-19 pandemic played numerous short-term and long-term roles in the California housing market.
For instance, Wei told Patch, residents who began to work remotely amid the height of the COVID-19 pandemic often had the flexibility to seek out housing in historically less-expensive communities.
An annual report released by the California Association of Realtors said the areas in California experiencing the highest home sales throughout 2021 were the Bay Area, making up 32.8 percent of sales; the central coast, making up 26.6 percent of sales; and Southern California, making up 23.2 percent of sales.
While the incentive to buy is big, the amount of houses available on the market is limited. Wei said that long-time homeowners are not moving as they were in the past due to low rates on current mortgages and low property taxes.
The Golden State: Home To The Priciest ZIP Codes In The Country
While there don’t seem to be enough homes to go around in the Golden State, prices for a single-family house continue to surge in California. The state has some of the priciest ZIP codes in the U.S., according to PropertyShark’s “Most Expensive U.S. ZIP Codes in 2021.”
A whopping 89 Californian ZIP codes ranked as the priciest in the country, with the Bay Area’s Santa Clara and San Mateo counties dominating the national list. According to PropertyShark, the two counties form “a nearly contagious supercluster” of ultra-expensive ZIP codes that include high-profile tech centers.
Topping the national ranking was Atherton in San Mateo County, and the city dominated the No. 1 spot for a fifth consecutive year, recording a $7.5 million median home price.
But median home prices in California were rising all over the state this year. The state as a whole made up 70 percent of PropertyShark’s report, with New York making up 17 ZIP codes on the list and Massachusetts making up seven.
While the Bay Area took home the gold for priciest ZIP code in 2021, Los Angeles hailed as state’s most expensive county with a collective 21 ZIP codes being included in the rank.
In 2021, California’s median home price rose above the $800,000 benchmark for the first time in the state’s history. After months of median home prices steadily increasing throughout the Golden State, the California Association of Realtors reported that in April 2021, heated market conditions and a shortage of homes for sale resulted in driving the state’s medium price above the benchmark.
As of December, the median home price in California was $717,930, up 2.7 percent from last month and up 16.8 percent from December 2019, the California Association of Realtors said in its December report. This marks a December record for median home prices in the state.
To Buy Or Not To Buy, That Is The Question
The real estate experts at the California Association of Realtors predict a steady growth in costs to buy a house in the Golden State, but Wei said that the forecasted growth will likely continue at a slower pace than it did in 2021.
Pricier homes may at first glance be discouraging to first-time homebuyers, but Wei encouraged California residents not to lose faith. While prices may be rising to buy a home, the interest rate on loans is predicted to stay lower than it’s been in history, and residents considering buying a house in California should move forward.
“I mean, the best time to buy was probably 10 or 15 years ago when the price was really low,” Wei told Patch. “But we can’t go back in time, so we should take advantage of low rates.”