Fastest Home Price Growth in Small California Cities in 2023
The housing market in California witnessed a significant slowdown in 2023, marked by soaring interest rates hitting a 23-year high and sluggish inventory across the state. Unlike the initial pandemic years, home prices didn’t experience substantial growth, particularly evident in the Bay Area, with some regions even witnessing a decline in price growth. However, despite this deceleration, the greater Bay Area remains the most fiercely competitive region for home buying in the state, as per data provided by real estate company Redfin to SFGATE.
Redfin’s analysis revealed that seven out of ten of the most competitive cities in California to purchase a home were nestled within the Bay Area. The assessment considers various metrics like days on the market, offer frequency, contingency waivers, and the sale-to-list ratio to derive a comprehensive competitiveness score.
Leading the roster of competitive cities for homebuying in California was Mountain House, a planned community in San Joaquin County, sought after for its affordability just outside the Bay Area. Homes in Mountain House were selling for an average of 2% above the list price, securing an offer within nine days on average. Notably, in November 2023, a staggering 77.8% of homes sold in Mountain House exceeded their asking price, a stark contrast to the 15.4% in the same period of 2022.
The second and third spots on the list were claimed by Newark and San Leandro, followed by Sunnyvale, Cupertino, San Lorenzo, and Santa Clara. Conversely, Laguna Beach, Joshua Tree, and Idyllwild-Pine Cove emerged as the least competitive cities for homebuyers.
Throughout 2023, housing prices in California experienced the most rapid growth in Tustin, surging by 11.7% year-over-year in this Orange County town. Coachella, recognized for its annual music festival, witnessed the second-highest price growth at 11.5%, while Chowchilla, housing two state prisons, marked an 11.3% increase in 2023.
However, not all regions experienced such rapid price escalations. Cities like Malibu, Live Oak, and Beverly Hills exhibited the slowest price growth. Additionally, Berkeley, Albany, Burlingame, Lafayette, Millbrae, and Alameda took spots five through ten for the slowest price growth in the state.
Despite signs of the Bay Area exodus tapering off, it remains the region with the least interest for relocation within the state, as indicated by Redfin searches. Los Angeles follows San Francisco in lower migration interest, while Sacramento and Bakersfield top the list for migration interest in metro regions within California.
Looking ahead, the trend of Californians moving inland isn’t expected to abate soon, according to Daryl Fairweather, Redfin’s chief economist. The increased desire for space and affordability during the pandemic continues to drive this migration, with Fresno and Bakersfield predicted to see further momentum in 2024. Fairweather highlights the Bay Area’s affordability limitations, suggesting that Fresno and Bakersfield present compelling value propositions in the current market landscape.