UNITED STATES—It’s been an interesting year for California’s real estate market. At the beginning of 202, the local market was bustling with competition and activity, but around April, sales plummeted when the state went into lock-down. However, the market rebounded and looks to be on the up-and-up, which is favorable for anyone looking to sell a home but even more fruitful for buyers.
Home Prices are Rebounding
At the end of 2020, the medium home value had gone up to 4.4.%, which was still considered low for California. Since lower interest rates made homes more affordable, it meant that areas that were out of reach for most buyers (like San Francisco Bay) became accessible to other income brackets. However, that number is likely to change in 2021.
Buyers and sellers understand that real estate deals are still possible and if you need some information for getting started on mortgage rates, focus on real estate as an investor. You can still buy a house for a lower price, keep it in your portfolio until the vaccine rollout, and sell it for a hefty profit once life goes back to normal.
Urban vs. Suburban Markets
More people are moving out of urban centers because the draw to those places is virtually gone. You can’t go out and enjoy what the city has to offer, so small towns and rural areas are booming during this time as a result. Housing markets will see a demand in suburban markets because it makes social distancing easier, plus you’ll have a large space to dwell in.
A Rise in Inventory Levels
Due to fewer people selling their homes, there are fewer homebuyers in the market. Housing supply continues to decline across the state, with an average fall of 30 percent in active listings. Southern California has seen the worst of this, but the city centers are also included. More and more sellers are taking their homes off the market and chose to wait for an economic upturn.
Over the past few months, that trend has changed significantly, as almost half of all consumers thought it was an excellent time to sell. They’re noticing that their homes are becoming more sought after by investors, which is the leading cause of the increase. Plus, with the COVID vaccine on the horizon, it’s becoming safer to let strangers into your home for a viewing.
The Average Mortgage Rate Reminds at 3-3.5%
In July 2020, California saw a plummeting interest rate that stayed at 2.98 for a few weeks, but the 3-3.5% rate will likely remain consistent across 2021. It’s in the Fed’s best interest to keep interest rates low so consumers can actually make payments. As a positive, this has increased demand among home buyers, which could help prop up home prices in 2021.
An Increase in Home Sales Across California
When COVID-restrictions started to ease in June, more homeowners began to sell across the state. It’s likely that as the lock-down wanes for the second time, this increase in home sales will happen again. Since more people are leaving urban centers for suburban neighborhoods and small towns, we will also see more empty homes in mid-2021.
Although the departure from the urban centers will lead to more homes being sold now, the reverse will happen when COVID-19 is a thing of the past. More people will try to migrate back into the Bay Area to take advantage of city life, which will make homes in the area increase significantly. This will help make the housing market profitable once more.