Home prices in California continued their relentless rise in June. CAR stats reveal housing prices are up in all but one region, and although sales rose in each region too overall across the state, home sales actually fell 2.2%. The housing market california is always on everyone’s mind in 2021. While some home buyers are hoping for a housing market crash, the likelihood of that happening is fairly low.
This year’s real estate market has been exceptionally strong, with strong housing demand in virtually every region of the country. A strengthening economy and millennials nearing their peak homebuying years are fueling a residential housing boom.
Many buyers are still in the hope of finding a home that fits their budget and needs. Despite popular belief that now is not a good time to buy, many home buyers are looking to lock in their monthly housing payments by taking advantage of still-low mortgage rates. However, in this hot real estate market, it’s difficult for buyers to find a good deal, especially with the typical asking price rising by double digits.
Although the housing market is still expected to favor sellers we appear to be at a tipping point in the housing market, where prices have risen so dramatically that buyers are backing off and home sales are slowing down. According to Realtor.com, the median national home price for active listings in June was $385,000, a 12.7 percent increase from the previous year. The annual price growth rate has slowed for the second month in a row. The annual median home price growth rate in May was 15.2 percent, down from 17.2 percent in April.
The decline in time-on-market has slowed for the first time in nearly four months, indicating that some properties are sitting on listing portals for a little longer. These market trends point to a positive development for buyers as we enter the crucial home buying season of 2021. Additionally, compared to last year, the number of newly listed properties is also increasing, and the sharp inventory losses of recent months have moderated. The net result has been a deceleration in the growth of listing prices. While home prices are still rising at a double-digit rate, they have passed their peak growth rates.
The popular belief is that it is a good time to sell and that ultimately means that the numbers of home sellers that hit the market are constantly increasing. These latest market trends (seen in May/June) point to a shift in real estate activity, implying that we may have passed the peak of this hot housing market, which is good news for home buyers. The market is still heavily skewed toward sellers, but we may be seeing the first signs of a return to a more balanced real estate market following the most active sales period in years.
The Numbers – Housing Prices, Days on Market & Inventory
While average home prices continue to rise in leaps and bounds again, in some areas of San Diego as high as 24% year over year gains. On average, homes closed at 100.5% of the list price. Closed Sales increased 16.7 percent for Detached homes and 15.9% for Attached homes. Pending Sales decreased 3.5 percent for Detached homes but increased 7.9 percent for Attached homes.
The San Diego North County Median Sales Price was up 37.2 percent to $960,000 for Detached homes and 19.0 percent to $589,000 for Attached homes. Overall San Diego’s home prices are up 29.6% to $862,000
Days on Market decreased 60% for Detached homes and 73.5% for Attached homes. Supply decreased 61.5 percent for Detached homes and 66.7 percent for Attached homes. The increase in sales prices comes with a slight decline in existing home sales nationwide, as homebuyers struggle with declining affordability amid a lack of inventory, forcing some buyers to simply wait it out in hopes of more inventory and less competition. Meanwhile, home builders are trying to meet the increased market demand, with housing starts up 3.6% in May from April, according to the Commerce Department. As we ease into new routines and look forward to a post-pandemic future, one thing remains certain: America desperately needs more homes.
While inventory on paper is still incredibly low, I am starting to see more homes coming the market this month then I have in the last year. According to the national association of realtors more new listings came into the market, with new listings in the past four weeks up 6.2% from one year ago.However, there is still a large demand-supply gap: total active listings are down 31% from one year ago while total pending listings are up 13% year over-year.
Today’s Mortgage Rates are going UP.
Mortgage purchase applications declined by 1% from the prior week and from one year ago, according to the Mortgage Bankers Association. Mortgage originations have declined even the 30-year fixed mortgage rate hovers at a historic low level, plausibly because of the sharp rise in home prices that has eroded home affordability.
Today’s mortgage rates are drifting higher. The 30-year fixed-mortgage rate average is 3.02%, which is an increase of 4 basis points compared to one week ago. (A basis point is equivalent to 0.01%.) The average Monthly Mortgage Payment is up $266 from one year ago, due to rising home prices.
Chief Economist Lawrence Yun expects the 30-year fixed mortgage rate to move towards 3.5% by the end of 2021 and the inflation rate to average 2.7% in 2021. Even with higher inflation, the Federal Open Market Committee has kept the federal funds rate at 0 to 25 basis points as it sees the current inflation rate to be transitory, mainly arising from a temporary rebound in consumer spending. The estimated monthly mortgage payment rose to $1,438, up $266/month from one year ago, making a home purchase less affordable. In April, NAR’s Housing Affordability Index fell to 155.8.
As of June 27, the fraction of loans in forbearance continued to trend downwards to 1.9 million, which is only 3.87% of total mortgages, according to the Mortgage Bankers Association. Rising consumer confidence and temperatures around the us abound as we all get used to a new normal. In fact consumer confidence jumped to the highest it has been in June since the pandemic.
What I’m Seeing in Real Time
After a year of a VERY competitive market, bidding wars and escalation clauses, there is good news for frustrated home buyers. Realtor.com’s June data showed that the inventory of newly listed homes is rising. More sellers coming on the market should start to moderate prices. Mortgage rates dropped this week, offering home buyers some relief in a hot summer housing market.
From a boots on the ground view, more homes are coming on market, however they seem to be priced too high for many home buyers and I’m now beginning to see price reductions for the first time since April of last year. This indicates that the market will slow down and home buyers are not willing to get into the kinds of bidding wars that frustrated so many earlier this year.
What’s Next for Home Sellers and Home Buyers?
Home sellers, did you miss the top of the market? Well, maybe, but only if you are over pricing your home. Simply look at the numbers- how much equity has your home gained in the last year…If you want to have my help in figuring this out make sure to contact me – my information is in description. Add that percentage to your home price from a year ago, and make sure to check what other homes are selling for in your neighborhood. Personally I strongly recommend under pricing your home to create more demand for you home, which in turn will drive your home higher in the end.
For our home buyers who have had the hardest time in this market, there is relief in sight. While we are not expecting to see a crash where you could get bargain deals on gret homes, you will start to have more homes to choose from, which in turn will stabilize prices overall. My biggest advice to home buyers is DON”T GIVE UP! It is worth it. It is more important than ever to get a plan in place to help you be successful in the next year of owning a home.
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About Tristen Campanella, Military Certified Realtor, Negotiation Certified Realtor
Email: [email protected]
Tristen’s top priority is integrity and honesty. Her valued perspective and highly personal approach has won her client’s trust. Through her thorough, competent and experienced representation, she delivers impressive results. She is extremely attentive in providing communication about the important details of the transaction and responds quickly to her client’s needs. She is an aggressive negotiator to ensure her clients receive the best price and terms for them.
Tristen is proud to be recognized in the top 5% of realtors in San Diego County. She is a Certified Military Relocation Specialist and Seller Representative Specialist.
As a local San Diego resident, Tristen enjoys hiking with her family of 5 kids, and her golden retriever Brady, all over San Diego County. She can also be found in the yoga studio, hiking, or paddle boarding.
Tristen will spend the time needed to truly listen to your goals and help you develop and plan to reach them.
Life Begins at Home.