21 Eye-Opening California Real Estate Statistics
California real estate statistics are closely monitored, as real estate prices are notorious for being double-digit higher than the national median price. The increasing prices have made a lot of people concerned about the health of the real estate market.
Some can still remember the sting brought by the California housing market crash before the Great Recession in the late 2000s. Now, faced with a global health crisis that has affected the economy, people wonder just how resilient the market is.
Let’s find out if we can expect a repetition of the Great Recession by looking at different perspectives and angles. We may even find out if there’s cause for concern.
Latest California Real Estate Trends (Editor's Choice)
- Home prices in California are 2.5 times higher than the median national home price
- California accounts for 25% of the total number of the nation’s homeless
- Housing shortages cost the economy $233 billion annually
- The foreclosure rate in Los Angeles is 3.6%
- From August 2019, the year-on-year prices of California real estate are at 14.5%
- 22% of homes sold in August 2020 were priced at $1 million and up
- 30-year fixed mortgage rates will stay below 3% in 2021
- By 2021, California’s real estate median value is expected to increase by 5.0%
- The number of real estate in California dropped by 43%.
California Housing Statistics
1. 40% of households in California struggle to buy a home.
California is one of the most densely populated states in the US. That’s the reason there’s a surge in demand for real estate. Naturally, this ever-growing demand, coupled with the limited supply, pushes real estate prices upward. In effect, those with limited purchasing power struggle to keep up with escalating prices. According to California real estate statistics, 40% wrestle with home-ownership — a figure that hasn’t been seen since World War II.
2. Home prices in California are 2.5 times higher than the median national home price.
Apart from having one of the highest numbers of migrant workers, California also holds the highest real estate prices. The average price of a home in California is approximately 2.5 times the median national price. It even surpasses the housing prices of Massachusetts and New York, the two states with the most expensive homes and rental rates.
3. California accounts for 25% of the total number of the nation’s homeless.
Some of California’s counties have the most expensive housing and rental rates in the country. This might be due to the rising demand, as more and more immigrants inhabit Silicon Valley and San Francisco Bay.
The median price in the state is twice as much as the national median housing price. Despite this, the poverty level is the highest in California. Approximately 12% of the US population resides in California, yet a quarter of the total number of homeless in the US lives in this state.
4. 38% of 18–34-year-olds still live with their parents.
Housing market statistics show us that more than a third of young people still live in their parents’ home. There are many reasons for this astounding number, such as the strain of repaying student loans and the decrease in the labor force demand. Other factors like the rising home prices and rental rates also contribute to the statistics.
5. Housing shortages cost the economy $143 billion–$233 billion annually.
A considerable portion of the household income in California goes either to the rent or to mortgage loans. Real estate eats up a significant part of a household’s income, which drastically reduces people’s capacity to spend on other consumer goods such as food and clothing. This is considered consumption spending loss and the amount lost is approximately $53 billion.
Furthermore, this shortage also costs the state $5 billion spent on services related to homelessness.
6. 75% of new residents live in urban centers.
The problems with California’s real estate are prevalent in urbanized areas. Because of the growing population, the demand for housing increases, which in turn reduces supply. The real estate industry then responds by rising real estate prices. It’s a typical scenario of the law of supply and demand.
What further aggravates the situation in these urbanized areas is that 75% of new residents searching for job opportunities are moving to already densely populated areas.
7. 21% of young adults had parental help with down payments.
The economic growth in Silicon Valley attracted young adults to relocate to the San Francisco Peninsula. However, 21% of them couldn’t afford down payments, so they had to ask their parents for help.
California Real Estate Market Trends
8. Foreclosure rate in Los Angeles is 3.6%.
For years, the state of California has seen growth in real estate prices. Despite this skyrocketing housing prices, the foreclosure rate in Los Angeles is only 3.6%. This is below the overall foreclosure rate in the US — 4.4%. Even with the rising prices of real estate, residents want to keep their homes.
