What's New
The California housing market is once again booming after a temporary slide in home prices and sluggish demand in 2023, as sales are surging in multiple cities in the Golden State, according to recent reports.
The California Association of Realtors celebrated the "biggest [annual] sale jump since 2021" in November, with single-family home sales up 19.5 percent compared to a year earlier. Some places in the state saw an even higher growth in sales: in a report published earlier this week, Redfin wrote that the Californian city of San Jose saw sales grow by 26.2 percent in November compared to a year earlier.
Sales grew by a similarly impressive 17.7 percent in San Francisco, 17.6 percent in Sacramento, and 15.2 percent in San Diego. By comparison, home sales grew by a much more modest 4.8 percent at the national level, according to Redfin.
Why It Matters
California is home to some of the most overvalued housing markets in the nation. Cities like San Jose, San Francisco, Los Angeles and San Diego are consistently mentioned as the most expensive markets in the country, and recently topped a list by SmartAsset of the most expensive places to buy a home in the U.S.
Despite stubbornly high prices, the Golden State's housing market has been going through a downturn after the pandemic—especially in places like San Francisco, which saw a steep decline in prices between in late 2022 and 2023 as demand dwindled following a mass exodus of residents triggered by the health emergency and the rise of remote work.
While sales at the state level remain below pre-COVID level and California's state market is still "a mixed bag," as the California Association of Realtors described it, growing sales offers some optimism for the near future.
What to Know
A total of 267,800 units were sold in California in November, according to data from the California Association of Realtors—less than the pre-pandemic norm of 400,000 but more than the 223,940 sold a year earlier.
It might have something to do with the fact that the median home price dropped by 4 percent from October to $852,880 in November, offering some respite to buyers even as mortgage rates remain high. But despite the significant decline, home prices in California remain much higher than at the national level, where the median price of a home was $430,010 in November, according to Redfin's data.
The growth in sales might have more to do, in fact, with the ongoing supply shortage in the West which is keeping competition "afloat," as Redfin put it.
"There's low inventory, so if a house checks all the boxes, it's selling very quickly with multiple offers," said Bay Area Redfin Premier real estate agent Josh Felder. "Even homes in the $1 million to $3 million range are getting five to seven offers if they are move-in ready and in the right neighborhood with the right schools—and they can sell for anywhere between 10 percent and 14 percent over the asking price."
"There is a lot of money in Silicon Valley. You'd think there would be a finite supply of people who have $3.5-$5 million for a home, but apparently not. They just keep coming," he added.
Sales growth, in fact, was concentrated in the Central Coast, which reported a year-on-year increase of 21.7 percent, according to the California Association of Realtors. Here, prices climbed by 7.9 percent to a staggering $1,030,000.
San Francisco, which struggled significantly in the past few years, appears now well on the way to recovery. According to the California Association of Realtors' report, the city increased its home sales by 14 percent in November, while median prices jumped up by 5.3 percent to $1,316,500. While inventory is slowly growing in the state, the city lags behind.
Over half of the homes in the Bay Area, according to Redfin, are selling for more than their asking price—despite the fact that the median sale price of a home in the region is already much higher than the national average. In San Jose, 58.6 percent of homes sold in November went above their list price. In Oakland and San Francisco, respectively 53.6 percent and 52.9 percent of homes were sold above their asking price.
The situation is different in other parts of the Golden State: in the Far North, sales grew by 5.2 percent, while median prices remained flat at $375,000. In Southern California, sales rose by 8.7 percent, while median price climbed by 3.1 percent to $850,000.
What People Are Saying
The California Association of Realtors said in a press release issued on Sunday: "California's housing market remains a mixed bag. For November 2024, closed escrow sales of single-family homes increased to 267,800, up from October's 264,870. This marks a 1.1 percent monthly improvement.
"However, it still falls significantly short of the 400,000 units typically seen before COVID-19. The recovery is attributed to a prior low base, as 2023 numbers were particularly dismal due to mortgage rate uncertainties and inflation."
Redfin said in a report released on Monday: "Early-stage homebuying activity has been picking up across the country since the election. But some West Coast markets may be gaining steam especially quickly in part because a shortage of homes for sale is keeping competition afloat."
What's Next
The California Association of Realtors believes that the "future looks cautiously optimistic for California's housing market."
"Housing sentiment steadily improves as consumers adjust to higher mortgage rates," the California Association of Realtors' Chief Economist Jordan Levine said. "More buyers are expected to re-enter the market after standing on the sidelines in 2023 and parts of 2024."
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