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Real Estate

Low inventory means higher prices for California’s housing market

Housing supply declined more than 30% across the state

The California housing market rebounded in June with the largest month-to-month sales increase in nearly 40 years, and California’s median home price hit its own record high, the California Association of Realtors said.

After the statewide median home price fell below $600,000 in May, it rose to $626,170 in June, which was up 2.5% from June 2019. This makes it the highest recorded May-to-June average, CAR said.

Existing single-family home sales totaled 339,910 in June on a seasonally adjusted annualized rate, up 42.4% from May and down 12.8% from June 2019.

Homes priced below $500,000 made up 48% of total sales in May 2020, but only made up 44% of all sales in June 2020. Sales of million-dollar properties, on the other hand, increased in market share to 18.1% in the most recent month compared with 15.6% in May 2020.

“A new record high in the statewide median price suggests that there is stronger housing demand from more qualified, affluent buyers in this extremely favorable lending environment,” CAR Senior Vice President and Chief Economist Leslie Appleton-Young said in a statement.

Meanwhile, year-to-date statewide home sales were down 12.9% in June.

“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,” said CAR President Jeanne Radsick in a statement. “While the momentum is expected to be sustained as we kick off the third quarter, the resurgence in coronavirus cases remains a concern and may hinder the market recovery in the second half of the year.”

Just about half of the counties tracked by CAR, 26 out of 51 to be exact, had a year-over-year loss in closed sales. Mono County had the highest decline by far, down 40%. Napa County trailed, going down 28.2%. 

As a response to the pent-up demand from the delay of home-buying season, median home prices in the Central Valley rose 7.4% from last year, CAR said. Home prices in Southern California also rose 3.3% from the year prior. 

Speaking of pent-up demand, housing supply continued to trend downward on a year-over-year basis as well, CAR said. Active listings fell more than 25% for the seventh month in a row and active listings sank 43%. 

Across the state, all areas had housing supply decline more than 30% from the year prior, CAR said. More specifically, Southern California had the biggest drop in supply, as for-sale listings fell 47.3% year over year.

CAR conducted a Google poll earlier this month that revealed 44% of consumers said it was a good time to sell, up from 40% a month ago, and slightly down from 49% a year ago.

Likewise, 31% of consumers said now is a good time to buy a home compared to the 23% who said the same thing last year.

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