reported that the Golden State’s home prices surpassed $700k for the first time. Disclaimer: This article includes forecasts for the California real estate market in 2020 and 2021. A gradual rise in inventory levels. These are the best places to invest in California in 2021 based on cash on cash return. It would also bring more people into the housing market, increasing demand and home prices going forward. In August, Zillow reported that the statewide median home value had “gone up 4.4% over the past year.”. The key takeaway here is that the housing market continues to surprise economists and analysts. But new data reveals that the market has recovered – it’s as if COVID-19 never touched the real estate industry in California (for most areas). What’s the Best Airbnb Analytics Platform for 2019? Related: Suburban Real Estate Market Boom Due to COVID-19. However, places untouched by the fires will remain competitive. Since bottoming out in March 2011, the HPI … Actually, it’s not much of a prediction. -Karen Condor, a real estate expert from Pasadena, CA, with, At the same time, it’s important to mention the, Ashley Baskin, a licensed real estate agent who serves on the advisory board for. The outlook for home prices in California is that they will continue to climb through 2020 and into 2021. But going into 2021, we expect home-price appreciation to pick up again. Early forecasters thought the housing bubble would bust in California and a housing market crash was bound to happen before the end of 2020. Should Real Estate Investors Go for Micro Apartments? Zillow Economic Research predicts that home values will increase by 3.6% in the next three months until Feb 2021. Home prices were rising across the board, with only a few exceptions. poll showed that the people willing to sell right now has gone up 4%, which is a big increase in the grand scheme of things. Of course, COVID-19 is not all the California housing market is facing. While there are a few different reasons for this drop (the wildfires, for instance), a major one is the pandemic. Buyers still want to buy, Coronavirus be damned. While the situation may differ from city to city, most local experts are reporting the same California real estate market trends. As a result, an ever-growing number of would-be buyers could get priced out of the market. Airbnb Takes Legal Action Against a Guest for... How to Calculate the Rate of Return on a Rental Property. One overlooked California housing market prediction for 2021 is the clear impact of the wildfires on the cost of home insurance. Should You Be Shorting Real Estate Right Now? And many experts believe that, due to low inventory and growing demand (two upcoming California housing market predictions on this list), home prices will continue to rise in 2021.Â. What Kind of Airbnb Occupancy Rate Can You Expect? It’s already occurring. The advent of a coronavirus vaccine will also play into this prediction for the California real estate market. In about a month, a C.A.R. COVID-19 Vaccine to Drive Airbnb Occupancy Rate Recovery... Home Prices Fell During COVID-19 in These Cities, Airbnb Occupancy Rate Up 13% as Market Recovers. But the skyrocketing industry loss ratio seen with California home insurance due to the number of wildfire-related claims has insurance companies not only raising rates, but decreasing coverage and even carrying out non-renewals. Today we take a look at the latest Corelogic prediction for house prices through May 2021, when HOME PRICES ARE EXPECTED TO DROP by 6.6% nationwide. Recent forecasts from industry groups like Freddie Mac and the Mortgage Bankers Association have predicted that the average rate for a 30-year fixed mortgage could stay within the low-3% range well into 2021. Home buyers started to come out again. But that trend has eased a bit. So it’s estimated prices and property values will continue to rise in this seller’s market, and the supply-and-demand imbalance is lowering affordability for many would-be buyers. And many experts believe that, due to low inventory and growing demand, , home prices will continue to rise in 2021.Â. It is based on current real estate conditions around the state, as of late summer 2020. In July, C.A.R. The California median home price is forecast to edge up 1.3 percent to $648,760 in 2021, following a projected 8.1 percent increase to $640,330 in 2020 from $592,450 in 2019. There’s no doubt that the coronavirus pandemic had an initial negative impact on the California housing market this year. We expect to see another gradual reopening process later this year, which in turn could lead to another surge in home sales. This forecast relates back to some of the other California housing market predictions above. Related: 6 Most Affordable Cities in California for Real Estate Investing. When will the US housing market prices go back to normal? And with trends continuing on this trajectory, it’s highly unlikely that a California housing market crash will happen in 2021. reported that home sales across the state rose by a whopping 42% from May to June 2020. If you were wondering “Will the 2021 California housing market be a buyer’s market or a seller’s market?”, the last few predictions have probably answered your question. We expected this surprisingly strong performance to continue through the end of 2020 and into 2021. Californias economy grew 4.7% in the 12 months ended in February compared to the national rate of 2.8%. Although sales dropped during the first major wave of the coronavirus, they began to quickly bounce back. At the same time, it’s important to mention the California wildfires and the possible effect they may have on prices. Prices were 26% undervalued compared to incomes, which were growing faster than home prices due to massive job growth in the area. Our third prediction for the California housing market in 2021 should come as welcomed news to home buyers. All rights reserved. But the skyrocketing industry loss ratio seen with California home insurance due to the number of wildfire-related claims has insurance companies not only raising rates, but decreasing coverage and even carrying out non-renewals. 