9. From August 2019, the year-on-year prices of California real estate have grown by 14.5%.
COVID-19 depressed the California real estate market during the first quarter of 2020. However, it seems that its effects have diminished as more people realize that the real estate business can carry on despite the pandemic. This is evident from the year-on-year price growth of 14.5% from August 2019.
Moreover, this price growth was the highest recorded since 2014 and larger than the six-month average increase of 4.3% from February 2020 to July 2020.
10. Median home price in California broke the $700,000 mark.
In August 2020, California saw one of the highest price growths in real estate since March 2014. The record-low interest rates have puffed up consumer confidence, which led to growing demand and real estate prices. The demand was so high that prices reached the record-breaking $706,900. While this is positive news for investors, the price increase diminished the purpose of the lowered interest rates.
11. Home value in California increased 78% faster than the national home value.
According to California’s median home price history, home prices increased 16% faster than the national price in the last 30 years. Moreover, this year, the increase is astonishing 78%.
Many factors led to this rapid growth in real estate prices, such as the opposition of local government to property developments, activists that fight to preserve a county’s historical ambiance, and environmentalists who constantly warn about environmental hazards developments can bring to a community.
12. 22% of all homes sold in August 2020 were priced at $1 million and up.
California is known for its expensive real estate houses. In fact, in August 2020, the prices were record-breaking high for the state. Even with the rising prices, the demands continue to soar. Some real estate agents would receive 40 to 50 offers for some listed properties.
Many people expected to see a continuous downtrend for California’s real estate sales and lower prices due to a double-digit unemployment rate brought about by the pandemic, but the state is seeing the opposite. With more people staying at home, spending less on entertainment and recreational activities, they have more money to spend on larger houses.
13. Los Angeles and Orange County saw a 19% decrease in the number of homes for sale.
As millennials enter their home-buying years, they are more inclined to purchase homes than to rent out apartments. The problem is that the older generation, the baby boomers, are more hesitant to move and sell their current homes because of the pandemic. This creates a greater chasm between demand and supply.
14. The average rent of a single bedroom apartment in the San Francisco Bay Area dropped by 11.8% in June 2020.
The real estate industry, along with other types of businesses, has been feeling the pandemic’s impact, which is evidenced by the decreasing rental prices in major cities. San Francisco Bay Area’s average rental rates in June 2020 decreased by 11.8%, compared to last year’s average rates. Despite the double-digit decrease, it’s still considered one of the most expensive cities to live in.
California Housing Market Predictions
15. 30-year mortgage rates dropped at 2.75%, and they will remain lower than 3% until 2Q of 2021.
The pandemic has weakened the California housing market after the spread of COVID-19 in April 2020. However, the market recently witnessed a 2.75% mortgage rate, the lowest the country has seen in 50 years. The Mortgage Bankers Association is confident that the rate will remain below 3% until the second quarter of 2021.
16. California’s median real estate value is expected to increase by 7.6% in 2021.
At the beginning of 2020, the California real estate market proved to be a promising investment for sellers. The market was experiencing growth in prices due to the increased demand for real estate. When coronavirus started to cause health problems on a global scale, the country responded with a lockdown. The real estate was put on hold.
Surprisingly, in mid-2020, the market started to flourish again. More and more people realize that buying and selling are possible amidst the pandemic through non-face-to-face transactions.
17. The number of luxury homes on the San Francisco market rose to 39.3%.
(World Property Journal)
The events of 2020 have brought a lot of uncertainty for consumers. This was evident in April and May 2020. As the country was on lockdown, fear of the coronavirus and the possibility of another recession discouraged buyers from relocating and making purchases.
A significant number of people decided to stay put and purchase more affordable properties instead of expensive homes. This resulted in an increase in the number of luxury homes listed. An example of this consumer response happened in San Francisco, where the number of luxury homes rose to 39.3%.
