California Real Estate Prices Surge to New Heights
The real estate market in California continues to show signs of growth, as the median home price surpassed $800,000 in July. This marks the fourth consecutive month of price increases and the first year-over-year gain in nine months, according to a report from the California Association of Realtors.
In July, the statewide median price reached $832,340, a slight 0.2% increase from the previous year’s median price of $830,870. Despite rising interest rates, which averaged 6.84% for a 30-year fixed mortgage in July compared to 5.41% a year ago, the demand for homes remains strong.
However, while prices have been on the rise, the number of home sales has seen a decline. In July, 269,180 single-family homes were sold statewide, which is a 3% decrease from the previous month of June and a 9% decrease from the same time last year when 295,770 homes were sold.
Nevertheless, there are some positive aspects to consider. This is the first time in over a year that home sales declined by less than 10% on a year-over-year basis, suggesting some stability in the market. The lower sales base in July can be attributed to the lack of inventory available for purchase.
Jennifer Branchini, president of the California Association of Realtors, highlighted the ongoing competitiveness and resilience of the housing market, despite the recent slowdown in sales.
At the local level, San Mateo and Santa Clara counties experienced increases in median home prices, while the number of home sales continued to decrease due to the limited supply of available homes for sale.
In San Mateo County, the median sales price for a single-family home was $1.984 million in July, which is slightly higher compared to the median price of $1.965 million recorded in July 2022 but 2.7% lower than June’s median price of $2.039 million. Home sales in San Mateo County were down by 18.6% compared to the same time last year and fell by 29.3% compared to the previous month of June. The average time homes spent on the market in July was 11 days, one day longer than June and the same as July 2022.
With the real estate market remaining highly competitive and inventory levels low, it is crucial for buyers and sellers to stay informed and adapt to the ever-changing market conditions.
The median price for a single-family home in Santa Clara County in July was $1.8 million, representing a 3.4% increase compared to the median price of $1.74 million recorded last year. However, it was 1.4% lower than the median price of $1,825 million recorded in June. Sales in July were down 6.2% compared to the same period last year and fell by 23.1% from June. The average time a home stayed on the market in July was eight days, which remained consistent with June’s figure. In contrast, homes stayed on the market for 14 days last year.
Jim Hamilton, president of the Silicon Valley Association of Realtors, commented, “Despite elevated interest rates, the fact that homes are selling quickly indicates strong demand. However, median prices are still unaffordable, especially for first-time and middle-income homebuyers. Lower interest rates would be tremendously helpful, and we hope the Federal Reserve will reconsider its aggressive approach.”
On Aug. 17, mortgage interest rates reached a 20-year high, exceeding 7%, according to Freddie Mac. Since then, rates have remained around that level or higher for 30-year fixed-interest loans.
The lack of housing inventory is not restricted to Santa Clara County but a nationwide issue, as highlighted in the National Association of Realtors’ recent report on July’s existing home sales. The report reveals a 1.9% nationwide increase in the median home price compared to last year, with home sales dropping by 16.6%.
Lawrence Yun, chief economist for the National Association of Realtors, explained, “Two influencing factors affecting sales are inventory availability and mortgage rates, both of which have been unfavorable for buyers. Lower mortgage rates can stimulate the market and encourage more buyers and sellers to participate.”