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Covid has a booming effect on the California housing market
California Real Estate Market Booming Even As COVID-19 Pandemic Continues:
The coronavirus pandemic has been absolutely devastating for dozens of industries, but when it comes to real estate, houses are selling like never before.
“We had one of the busiest years in real estate on record,” Stan Smith, the director of the California Association of Realtors, said. Smith said that although the year started slow, there were more home sales in the state than ever before.
“I believe that this situation has put a magnifying glass on everyone’s living situation,” he said. “And your mind didn’t think that much about where you were living because you were at work, but now that most people are working from home, that’s all you think about.”
The issue is that getting into a new, bigger home is not that easy.
“The problem in California is that we have much more demand than we have available housing,” Smith said. “It is estimated that we need 180,000 new units of housing every year, just to meet demand.
“At best, we’re getting maybe 90,000,” he continued. “We’re only adding half of what we need every year, so the deficit continues to grow, and that puts pressure on the existing housing stock and causes prices to go up.”
In December, the statewide median home price was $717,930, up 16.8% from December 2019. But the high prices are not driving buyers away.
Smith said that while all areas are booming, proximity remains key for many people.
“One of the things that this new reality has done, [it] has caused a lot of areas to be rediscovered…because they’re centrally located,” he said.
Smith said that sellers should not unrealistic about the value of their homes. As for buyers, he said they should have all their ducks in a row before putting an offer in on a property.
“Make sure that you have not only been pre-approved, but all the underwriting has been done,” he said. “If you can show the seller that you have gone through that process your chances of getting that deal are much, much greater.”
Smith also said buyers better have all of their financials in line because with the competing offers comes a little bit of a price war, which has caused one-third of all listings to sell for more than their original asking price.
C.A.R. Predicts a lot of Home Sales and better costs in 2021:
Leslie Appleton-Young delivered her updated California housing market forecast for 2021. She expects sales to still improve through 2021. The prediction is predicated on growing client demand that’s pushed California’s median value on top of $700,000 and low inventories which will cause value increase. California’s weekly showings index rose to 182.3% over it had been in September of 2019. Mortgage rates have born backtrack and buy applications rose 24.2% on an annual basis last week.
Growing at a slower pace, however on a high buyer demand:
The number of applications for a new purchase of mortgage rose up once more last week, where it continued the 39-week long streak of growing buyer or customer demand that started back in May 2020 and fueled a lot of the expansion in existed sales. California enjoyed throughout the last half of the year. However, there is proof that the enlargement can cool to less significant levels of growth. For the past seven weeks, the year-to-year increases have been below 20% consecutively after the growth of more than 20% for the preceding thirty-two weeks. Buyer demand remains increasing, it's simply doing thus additional slowly than it absolutely was at the tip of 2020.
By historical standards and fears concerning inflation, the sharp rise in interest rates caused the market to weigh down somewhat over the past two weeks, which are bolstered by the likelihood of a new round of pandemic relief, are seemingly overblown.
There are many encouraging economic reports this week, thus the housing market remains comparatively strong additionally it's growing at a slower pace than we saw the previous six months. By historical standards, the interest rates stay terribly low, although the inventory remains tight, buyer demand remains sturdy.
According to the National Association of Realtors, nearly 58% percent of counties nationwide have median home costs, but only $150,000 and below that. Home costs are nearing record highs, however, rent value is down from their pre‐coronavirus peaks. Whereas the pandemic-induced economic conditions are distinctive, California continues to face an equivalent underlying downside that has priced out several Californians for decades: there is a huge shortage of housing units in the state, mostly attributable to government laws that come near the prices of production.
The drop-down in mortgage rates creates buying luxury homes an additional viable possibility for money-bearing customers and investors. The greatest trend to purchasing luxury homes with more room, aloof from dense urban areas is additionally grasping across the country and in California.
By February, there will be a Double-Digit growth in California Home Sales:
The preliminary figures from MLS across the state show there is over 15% growth in California Home Sales on a year-to-year basis last month, though several transactions from February are still being according. This represents a small cooling from the 20%+ pace of the last many months, however, it additionally represents current growth at a comparatively high volume of transactions.
A stronger week is being reported by the Realtors in California:
In last week's survey, additional members reported an uptick in the key parts of their business being in steps with the preliminary market figures. The percentage of Realtors who had listed a property increased up to 23.4%. It is additionally found that a bigger proportion up to 23.9% additionally opened written agreement on a new transaction. Significantly, the percentage of Realtors who had closed their sales increased up to 24.8% for the second consecutive week, and it corroborates the unfinished sales information that means March can keep sturdy for the closed sales.