18. A total of 11,300 homebuyers fell victim to online real estate scam.
(The Mercury News)
The coronavirus pandemic led to a different way of doing business. Nowadays, almost everything can be purchased online, and this includes real estate.
Before the lockdown, real estate agents and companies have incorporated technology in home tours and meetings, but not everyone followed suit for fear of frauds and scams and the immense cost the transition would bring on the companies.
However, because of imposed social distancing, people in the real estate business had to adapt quickly. Sellers are now meticulous with photography and touring videos. Even meetings are done virtually through FaceTime and Zoom.
19. San Francisco’s home price growth is expected to be 1.4% in 2020.
At the beginning of 2020, San Francisco’s home price growth was 3.7%. The price hike was interrupted when the coronavirus hit California, which led to the lockdown during the second quarter of the year. When the market opened again, the city’s real estate market prices continued to grow, and the growth is predicted to be 1.4% by the end of the year.
20. Last year, foreign buyers represented 3.9% of the total California home sales.
Due to the global health crisis, the restrictions are expected to lower the number of sales closed by foreign buyers. This isn’t as scary as it sounds since they comprised only 3.9% of the total sales last year. Real estate agents are confident that domestic buyers can make up for the loss due to increased real estate activity backed by the lowered mortgage rates.
21. The number of real estate on the Californian market dropped by 43%.
As the real estate market starts to recover, a number of realtors in California are adapting to the new way of closing sales. However, recovery of the market isn’t just about the agents’ ability to adapt to changes and the homebuyers’ eagerness to purchase, but also about the sellers’ willingness to add their property to real estate listings. Apparently, more and more people refuse to put their homes up for sale and risk the possibility of contracting the virus.
No one can predict how long the pandemic will last and, if the health crisis persists, it might affect the real estate market.
California’s real estate prices have always been relatively better than the national median prices. However, people have been wary, as they feared that real estate might see a repeat of the Great Recession.
Based on the California real estate statistics and the facts we’ve presented here, it seems that the probability of that happening is slim. Real estate in California is performing well, and it has been that way for years now.
The simple explanation for the rising California housing market rates is that the supply is so limited that it can’t quench the consumers’ demand. The pandemic may have halted price movement for a couple of months, but when consumers started to adapt to transactions that don’t require face-to-face selling, home prices started to rise again.
Therefore, there doesn’t seem to be any reason buyers and sellers fear that the real estate market in California might crash.
Frequently Asked Questions
How much money do you need to buy a house in California?
The amount needed to buy a house in California depends on the county the house is in. For instance, in Los Angeles, the median price is $677,260. In the San Francisco Bay Area, you can buy a house for $1,068,000, while in Sacramento, the median price is $425,000.
Are house prices dropping in 2020?
On the contrary, despite the global health crisis, house prices in California are increasing. As people learned how to close a sale without face-to-face transactions, the demand for homes continues to grow, which leads to prices growing every month. In fact, real estate market statistics tell us that California’s real estate prices are increasing year-on-year.
Where is the most affordable place to live in California?
The most affordable houses in California can be found in the Northern part of the state, which is 2.5 hours away from San Francisco. The small town of Clearlake has a median home price of $176,192.
What is the best month to buy a house in California?
Based on real estate trends in California, prices tend to be higher in the spring. During the ber-months, prices tend to go lower. Usually, California homes have the lowest prices during October and November.
When will house prices drop in California?
House prices in California are expected to drop by the end of the year. This has been the California real estate trend for several years. If you’re a buyer who wants to save on the home purchase, you might want to consider waiting until the end of the year before you make your purchase.
When will the housing market crash in California?
In April 2020, the forecast for the real estate market in California was grim. Initially, experts predicted that the market might experience a downturn. The bleak forecast was made when COVID-19 was already affecting much of the economy. Several months later, experts say that the real estate market crash is highly unlikely, judging by the recent California real estate statistics.