With buyers looking to purchase homes before rates go any higher and sellers hesitating to give up their properties due to the fear of rising mortgage rates, the 2022 California real estate market may be turning into a perfect storm.
What's in store for home prices, inventory, and affordability? The following guide will provide some important statistics and give insight into what you can expect in the coming months.
Home Values Hit Record Highs
According to Zillow, California’s housing market remains one of themost valuable in the country. In April of 2022, home prices in the state hit a new record, soaring 4.1% higher than March’s levels to reach a high of $884,890. At the same time, home sales fell 1.9% from March to April of this year. They are also down 8.5% from April of 2021.
While January of 2022 marked the first time since July of 2020 that housing prices did not experience annual double-digit increases, the median home price statewide is expected to creep up even higher as the spring homebuying season heats up.
California Remains a Seller’s Market
The combination of low housing inventory and rising interest rates has continued to fuel a sense of urgency among California’s prospective homebuyers. The imbalance between supply and demand continues to heat up the market, with many homebuyers making offers that are higher than the asking price. In April of 2022, approximately 72.8% of homes sold above the asking price, creating yet another record. While this has led to a significant affordability problem, the increase in prices may entice homeowners to sell, ultimately slowing the rate of appreciation.
Homes are also still selling in near-record time, with the median number of days needed to sell a single-family home in California increasing just one day year-over-year, from seven days in April 2021 to eight days in April 2022.
Home Affordability Is an Increasing Problem
Affordability continues to be a significant concern throughout the state, with sales of homes listed for less than $500,000 reaching their lowest level ever. At the same time, the state continues to see robust sales in the higher end of the market, with sales of luxury homes in high-priced markets significantly outpacing those in more affordable areas. Of all the homes sold in the state, 34.7% were priced at a million dollars. This represents an increase for the third month in a row and is an all-time high. Sales of homes priced above $2 million also continue to rise year over year.
In the first quarter of 2022, only 24% of California households could afford to purchase homes at the median rate. This represents a decrease from 25% in the fourth quarter of 2021 and 27% in the first quarter of 2021. The cost of rent is also increasing and doesn't show any signs of slowing. This combination of issues has led some residents to move out of the state and into other areas where affordability isn't as much of a concern — like Texas.
It’s a Great Time to Get a California Real Estate License!
California’s real estate market doesn’t appear to be slowing any time soon, making now a great time to get started in a lucrative real estate career. If you've been thinking about getting your California real estate license, Aceable's online California real estate pre-licensing course can help you get started and give you all the tools you need to excel. Check it out today!