2021 will likely see even more buyers priced out of an already pricey real estate market. wrote: “Housing supply continued to decline significantly across the state, with all areas falling more than 30 percent in active listings from last year.” Southern California, in particular, has experienced a major drop in supply. … Sales dropped and many feared a housing market crash. Speaking of a turnaround, consider this. With the current supply-and-demand imbalance across much of the state, it appears likely that California home prices will continue along their upward trajectory through this year and into next. Jennifer Okhovat, a real estate agent with Compass in the Los Angeles real estate market told Mashvisor: In Los Angeles, we are not feeling any signs of the market slowing down as of now. However, all of the market data and trends prove that the, However, Ari Rastegar, a real estate developer in the Sun Belt, including Southern California, and the CEO & Founder of the, While it isn’t perfect by any means, the overall outlook for the, California housing market predictions for 2021, The Impact of the Coronavirus on the California Real Estate Market, 6 Most Affordable Cities in California for Real Estate Investing, Suburban Real Estate Market Boom Due to COVID-19. With home prices closing out 2020 around 7.6% above the average home price at the end of 2019, realtor.com predicts 2021 will yield an additional 5.7% increase in home prices … So while California regulators battle it out with the insurance industry over price spikes and reduced coverage, homeowners in fire-prone areas are experiencing sticker shock, either with their current carrier or when they have to scramble for a new one. Homeowners who want to sell are starting to realize that it’s reasonably safe to do so, with some common-sense precautions. that the Golden State’s home prices surpassed $700k for the first time. We have a few predictions for this, based on different factors. So we can’t claim it as our own. It’s easy to understand the motivation behind this trend. Despite a triple terror of ongoing COVID-19, worsening wildfires, and a fractious presidential election, California’s housing market is marching on…So it’s estimated prices and property values will continue to rise in this seller’s market, and the supply-and-demand imbalance is lowering affordability for many would-be buyers. Our second prediction for the California real estate market in 2021 has to do with a shift in demand among home buyers. that mortgage rates would remain low and drop even further come 2021. A rebound in home prices. So while California regulators battle it out with the insurance industry over price spikes and reduced coverage, homeowners in fire-prone areas are experiencing sticker shock, either with their current carrier or when they have to scramble for a new one. They reported a drop in active listings in most major regions across California, with the Southern California housing market being among the regions with the highest YoY drop – 52.4%. In fact, the rate of … Halifax says house prices will fall by between 2% and 5% this year. Related: Sacramento housing outlook for 2021. A dramatic drop in house prices in the long-term shouldn't be expected, according to Veros Real Estate Solutions. A few different factors will likely lead to a rise in California home sales in 2021. “ (But) if unemployment remains elevated in early 2021, then we can expect home prices to soften.” However, price drops aren’t expected in Southern California. The most recent Freddie Mac quarterly forecast released in June 2020 points to rising home prices (2.3% across the year and 0.4% in 2021), as well as continued low mortgage … Low rates have increased demand among home buyers, which in turn could help prop up home prices going into 2021. Wildfires and the presidential election are also impacting market trends. They reported a drop in active listings in most major regions across California, with the. As a result of all this, we expect that suburban and “small town” housing markets across the state will see an increase in demand and competition in 2021. Another forecast is that home values will appreciate by … Sales activity picked up. So even with rising prices, some buyers may find relief with this California housing market prediction, according to Ethan Taub, CEO of Loanry: One prediction I have for the housing market that will make a lot of people happy is that I think that mortgage rates for houses in the area will hover in the area that they are in now, which is around the rate of 3.5%. A few experts weighed in and told Mashvisor that they also predict growing California home prices in 2021: The outlook for home prices in California is that they will continue to climb through 2020 and into 2021. Looking at Zillow’s California