Listing prices in California have risen 34% since January as inventory shriveled amid the pandemic.
Zillow says the statewide median listing price for all types of existing residences was $735,000 as of Sept. 5 — up 34% since the start of the year. A key reason is owners seeing the heated competition for the few homes for sale. Listings statewide are down 46% from early September 2019.
The year started with a 10% rise in list prices through mid-March as a robust economy was supporting eager house hunters. When statewide “stay at home” orders throttled the economy, including homebuying, pricing stagnated for roughly two months.
A lot happened in early spring as home sales were given exemptions to business limits, loan rates fell again and home seekers sought larger residences. All of that collided with fewer homeowners willing to sell in the coronavirus era.
Prices, at least what sellers wished for, soared. The median asking price was up 20% year-to-date by mid-June and has steadily increased, jumping $187,000 since New Year’s Day.
Some of these price hikes can be tied to historically cheap mortgage rates that rose to 3.65% in mid-March amid financial market turmoil as the coronavirus risks became known. Thanks to aggressive moves by the Federal Reserve, rates tumbled to a record low 2.86% last week — a drop that boosts a house hunter’s buying power by 11%.
Also, many owners don’t want to sell due to the virus risks. If they did sell, they’d likely be uncomfortable shopping for another residence. Others are in financial distress or have economic worries and don’t feel they could afford another home.
The supply of California homes for sale started 2020 relatively flat through mid-March when the pandemic and efforts to slow its spread became widespread. But instead of increasing as they’d do in a typical sale year — especially in the prime spring homebuying season — they’ve actually declined 21% since 2020 started. Adding to the price index’s spike is a shortage of “affordable” homes for sale.
Still, lofty pricing and thin inventory haven’t thwarted homebuying. New escrows statewide ran 22% ahead of the year-ago pace as of Sept. 5. In mid-April, when economic uncertainty was high, new escrows were 56% below 2019 activity.
In Southern California, as of Sept. 5 …
Los Angeles and Orange counties: $969,750 median listing price — up 14% in a year with listings down 24% and new escrows up 9%.
Riverside and San Bernardino counties: $476,975 median — up 14% with listings down 46% and new escrows up 14%.
Some of these these trends are also seen nationally. The U.S. median asking price of $345,824 is up 9%. Listings are down 29% as new escrows run 25% higher than a year ago.
Source: Orange County Register