The good news, there are 1.5 million renters who can afford to buy.
As another statewide home price record is shattered in the pandemic era, we hear this: “Not only do skyrocketing home prices threaten already low homeownership levels and make it harder for those who don’t already have a home to purchase one, it also brings to question the sustainability of this market cycle.”
Those aren’t the words of this columnist or some perpetual real estate skeptic. That’s Jordan Levine, chief economist for the California Association of REALTORS® commenting on C.A.R.’s eye-grabbing homebuying report for April.
The median sale price for an existing, single-family home in California rose to an all-time high of $813,980 in April, a record-setting 34% price jump from April 2020, according to C.A.R.
The C.A.R. report states:
• Gains were widespread, with 48 of 51 counties seeing one-year price gains of 10% or more. Highest? Santa Barbara, up 83% to $1.1 million.
• Broken records were common, too: 29 counties set price highs. San Mateo County passed the $2 million median.
• Sales were quick and above what sellers originally sought: The typical single-family house went from listing to escrow in seven days vs. 13 a year earlier, at a sale price to list price ratio of 103.3% vs. 100% in April 2020.
• The Southern California median hit $750,000, up 28% in a year. The Bay Area rose to $1.33 million, jumping 36%.
• Statewide gains in sales counts were certainly skewed. The 458,170 annual pace was up 65% in a year, but that was compared to the locked-down April 2020 economy.
Affordability is a growing problem, even with mortgage rates still near all-time lows.
John Burns Real Estate Consulting found all eight California markets it tracks showed affordability below historic norms when it compared March homebuying conditions with a history dating to 1985.
San Jose affordability had the ninth-worst affordability among 33 U.S. markets studied tracked. Los Angeles was 14th; Orange County, 15th; San Diego, 16th; Sacramento, 17th; East Bay, 20th; Inland Empire, 21st; and San Francisco, 25th.
However, the heat is not just in California: The U.S. markets with worse affordability than these Golden State regions were Salt Lake City; Denver; Seattle; Houston; Austin, TX; Portland, OR; Las Vegas, and Dallas.
Levine’s hope: “As vaccination rates increase and the state reopens fully, higher home prices will hopefully entice prospective sellers who have held off putting their homes on the market during the pandemic to feel more comfortable listing their homes for sale, which would alleviate pressure on home prices.”
In a panel discussion last week on affordability, Levine shared stats on the number high-earning tenants who can currently afford to buy a home–and there are 1.5 million of them (see image at top).