real estate market forecast for home price appreciation, it predicts that values will go up by 5% from now through August 2021. Looking at Mashvisor’s investment data for the Sacramento real estate market, it is looking positive for rental property investors, making it a good place to invest in California: However, Ari Rastegar, a real estate developer in the Sun Belt, including Southern California, and the CEO & Founder of the Rastegar Property Company warned that renters may actually leave the California housing market in favor of more affordable areas. “Urban flight” has been in the news a lot lately. When Governor Newsom began to ease COVID-related restrictions back in June, we saw a huge uptick in home sales across the state. This was a 6.1% increase from July. It’s almost impossible to make reliable housing market predictions for 2021. California Home Prices Will Continue Rising. reported. So there appears to be a gradual shift in mindset taking place here. poll conducted in July found that 44% of consumers thought it was a good time to sell, up from 40% a month earlier. Even as the market began to recover at the end of May. A few of our market insiders spoke of this trend: A suburban migration within the state from San Francisco and the Bay Area to more suburban areas like Sacramento may see an urban exodus of sorts taking place but will invariably boost home sales in the Golden State. Those are some of the things we expect to see in the California housing market during 2021. Even as the market began to recover at the end of May, Fannie Mae forecasted that mortgage rates would remain low and drop even further come 2021. As you can see, the California real estate market is doing well. So we could see a gradual increase in for-sale inventory through the end of 2020 and into 2021. The estate agents Savills and Hamptons both believe house prices will stay the same in 2021… The real estate and mortgage industries learned to adapt, by implementing digital workflows that eliminated the need for face-to-face contact. Their mortgage rate forecast calls for an annual rate of 3.2% by the end of 2020, with rates dropping as low as 2.9% in 2021. See our report on the SoCal housing market. With COVID-19 came talks and fear of the impact of an economic recession on the housing market. This prediction for the California real estate market has been echoed by a number of analysts and economists. While it’s not likely 2021 will see a huge boost in housing inventory – enough to meet the growing demand and home sales – some experts do see a gradual increase in the California housing market’s future. But then a funny thing happened. A forecast by Haus shows home prices dropping between 0.5 and 2.5 percent from October 2020 to July 2021. But that sharp increase in home sales tells us a lot about the level of demand within the market. 7 San Diego Housing Market Trends for 2020, The Right Moves to Make in Each Real Estate Cycle, New York Real Estate Market Forecast for 2021. But once they do, housing prices should fall fast. Due to the fact that California is showing signs of a generally “healthy” market with no crash in sight, you might be wondering where to invest. You can see that in the chart above, provided by Freddie Mac. A shift in demand from urban to suburban areas. But prices seem stable for now. In April of this year, home sales plummeted as the state went into a pandemic-driven lockdown mode. At the same time, it’s a seller’s market. But there are several signs pointing to the fact that a safe California housing market prediction to make is the rise in home sales. That was the lowest average in 50 years of tracking, and it could fall even lower by the time you read this article. However, the mortgage rate forecast for 2021 is generally a positive one – mortgage rates are expected to remain low. When this article was published, in early August 2020, home prices in most parts of California were still rising year-over-year. Incredibly, California used to be the second-cheapest state in the U.S.; Oklahoma, Kansas, and Texas took the lead due to their severe storms, with the highest amount of claims for wind and hail, followed by water damage and freezing. -Emily Deaton, a financial journalist at Let Me Bank. Keep this turnaround in mind as we explore the five predictions for the California real estate market below. Corelogic found a price growth of 9.5% in November, year over year. And then the coronavirus came along. The house price trends over the past few months are clear – prices are continuing to grow, despite COVID-19. Here is what experts are forecasting for next year: While no one can 100% predict the future (and 2020 is making it even harder for the most experienced in the industry), it’s safe to say that we can expect these 9 California housing market trends in 2021: Mashvisor’s data reveals that California home prices rose from August to September. The Covid 19 shutdowns have impacted the rental housing market, yet prices … Related: The Impact of the Coronavirus on the California Real Estate Market. Fitch Ratings says demand has been unsustainable and expects home prices to fall by 3 per cent to 5 per cent in 2021 after a 7 per cent increase in 2020, in a new report. They are not meant to be definitive. Minimum Credit Score to Buy a House in 2021, Based on Loan Data, Average Down Payment Rising Among First-Time Buyers in 2021. Investment Property Tax Deductions When Buying or Selling Real Estate as an Investor.